Ebook International business - A managerial perspective (8th edition): Part 2

(BQ) Part 2 book International business - A managerial perspective has contents: International strategic management; international strategic alliances; international organization design and control, international marketing; international operations management; international financial management;...and other contents.

Find more at http://www.downloadslide.com Part  Managing International Business Chapter 11 T.M.O Travel/Alamy International Strategic Management After studying this chapter, you should be able to: Characterize the challenges of international strategic management Assess the basic strategic alternatives available to firms Distinguish and analyze the components of international strategy Describe the international strategic management process Identify and characterize the levels of international strategies MyManagementLab® Improve Your Grade! More than 10 million students improved their results using the Pearson MyLabs Visit mymanagementlab.com for simulations, tutorials, and end-of-chapter problems M11_GRIF8218_08_SE_C11.indd 326 06/03/14 5:19 PM Find more at http://www.downloadslide.com Global Mickey M ickey Mouse is every bit as popular around the globe as Coca-Cola’s soft drinks and McDonald’s burgers But the Walt Disney Company has done a surprisingly poor job of c­ apitalizing on the global potential for its various products In 2012, for instance, 75 percent of Disney’s $42.3 billion in revenues came from the United States and Canada, which account for only percent of the world’s population This contrasts markedly with Coca-Cola and McDonald’s, which each derive about two-thirds of their revenue from outside the United States Perhaps Disney’s most public effort at internationalization has been its theme park operations Its first theme park, Disneyland, opened in Anaheim, California, in 1955 and was soon generating huge profits The 1971 debut of the firm’s next major theme park development, Florida’s Walt Disney World, was also a major success Given the enormous popularity of Disney characters abroad, the firm saw opportunities to expand theme park operations to foreign markets Its first international venture, Tokyo Disneyland, opened in 1983 The Japanese have long been Disney fans, and many Japanese tourists visit Disneyland and Disney World each year To limit its risk, though, the firm did not invest directly in the park—a decision Disney managers would eventually come to regret Instead, a Japanese investment group called the Oriental Land Company financed and entirely owns Tokyo Disneyland Disney oversaw the park’s construction and manages it but receives only royalty income from it Tokyo Disneyland has been an enormous success from the day it opened its gates: It greeted its 100 millionth visitor after only eight years, a milestone that Disneyland took twice as long to reach And Tokyo Disneyland remains one of Japan’s top tourist attractions The success of Tokyo Disneyland inspired the firm to seek other foreign market opportunities After evaluating potential sites throughout Europe, the firm narrowed its choice to one in France just outside Paris This time, though, Disney decided to participate more fully in both the park’s ownership and its ­profits Although the French government decreed that Disney’s ownership in the new venture would be limited to no more than 49 percent (with the remaining 51 percent made available for trade on European stock exchanges), Disney eagerly accepted this ownership structure The French government’s offer of numerous economic incentives also played a role in Disney’s decision The government sold the land for the park to Disney at bargain-basement prices and agreed to extend the Parisian rail system to the proposed park’s front door But as Euro Disney took shape, storm clouds loomed Farmers protested the manner in which the French government condemned their land so that it could be sold to Disney The cultural elite in Paris lambasted the project as an affront to French cultural traditions Disney found itself defending its conservative employee dress codes, regimented training practices, and plans to ban alcohol from park facilities Finally, a recession swept through Europe in 1992 just as the park was opening, forcing Disney to drop its plan to reduce its debt by selling land it owned near the park to local developers M11_GRIF8218_08_SE_C11.indd 327 Disney did learn some things from its start-up problems in Europe When the Disney Studios theme park adjacent to Disneyland Paris premiered in 2002, Disney made some small but significant changes in its operations The voices of European actors such as Jeremy Irons, Nastassja Kinski, and Isabella Rossellini were featured on Disney Studios’ tram rides, rather than those of U.S actors like Bruce Willis Disneyland Paris ­originally offered only French sausages, upsetting German, Italian, and British visitors who preferred those of their own country Disney Studios Paris’ food outlets, however, ­offer a broader array of sausages The setting of the park’s f­eatured stunt show is modeled after St Tropez, rather than a Hollywood back lot Small matters, perhaps, but such details are designed to make visitors to the theme park feel more at home In 2005, Disney’s next major international foray came to fruition when Disneyland Hong Kong made its debut Opening-day festivities included a traditional parade comprising mainly Disney characters coupled with a few local touches—­ fireworks, Chinese lion dancers, and clanging cymbals The ­company ­received a 43 percent equity stake in the $3.6 billion ­project in exchange for an investment of only $314 million The ­local ­government, in turn, invested more than $2.9 billion in ­low-interest loans, land, and infrastructure improvements for the remaining 57-percent share Disney was careful to incorporate feng shui concepts into the design of the Hong Kong park But as in Europe, Disney had to go back to the ­drawing boards and revise its approach to running Disneyland Hong Kong because attendance and spending fell below the ­company’s projections Disney had again failed to understand its market The Chinese were less familiar with many Disney characters and classic attractions than the company expected, and many visitors felt the park was too “foreign” for their tastes To compensate, Disney systematically reduced the presence of ­ some of its traditional characters and replaced them with more Chinese figures such as Cai Shen Ye, the bearded Chinese god of wealth It also changed the costuming of mainline favorites such as Mickey and Minnie Mouse, putting the venerable characters into red Chinese New Year garb And the iconic daily Disney parade has been changed to include such traditional Chinese ­favorites as dragons and puppets of birds, fish, and flowers These efforts have worked; in 2011, Disney began a multiyear expansion of the Hong Kong park The first addition was Toy Story Land, featuring Buzz Lightyear, Woody, and friends Disney is nothing if not persistent In addition to tinkering with Disneyland Hong Kong, the company established a branch office in Shanghai to coordinate its efforts in the 1.3-billion ­customer market The Disney Channel and Disney cartoons are now broadcast throughout China, and “Disney Corners” ­featuring Disney-branded merchandise are available in more than 1,800 ­department stores in China Disney operates 15 ­learning centers 06/03/14 5:19 PM Find more at http://www.downloadslide.com 328    Part 3  •  Managing International Businesss in Beijing and Shanghai, using a ­curriculum featuring Disney characters such as the Little Mermaid and Mickey Mouse to teach English to 7,000 Chinese youngsters ranging in age from to 12 It plans to expand this program to 150 facilities serving 150,000 students by 2015 Of course, this approach to language education familiarizes the new ­generation of Chinese with Disney characters as well as improving their English skills Disney’s methodical approach to the Chinese market has paid off: After a decade of negotiations, Disney broke ground on a new $4.4 billion theme park in Shanghai in 2011 Disney will own 43 percent of the new venture, with three ­city-owned ­businesses controlling the remainder The company also is targeting India as a lucrative m ­ arket for its products In 2004 it launched Disney Channel and Toon Disney p­ rogramming customized for the Indian f­amilies Disney ­developed an Indian ­takeoff on High School Musical, although cricket replaced basketball in the movie’s storyline In 2012, it acquired UTV, India’s largest TV and film studio, which also c­ ontrols six l­eading Indian broadcast channels Chinese and Russian ­versions of High School Musical are also under way, as are live and a­ nimated films targeted to the Japanese, Indian, Chinese, Arab, and Russian markets Nor is the company ignoring its ­opportunities elsewhere Disney’s Consumer Product Division has established ­dedicated sales teams to cater to the worldwide ­procurement needs of major international r­etailers such as Carrefour, ASDA (the British subsidiary of Walmart), and Metro In 2012, the Disney Channel debuted in Russia and Turkey It now is broadcast in 35 languages in 167 ­countries serving 323 million ­subscribers ESPN International has equity interests in 27 ­international TV networks and has d­ eveloped customized programming, such as ESPN Classic Sport Europe, ESPN Latin America, and ESPN Asia, to serve sports fans in those ­regions Still, the company’s international ­operations, which generate only 25 percent of the company’s revenues, have much room for improvement and growth.1  ■ To survive in today’s global marketplace, firms must be able to quickly exploit ­opportunities presented to them anywhere in the world and respond to changes in ­domestic and ­foreign markets as they arise This requires a cogent definition of the firm’s corporate ­mission, a vision for achieving that mission, and an unambiguous ­understanding of how the ­company intends to compete with other firms To obtain this understanding, firms must c­ arefully ­compare their strengths and weaknesses to those of their worldwide competitors; a­ ssess likely political, economic, and social changes among their current and prospective c­ ustomers; and analyze the impact of new technologies on their ways of doing business Disney’s decisions to build Tokyo Disneyland, Disneyland Paris, Disney Studios Paris, and Hong Kong Disneyland are consistent with its strategy to be a global entertainment firm So, too, are its efforts to increase worldwide licensing of its characters and expand its audience for the Disney Channel to other countries But the firm stumbled badly in its initial efforts with Disneyland Paris and knows its competitors will continue to fight for market share European vacationers can enjoy other amusement parks, such as Denmark’s Legoland or France’s Parc Asterix Mickey Mouse lunchboxes compete for the attention of the world’s schoolchildren with those featuring England’s Paddington Bear, France’s Babar the Elephant, Japan’s Hello Kitty, and Belgium’s Smurfs And Time Warner’s Cartoon Network has been outperforming the mouse for years Thus, Disney’s top managers know that they are in a continuous battle for the e­ ntertainment dollars (and euros, yen, and pounds) of the world’s consumers and that it is up to them to deploy the firm’s resources to achieve desired levels of profitability, growth, and market share The Challenges of International Strategic Management Disney’s managers, like those of other international businesses, use strategic management to address these challenges More specifically, international strategic management is a comprehensive and ongoing management planning process aimed at formulating and implementing strategies that enable a firm to compete effectively internationally The process of developing a particular international strategy is often referred to as strategic planning Strategic planning is usually the responsibility of top-level executives at corporate headquarters and senior managers M11_GRIF8218_08_SE_C11.indd 328 06/03/14 5:19 PM Find more at http://www.downloadslide.com Chapter 11  • International Strategic Management    329  in domestic and foreign operating subsidiaries Most large firms also have a permanent ­planning staff to provide technical assistance for top managers as they develop strategies Disney’s ­planning staff, for example, gathered demographic and economic data that the firm’s decision makers used to select the sites for its domestic and international theme parks International strategic management results in the development of various international strategies, which are comprehensive frameworks for achieving a firm’s fundamental goals Conceptually, there are many similarities between developing a strategy for competing in a single country and developing one for competing in multiple countries In both cases, the firm’s strategic planners must answer the same fundamental questions: ● ● ● ● ● What products or services does the firm intend to sell? Where and how will it make those products or services? Where and how will it sell them? Where and how will it acquire the necessary resources? How does it expect to outperform its competitors?2 But developing an international strategy is far more complex than developing a domestic one.3 Managers developing a strategy for a domestic firm must deal with one national government, one currency, one accounting system, one political and legal system, and, usually, a single language and a comparatively homogeneous culture But managers responsible for developing a strategy for an international firm must understand and deal with multiple governments, multiple currencies, multiple accounting systems, multiple political systems, multiple legal systems, and a variety of languages and cultures Moreover, managers in an international business must also coordinate the implementation of their firm’s strategy among business units located in different parts of the world with different time zones, different cultural contexts, and different economic conditions, as well as monitoring and controlling their performance But managers usually consider these complexities acceptable trade-offs for the additional opportunities that come with global expansion Indeed, international businesses have the ability to exploit three sources of competitive advantage unavailable to domestic ­­ firms ● ● M11_GRIF8218_08_SE_C11.indd 329 Global efficiencies International firms can improve their efficiency through several means not available to domestic firms They can capture location efficiencies by locating their ­facilities anywhere in the world that yields them the lowest production or distribution costs or that best improves the quality of service they offer their customers Production of ­athletic shoes, for example, is labor intensive, and Nike, like many of its competitors, centers its manufacturing in countries where labor costs are especially low.4 Similarly, by building factories to serve more than one country, international firms may also lower their ­production costs by capturing economies of scale For example, rather than splitting ­production of its first SUV among several factories, Mercedes-Benz decided to initially produce this vehicle only at its Alabama assembly plant to benefit from economies of scale in production.5 Finally, by broadening their product lines in each of the countries they enter, international firms may enjoy economies of scope, lowering their production and ­marketing costs and enhancing their bottom lines Apple’s transition from a seller of only personal ­computers to a company with an extensive line of electronic communications equipment—­desktops, ­laptops, iPhones, iPads, etc.—allows it to economize on research and ­development ­expenses, branding costs, and distribution expenses As a result, its research and ­development (R&D), distribution, and branding costs per product are much lower than when it was simply a seller of computers Multinational flexibility As we discussed in Chapters and 4, there are wide ­variations in the political, economic, legal, and cultural environments of countries Moreover, these ­environments are constantly changing: New laws are passed, new ­governments are elected, economic policies are changed, and new competitors may ­enter (or leave) the national ­market International businesses thus face the challenge of ­responding to these multiple ­diverse and changing environments But unlike domestic firms, which operate in and ­respond to changes in the context of a single domestic environment, ­international businesses may also respond to a change in one country by implementing a change in another country Chicken processor Tyson Foods, for example, has benefited from the increased demand by health-conscious U.S consumers for chicken breasts In ­producing more chicken breasts, 06/03/14 5:19 PM Find more at http://www.downloadslide.com 330    Part 3  •  Managing International Businesss ● Tyson also produced more chicken legs and thighs, which are ­considered less d­ esirable by U.S consumers Tyson capitalized on its surplus by ­targeting the Russian market, where dark meat is preferred over light, and the Chinese market, where chicken feet are­ ­considered a tasty delicacy Tyson exports nearly $700 million worth of chicken thighs and legs to Russia and chicken feet to China.6 In a variety of ways similar to this, international ­businesses are better able than purely domestic firms to exploit and ­respond to changes and differences in their operating environments Worldwide learning The diverse operating environments of multinational c­ orporations (MNCs) may also contribute to organizational learning.7 Differences in these ­operating environments may cause the firm to operate differently in one country than another An astute firm may learn from these differences and transfer this learning to its o­ perations in other countries.8 For example, McDonald’s U.S managers believed that its r­ estaurants should be freestanding entities located in suburbs and small towns A Japanese f­ ranchisee convinced McDonald’s to allow it to open a restaurant in an inner-city o­ ffice building That restaurant’s success caused McDonald’s executives to rethink their store location criteria Nontraditional locations—office buildings, Walmart s­ uperstores, food courts, and a­ irports—are now an important source of new growth for the firm. “Emerging Opportunities” provides another example of the benefits of w ­ orldwide learning Unfortunately, it is difficult to exploit these three factors simultaneously Global e­ fficiencies can be more easily obtained when a single unit of a firm is given worldwide ­responsibility for the task at hand BMW’s engineering staff at headquarters in Munich, for example, is ­responsible for the research and development of the company’s new automobiles By focusing its R&D efforts at one location, BMW engineers designing new transmissions are better able to coordinate their activities with their counterparts designing new engines However, centralizing control of its R&D operations also hinders the firm’s ability to customize its product to meet the differing needs of customers in different countries Consider the simple question of whether to include cup holders in its cars In designing cars to be driven safely at the prevailing high speeds of Germany’s autobahn, the company’s engineers initially decided that cup holders were both irrelevant and dangerous Driving speeds in the United States, however, are much lower, and cup holders are an important comfort feature in autos sold to U.S consumers Lengthy battles were fought between BMW’s German engineers and its U.S marketing managers over this seemingly trivial issue Only after a decade of argument did cup holders finally become a standard feature in the firm’s automobiles sold in North America And even then, in some BMW models the cup holders were placed in front of the air conditioner vents, making it harder to keep beverages at their desired temperature As this example illustrates, if too much power is centralized in one unit of the firm, it may ignore the needs of consumers in other markets Conversely, multinational flexibility is enhanced when firms delegate responsibility to the managers of local subsidiaries Vesting power in local managers allows each subsidiary to tailor its products, personnel policies, marketing techniques, and other business practices to meet the specific needs and wants of potential customers in each market the firm serves However, this increased flexibility will reduce the firm’s ability to obtain global efficiencies in such areas as production, marketing, and R&D Furthermore, the unbridled pursuit of global efficiencies or multinational flexibility may stifle the firm’s attempts to promote worldwide learning Centralizing power in a single unit of the firm to capture global efficiencies may cause it to ignore lessons and information acquired by other units of the firm Moreover, these other units may have little incentive or ability to acquire such information if they know that the “experts” at headquarters will ignore them Decentralizing power in the hands of local subsidiary managers may create similar problems A decentralized structure may make it difficult to transfer learning from one subsidiary to another Local subsidiaries may be disposed to reject any outside information out of hand as not being germane to the local situation Firms wishing to promote worldwide learning must utilize an organizational structure that promotes knowledge transfer among its subsidiaries and corporate headquarters They must also create incentive structures that motivate managers at headquarters and in subsidiaries to acquire, disseminate, and act on worldwide learning opportunities M11_GRIF8218_08_SE_C11.indd 330 06/03/14 5:19 PM Find more at http://www.downloadslide.com Chapter 11  • International Strategic Management    331  Emerging Opportunities How Does a Japanese Firm Compete in China? … Act More American Although Toyota claims the title of being the world’s largest car manufacturer, it initially struggled in the Chinese market, the fastest-growing auto market in the world In 2005, it sold a mere 183,000 cars there, ranking ninth in the market, far ­behind Volkswagen, General Motors, Hyundai, and Honda And its performance fell well short of its ambitions: Toyota’s goal was to sell one million cars a year in China Part of Toyota’s problem is that it was a late entrant It delayed producing cars in China until 2002, when it entered into a joint venture with a local company, the First Auto Works Group (FAW) The first car manufactured by Toyota-FAW, the Vios, failed to attract much of a market, for, despite its u ­ nremarkable design, it was three times as expensive as most cars sold in China Toyota’s real difficulty was not its slow start or poor product ­positioning, however Rather, Toyota assumed the Chinese ­market would be similar to the Japanese market It soon learned, the hard way, that the Chinese market more closely resembled the U.S market Sales personnel in Japan are paid a salary and succeed by slowly building a base of loyal clientele by providing first-class service to them Similarly, most Japanese auto dealers sell but a single brand, thereby ensuring their loyalty to it Japan is a relatively small country with an ethnically homogeneous population Accordingly, Toyota used nationwide advertising to market its products in its home country Such is not the case in China Salespersons live off their ­commissions, and most dealers sell numerous brands Thus, loyalty plays little role in motivating either the sales staff or the dealers, who will ignore a slow-selling product should a more profitable one turn up And China is a large, diverse country For instance, an advertising campaign depicting the ruggedness of a Toyota SUV in conquering the harrowing terrain of inland China did little to spur sales in the populous, prosperous cities of the south To remedy its failures in the Chinese market, Toyota transferred Yoshi Inaba, a 38-year company veteran who had overseen the ­company’s recent success in the United States Inaba then recruited two senior U.S marketing executives who had worked for him in California to the same in China Their first task was to e­ stablish 32 FAW-Toyota regional dealership ­associations In the U.S market, such associations develop cooperative a­dvertising campaigns customized for their ­local markets The new team also revamped its annual dealer meetings, ­shifting from the staid approach used in Japan to the more rah-rah, ­inspirational approach used in the United States to build ­enthusiasm for the Toyota brand It also revamped Toyota’s ­approach to allocating cars among its Chinese dealers, adopting the “turn and earn” system used in the United States: Dealers who sell (or turn) more cars earn favorable access to additional cars, particularly the hot-selling models In this way, Toyota both rewards and motivates its dealers to focus their efforts on selling Toyotas rather than other vehicle brands Competition in the Chinese market is fierce, but ­ transferring ­lessons learned in the U.S market to its operations in China ­appears to have been successful Toyota sold nearly 900,000 vehicles there in 2011—a bit short of its ambitious million car goal, but a s­ignificant improvement from its 2005 sales However, while ­ adopting U.S approaches to doing business in China, Toyota is still a Japanese ­ company in the eyes of Chinese consumers Accordingly, the ­ company’s sales in China fell in 2012 as a result of boycotts of ­ Japanese products by Chinese consumers, angry at the Japanese ­government’s claim of sovereignty over the Senkaku/Diaoyu islands (see Chapter 3’s closing case, “Tiny Islands, Big Trouble.”) Sources: “Toyota predicts China sales won’t fully recover before fall,” www.japantimes.co.jp, April 22, 2013; “Toyota plots China fightback with new, ­no-frills car,” The Economic Times, April 20, 2013; “Japanese Car Sales Plunge Amid China Rage,” Wall Street Journal, October 9, 2012; “After the quake,” The Economist, May 19, 2011; “Toyota expands again in China,” www.edmunds.com, March 11, 2008; “VW holds lead in China, Toyota comes in second,” Wall Street Journal, January 11, 2008 (online); “In Chinese ­market, Toyota’s strategy is made in U.S.A.,” Wall Street Journal, May 26, 2006, p A1; “The birth of the Prius,” Fortune, March 6, 2006, p. 111; “China and Japan: So hard to be friends,” The Economist, March 26, 2005, p 23; “The Americanization of Toyota,” Fortune, December 23, 2003, p 165 For example, in the late 1990s Procter and Gamble (P&G) executives grew ­increasingly concerned that their organizational structure, which was organized along geographic lines, was hindering the ability of the firm to transfer hard-won knowledge in one region to other areas of the world P&G underwent a drastic organizational restructuring, creating a complex matrix structure that shifted more power to product line managers while retaining the local expertise of regional managers The process was neither easy nor quick In fact, the chief executive officer (CEO) who initiated the restructuring was fired after 18 months on the job His successor was more successful in implementing the change, which has allowed P&G to transfer products, such as the Swiffer Sweeper or the upscale SK-II skin care ­cleansing system developed by its Japanese subsidiaries, throughout the globe more quickly and profitably.9 General Electric (GE) adopted a different approach to facilitate learning transfer among its units It established 12 management councils, composed of senior executives from different ­subsidiaries At the quarterly meetings of these councils, each member must present a new idea that other subsidiaries can use in their businesses as well In this way, hard-earned knowledge of new techniques or market opportunities can be quickly spread throughout GE’s operations M11_GRIF8218_08_SE_C11.indd 331 06/03/14 5:19 PM Find more at http://www.downloadslide.com 332    Part 3  •  Managing International Businesss EyePress/Newscom SK-II was developed by P&G’s Japanese subsidiary after a l­ocal scientist noticed the soft and youthful skin of women working in a sake brewery Its expansion into other markets, including Asia, the United States, and the United Kingdom, was ­accelerated by an organizational ­restructuring ­designed to facilitate the t­ransfer of new products and new ­technologies from one region to another In Practice International businesses can benefit from global efficiencies, multinational flexibility, and worldwide learning These opportunities are not available to purely domestic firms ● It is difficult to create an organizational structure that allows a firm to capture all three of these advantages, however For further consideration: Which of these three advantages is most important? Is the ­answer the same for every firm? ● Strategic Alternatives MNCs typically adopt one of four strategic alternatives in their attempt to balance the three goals of global efficiencies, multinational flexibility, and worldwide learning The first of these strategic alternatives is the home replication strategy In this ­approach, a firm uses the core competency or firm-specific advantage it developed at home as its main ­competitive weapon in the foreign markets that it enters That is, it takes what it does ­exceptionally well in its home market and attempts to duplicate it in foreign markets MercedesBenz’s home replication strategy, for example, relies on its well-known brand name and its ­reputation for building well-engineered, luxurious cars capable of traveling safely at high speeds It is this market segment that Mercedes-Benz has chosen to exploit internationally, despite the fact that only a few countries have both the high income levels and the high speed limits appropriate for its products Yet consumers in Asia, the rest of Europe, and the Americas, attracted by the car’s mystique, eagerly buy it, knowing that they too could drive their new car 150 miles per hour, if only the local police would let them The multidomestic strategy is a second alternative available to international firms.10 A  ­multidomestic corporation views itself as a collection of relatively independent ­operating ­subsidiaries, each of which focuses on a specific domestic market In addition, each of these ­subsidiaries is free to customize its products, its marketing campaigns, and its ­operational techniques to best meet the needs of its local customers The multidomestic approach ­ is ­ particularly effective when there are clear differences among national markets; when ­economies of scale for production, distribution, and marketing are low; and when the cost M11_GRIF8218_08_SE_C11.indd 332 06/03/14 5:20 PM Find more at http://www.downloadslide.com  Chapter 11  • International Strategic Management    333 of coordination between the parent corporation and its various foreign subsidiaries is high Because each ­subsidiary in a ­multidomestic corporation must be responsive to the local m ­ arket, the ­parent company usually delegates considerable power and authority to managers of its ­subsidiaries in various host c­ ountries MNCs operating in the years prior to World War II often adopted this approach because of difficulties of controlling distant foreign subsidiaries given the ­communication and transportation technologies of those times The global strategy is the third alternative philosophy available for international firms A  global corporation views the world as a single marketplace and has as its primary goal the creation of standardized goods and services that will address the needs of customers ­worldwide The global strategy is almost the exact opposite of the multidomestic strategy Whereas the m ­ ultidomestic firm believes that its customers in every country are ­fundamentally different and must be approached from that perspective, a global corporation assumes that customers are  ­ ­ fundamentally the same regardless of their nationalities Thus, the global corporation views the world market as a single entity as it develops, produces, and sells its products It tries to ­capture economies of scale in production and marketing by ­concentrating its ­production ­activities in a handful of highly efficient factories and then creating global ­advertising and marketing campaigns to sell those goods Because the global corporation must coordinate its ­worldwide production and marketing strategies, it usually concentrates power and ­decision-making ­responsibility at a central headquarters location The home replication strategy and the global strategy share an important similarity: Under either approach, a firm conducts business the same way anywhere in the world There is also an important difference between the two approaches, however A firm using the home replication strategy takes its domestic way of doing business and uses that approach in foreign markets as well In essence, a firm using this strategy believes that if its business practices work in its ­domestic market, then they should also work in foreign markets Conversely, the starting point for a firm adopting a global strategy has no such home-country bias In fact, the concept of a home market is irrelevant because the global firm thinks of its market as a global one, not one divided into domestic and foreign segments The global firm tries to figure out the best way to serve all of its customers in the global market, and then does so A fourth approach available to international firms is the transnational strategy The ­transnational corporation attempts to combine the benefits of global scale efficiencies, such as those pursued by a global corporation, with the benefits and advantages of local responsiveness, which is the goal of a multidomestic corporation To so, the transnational corporation does not automatically centralize or decentralize authority Rather, it carefully assigns responsibility for various organizational tasks to that unit of the organization best able to achieve the dual goals of efficiency and flexibility A transnational corporation may choose to centralize certain management functions and decision making, such as R&D and financial operations, at corporate headquarters Other management functions, such as human resource management and marketing, however, may be decentralized, allowing managers of local subsidiaries to customize their business activities to better respond to the local culture and business environment Often transnational corporations locate responsibility for one product line in one country and responsibility for a second product line in another To achieve an interdependent network of operations, transnational corporations focus considerable attention on integration and coordination among their various s­ ubsidiaries “Venturing Abroad” discusses how IKEA has tried to capture the benefits of global scale ­efficiencies while remaining responsive to local conditions Figure 11.1 assesses these four strategic approaches against two criteria, the need for local responsiveness and the need to achieve global integration Firms must pay particular attention to local conditions when consumer tastes or preferences vary widely across countries, when large differences exist in local laws, economic conditions, and infrastructure, or when host-country governments play a major role in the particular industry Pressures for global integration arise when the firm is selling a standardized commodity with little ability to differentiate its p­ roducts through features or quality, such as agricultural goods, bulk chemicals, ores, and low-end semiconductor chips If trade barriers and transportation costs are low, such firms must strive to produce their goods at the lowest possible cost Conversely, if the product features desired by consumers vary by country or if firms are able to differentiate their products through brand names, after-sales ­support services, and quality differences, the pressures for global integration are lessened M11_GRIF8218_08_SE_C11.indd 333 06/03/14 5:20 PM Find more at http://www.downloadslide.com Figure 11.1 Strategic Alternatives for Balancing Pressures for Global Integration and Local Responsiveness Source: Based on Sumantra Ghoshal and Nitin Nohria, “Horses for courses: Organizational forms for multinational corporations,” Sloan Management Review (Winter 1993), pp 27 and 31 PRESSURES FOR GLOBAL EFFICIENCIES 334    Part 3  •  Managing International Businesss GLOBAL STRATEGY High Low The firm views the world as a single marketplace and its primary goal is to create standardized goods and services that will address the needs of customers worldwide TRANSNATIONAL STRATEGY HOME REPLICATION MULTIDOMESTIC STRATEGY The firm uses the core competency or firm-specific advantage it developed at home as its main competitive weapon in the foreign markets it enters Low The firm attempts to combine the benefits of global scale efficiencies with the benefits of local responsiveness The firm views itself as a collection of relatively independent operating subsidiaries, each of which focuses on a specific domestic market High PRESSURES FOR LOCAL RESPONSIVENESS AND FLEXIBILITY The home replication strategy is often adopted by firms when both the pressures for global integration and the need for local responsiveness are low, as the lower left-hand cell in Figure 11.1 shows Toys “R” Us, for example, has adopted this approach to i­nternationalizing its operations It continues to use the marketing, procurement, and distribution techniques ­developed in its U.S retail outlets in its foreign stores as well The company’s managers believe that the firm’s path to success internationally is the same as it was domestically: build large, warehouse-like stores; buy in volume; cut prices; and take market share from smaller, high-cost toy retailers Accordingly, they see little reason to adjust the firm’s basic domestic strategy as they enter new international markets Venturing Abroad Master of the Furniture Universe In 1943, when he was 17, Ingvar Kamprad established a ­mail-order company selling assorted merchandise A few years later, he added furniture to his product line but soon chose to design his own furniture products IKEA developed the idea of shipping disassembled furniture to allow the use of less-­expensive flat packaging The firm opened Europe’s first warehouse store in the small Swedish village of Älmhult in 1958 From these innovations, the pioneering retail firm has grown to encompass 298 stores in 26 countries The firm’s products are known for their combination of Swedishmodern style, practicality, and affordability Sofas, for example, cost as little as $200 and are covered with washable, durable canvas IKEA deliberately engages in social engineering, believing that better and lower-cost design can transform the lives of the average person Peter Fiell, author of Industrial Design A–Z, claims that the retailer’s ­philosophy is about “how to get the most quality to the greatest number of people for the least money.” He adds, “That’s the nucleus of modernism It’s inherently optimistic.” IKEA has developed a peculiarly Scandinavian culture, with emphasis on restraint and fairness, which it calls “democratic ­ ­design.” This slogan applies to products and also to organizational and task design Bill Agee, a U.S employee who transferred to IKEA’s Swedish headquarters, says, “It’s a little religious or missionary in a sense, but it’s who we are.” Within the firm, private offices are rare and everyone is on a first-name basis The no-frills facilities keep the M11_GRIF8218_08_SE_C11.indd 334 PASSPORT emphasis on the downscale customers, who are referred to as “people with thin wallets.” Josephine Rydberg-Dumont, the firm’s ­managing director, speaks with evangelical fervor “We’re ready for ­modernism now,” she says “When it first came, it was for the few Now it’s for the many.” To cope with the needs of diverse customers around the world, IKEA relies on standardization, with global production and ­distribution Customers in Russia, Malaysia, and the United States buy the same linens and cupboards Customers walk through the identical ­warehouses along the same predetermined pathway IKEA ­encourages ongoing consumption of “throw-away” furniture, long considered a durable good Christian Mathieu, the firm’s North American ­ marketing manager, says of the traditional attitude, “Americans change their spouse as often as their dining-room table, about 1.5 times in a lifetime.” To change that mind-set, IKEA launched an ad campaign called Unböring, featuring a discarded lamp sitting out in the rain The spokesman says, “Many of you feel bad for this lamp That is because you are crazy.” Rydberg-Dumont concurs, saying, “You value things that don’t bog you down, that are easy to take care of.” The message is, you can and should update your home as often as you update your wardrobe IKEA made some mistakes in its early globalization efforts, not surprising for a firm whose 212 million catalogs are printed in 17 ­ ­languages In the United States, for example, beds didn’t match standard sheet sizes Another flop was the six-ounce drinking glass that 06/03/14 5:20 PM Find more at http://www.downloadslide.com Chapter 11  • International Strategic Management    335  was far too small for U.S preferences Kent Nordin, a f­ormer IKEA manager, says, “People told us they were drinking out of our vases.” Bedroom dressers contained numerous small drawers, a popular European feature, but they couldn’t hold Americans’ bulky sweaters Storage units were not sized to hold standard coat h ­ angers Ultimately, top executives realized that telling U.S buyers to use smaller coat hangers wouldn’t work Today, IKEA has adapted its ­products to local tastes The firm is one of the top furnishings retailers in the United States, and in 10 U.S homes have at least one IKEA item In its newest venture, IKEA has expanded into designing and building entire communities of apartments that are furnished with IKEA products, down to the kitchen gadgets and the bath towels They are able to provide housing that is 25 percent less expensive than comparable units The firm’s tendency toward social ­engineering informs every aspect of the design, from the community gardens to the cooperative governance Many praise the developments, but some feel the concept will not work outside of Sweden “The idea of building an ideal little street is quite laudable,” says Ruth Eaton, author of Ideal Cities: Utopianism and the (Un)Built Environment “But you can’t put the same thing everywhere That’s where utopias go wrong…  You can’t take over the world, because conditions are too different, calling for different solutions Yes for Stockholm, no for Timbuktu.” The retailer may master the furniture industry, but it’s not clear whether those skills will translate into a flair for suburban ­development IKEA still has a long way to go before realizing its v­ ision of complete world domination in design for the home, but, with €27.6 billion in 2012 sales, it’s obviously well on its way Sources: “India Clears IKEA’s $1.95 Billion Investment Plan,” Wall Street Journal, May 2, 2013; “IKEA’s Parent Plans a Hotel Brand,” Wall Street Journal, March 5, 2013, p B3; “IKEA Chief Takes Aim at Red Tape,” Wall Street Journal, January 23, 2013, p B3; “IKEA eyes kitchen recycling in green push,” Financial Times, October 23, 2012, p 19; “The secret of IKEA’s success,” The Economist, February 24, 2011; www.ikea.com; “Ikea supersizes Beijing store,” Washington Times, April 11, 2006 (online); “IKEA expects Vietnam business, with its cheap supplies, to surge,” Wall Street Journal, September 24, 2003, p B13A; “To Russia, with love: The multinationals’ song,” Businessweek, September 16, 2002, pp 44–46; Eryn Brown, “Putting Eames within reach,” Fortune, October 30, 2002, pp 98–100; “A prefab ­utopia,” New York Times Magazine, December 1, 2002, pp 92–96 The multidomestic approach is often used when the need to respond to local conditions is high, but the pressures for global integration are low Many companies selling brand-name food products have adopted this approach Although not unmindful of the benefits of reducing manufacturing costs, such marketing-driven companies as Kraft, Unilever, and Nestlé are more concerned with meeting the specific needs of local customers, thereby ensuring that these customers will continue to pay a premium price for the brand-name goods these companies sell Moreover, they often rely on local production facilities to ensure that local consumers will readily find fresh, high-quality products on their supermarket shelves The global strategy is most appropriate when the pressures for global integration are high but the need for local responsiveness is low In such cases, the firm can focus on c­reating ­standardized goods, marketing campaigns, distribution systems, and so forth This strategy has been adopted by many Japanese consumer electronics firms such as Sony and Matsushita, which ­design their products with global markets in mind Aside from minor adaptations for ­differences in local electrical systems and recording formats, these firms’ digital cameras, TVs, smartphones, and Blu-ray players are sold to consumers throughout the world with little need for customization Thus, these firms are free to seek global efficiencies by capturing economies of scale in manufacturing and concentrating their production in countries offering low-cost ­manufacturing facilities The transnational strategy is most appropriate when pressures for global integration and local responsiveness are both high The Ford Motor Company has been attempting to employ this strategy For example, Ford now has a single manager responsible for global engine and transmission development Other managers have similar responsibilities for product design and development, production, and marketing But each manager is also responsible for ­ensuring that Ford products are tailored to meet local consumer tastes and preferences For instance, Ford products sold in the United Kingdom must have their steering wheels mounted on the right side of the passenger compartment Body styles may also need to be slightly altered in different ­markets to be more appealing to local customer tastes Not addressed to this point has been the issue of worldwide learning Worldwide learning requires the transfer of information and experiences from the parent to each subsidiary, from each subsidiary to the parent, and among subsidiaries The home replication, multidomestic, and global strategies are not explicitly designed, however, to accomplish such learning transfer The home replication strategy is predicated on the parent company’s transferring the firm’s core competencies to its foreign subsidiaries The multidomestic strategy decentralizes power to the local subsidiaries so that they can respond easily to local conditions The global strategy ­centralizes decision making so that the firm can achieve global integration of its activities M11_GRIF8218_08_SE_C11.indd 335 06/03/14 5:20 PM Find more at http://www.downloadslide.com 610    COMPANY index Cornetto, 479 Corning, Inc., 396, 397 Corus, 383 Costco, 157, 522 Courtaulds Textiles PLC, 468 Crane Valves, 237 Credit Suisse, 536 Cummins, 365 CyberOptics, 91–92 D Daelim, 377 Daewoo Group, 64, 149 Dai-Ichi Kangyo Bank, 513 Dai-ichi Mutual Life, 139 Daimler, 323, 324, 337, 345, 466 Daimler-Benz, 192, 399, 422 DaimlerChrysler, 323, 533 Dairy Queen, 321 Daiwa Securities, 255 Dannon, 486 Danone SA, 156, 588 Daslu, 147 Dell Computer, 64, 143, 158, 189, 204, 291, 409, 491, 500, 505, 559 Delphi, 291 Delta Air Lines, 226, 388, 393 Delta Products, 202 Denso, 510 Deutsche Bank, 96, 241, 255 Deutsche Telekom, 350 DHL Worldwide, 340 Diageo PLC, 341 Diane Von Furstenberg Cosmetics, 374 Dillard’s, 492 Disney Channel, 327–328, 344, 345 Disneyland, 98–100, 255, 327, 328, 337, 340–342, 344, 379, 433, 509, 515 Disney Stores, 344, 345 Disney Studios, 327, 328, 344 Disney World, 344 Dnata, 358 Dnata Singapore, 358 Dofasco, 237 Dom Pérignon, 224, 355, 360, 367 Donnelly Corp., 506 Doosan Infracore, 201 Dove, 487 Dow Chemical, 75, 377, 392, 396, 421 Dow Jones & Company, 367 DreamWorks Animation, 109 DSM Group NV, 402 Dubai International Capital, 195 Dun & Bradstreet, 526 Dunes Hotel and Casino, 457 Dunkin’ Donuts, 375 Dunlop, 31 Dunnhumby, 522 DuPont, 427, 516 Durawool, 148 Dutch East India Company, 31 E East Dawning, 168 eBay, 80, 191, 420, 495 Economist, The, 247 Eddie Bauer, 479 Electricity Supply Board International, 377 Electrolux, 291, 324, 325 Eli Lilly, 190 Emirates, 500, 579 Emirates Airline, 270, 358 Emirates Group, 358 Emirates Palace Hotel, Dubai, 37 Energy Information Administration, 104 Enron, 93–94, 144 Z03_GRIF8218_08_SE_CIDX.indd 610 Environmental Defense Fund, 398 ERA Mining Machinery Ltd, 95 Ericsson, 26, 261, 563 ESPN, 344, 345 ESPN Asia, 328 ESPN Classic Sport Europe, 328 ESPN International, 328 ESPN Latin America, 328 Estée Lauder, 484 Euro Disney, 327 European Aeronautic Defense & Space, 195 European Association of Aerospace Industries, 118 European Bank for Reconstruction and Development, 215 European Central Bank, 209, 308 European Court of Justice, 80, 305 European Investment Bank, 172 Excel Cigna Seguradora, 390 Eximbank of the United States, 377 Export-Import Bank of the United States ­(Eximbank), 534 Express, 467 Exxon Mobil, 37, 172–173, 391, 397, 414, 500, 587 F F Ad Müller Söhne, 336 Facebook, 191, 194, 344, 495 Federal Express, 340, 377, 403 Federalist Papers, 161 Federal Reserve Board, 254 Ferrari, 505 Fiat, 401, 505, 531 Finnish Cable Works, 342 Finnish Rubber Works, 342 Firestone, 375, 432 First Auto Works Group (FAW), 331 First International, 189 Flat Island Company, 555 Fletcher Challenge Ltd., 377 Flextronics, 258 FloraHolland, 177–178 Fonterra Corporation, 401 Forbes, 465 Ford Motor Company, 204, 226, 228, 234, 272, 299, 335, 358, 359, 363, 402, 421, 422, 428, 429, 432, 510, 548, 571 Foreign Commercial Service, 492–493, 526 ForestEthics, 398 Forest Stewardship Council, 398 Fortune, 465 Fortune Brand, 278 Forum Energy PLC, 74, 104, 105 Founder, 322 Foxconn, 143, 559 France Telecom, 116 Fred Olsen Energy Company, 174 Freeport McMoRan, 85 Fresh & Easy, 522 Friedrich Krupp GmbH, 377 Fuji, 388, 390, 394, 400 Fujitsu, 89, 403 Fuji-Xerox, 518 Fukusuke Corporation, 531 G Galeries Lafayette, 184 Gap Inc., 148, 468, 500, 507 Gazprom, 76 Genentech, 397 General Electric (GE), 87, 90, 150, 291, 331, 345, 377, 479, 516, 572 General Electric Corporation, 395, 400 General Mills, 299, 387, 390, 391, 395, 402, 403 General Motors, 90, 204, 228, 241, 272, 299, 331, 358, 359, 379, 392, 396, 397, 400, 401, 422, 427, 429, 441–442, 507, 537, 543 General Motors Import & Distribution Company Ltd., 537 Gerber, 480 Ghirardelli Chocolate Company, 273 Gibson, 485 Giro Sport Design, 114 Givenchy, 355 Glasbau Hahn, 336 GlaxoSmithKline, 374, 433–434 Glencore Xstrata PLC, 532 Global Witness, 163 Golden Pass Products LLC, 391 Goldman Sachs, 253, 545 GOME, 368 Goodyear, 361 Google, 79, 80, 358, 420, 495, 555 Google Ireland Holdings, 555 Google Ireland Limited, 555 Google Netherlands Holdings, 555 Government of Singapore Investment Corporation, 195 Grameen Bank, 588 Grameen Group, 405 Grameen Telecom, 588 Grand Metropolitan, 341 Groupe Danone SA, 399–400, 405–406 Grupo Herdez, 84–85 Grupo Luksics, 337 Grupo Modelo SA, 479, 481 Guinness, 341 Gulf and Western, 345 H Halliburton, 166, 564 Hallmark, 253 Hangzhou Wahaha, 405–406 HanseNet, 351 Hardy’s, 512 Harley-Davidson, 264, 485 Harrod’s, 195, 474 Harvard Business School, 187, 191, 340, 468, 476, 584 HBO, 480 Heathrow Airport, 241 Heineken, 373, 374, 381–382, 504 Hennes & Mauritz, 148 Hennessy, 355 Hermès, 80 Hermitage Capital, 84 Hewlett-Packard, 64, 143, 149, 187, 189, 204, 421, 509, 544, 577 Hilton Hotels, 33, 376, 580 Hindustan Lever, 422–423 Hindustan Unilever, 548 Hitachi, 368, 402 H&M, 500 Hoffmann-LaRoche, 123 Holcim, 546 Hollister Co., 347, 359 Home Depot, 152, 368, 522 Home Furnishings, Inc., 405 Home Way, 368 Honda, 30, 104, 204, 331, 421, 465, 466, 506–507, 538, 559, 572 Hong Kong Disneyland, 328, 337 Hon Hai Precision Industry Co., 143, 189, 202, 258 Honolulu Airport, 226 Hoover, 522 Household Finance, 255 HSBC Holdings, 195 Huawei, 261–263 Hudson’s Bay Company, 31 Hui Yuan, 405 Hunan Magic Power Industrial Company, 321 Husky Oil, 166 Hutchinson Whampoa, 261 06/03/14 9:52 PM Find more at http://www.downloadslide.com COMPANY index    611  Hyatt Corporation, 153 Hycrete Inc., 365 Hynix, 191, 337, 347 Hyundai Group, 64, 331, 347, 367, 377 I IBM, 89, 123, 127, 163, 225, 226, 363, 377, 378, 409, 447, 458, 487, 513, 551–552, 564 IESE Business School, 29 IGB Eletronica SA, 79 IHOP, 418 IKEA, 201, 321, 333, 334–335, 337, 398, 461–462 IMAX, 389 Imperial Chemical Industries PLC, 469 Indian Rare Earths Ltd., 276 Inditex, 148, 499 Indo-Rama Synthetics, 536–537 Industrial Development Agency Ireland, 554–555 Infiniti, 420 Ingersoll-Rand, 201 Inland Revenue, 551 Institutes of Chartered Accountants, 93 Intel, 64, 187, 191, 337, 510, 564 Inter-American Development Bank, 214 International Bank for Reconstruction and ­Development, 213, 232 International Computers, Ltd (ICL), 403 International Development Association (IDA), 213, 214 Internationale Vine of Latvia, 531 International Finance Corporation (IFC), 213, 214, 377 International Labor Organization, 468 International Monetary Fund (IMF), 75, 104, 196, 213, 215, 299, 538 International Olympic Committee (IOC), 27, 33 International Organization for Standardization (ISO), 516 International Red Cross, 33, 163 International Trade Administration (ITA), 281 Intimate Brands, 468 ITT, 345 J J Crew, 484 Jaguar, 226, 510 Jaguar Land Rover, 383 JAL, 500 Japan Airlines, 226, 390, 393, 525 Japanese Coast Guard, 104 Japan Marketing Services, 492 Jardine Matheson Holdings, Ltd., 31, 210 J.C Penney, 92, 376, 509 Jiangsu Five Star Appliance Co., 379 Johnson Controls, 403, 507, 510 Johnson & Johnson, 471, 572 Jovan, 374 Joyo.com, 420 JPMorgan Chase, 241, 249, 361 J Sainsbury, 195 JVC, 204 K Kal Kan, 567 Kawasaki, 390, 400 KBR, 377 Kellogg’s, 387, 391–392 Kentucky Economic Development Finance ­Authority, 202 Kenworth, 365 Kenya Power & Lighting (KP&L), 431 KFC, 117–118, 167–169, 201, 375, 493 Kia Motors, 278, 358, 473 Kingfisher, 398 Kirk Forest Products, 237 Z03_GRIF8218_08_SE_CIDX.indd 611 Kitchen Aid, 324 KLM, 393, 525 Kodak, 388, 390, 394, 416, 493 Koenig & Bauer, 57 Kohl’s, 346 Komatsu, 190, 199 Korean Airlines (KAL), 131–132, 393 Korea Stock Exchange, 412 Kraft, 32, 225, 335, 380 Kroger, 205, 491 Kugler-Womako, 57 Kuwait Oil, 482 Kyoto University, 124 L Lafarge Surma Cement Ltd., 214 Land Rover, 226 Lands’ End, 476 Lee Hung Fat Garment Factory, 30 Legoland, 328 Lenovo, 261, 322, 409–410, 414, 417 Lever Brothers, 471 Levi Strauss, 246–247, 487 Lexus, 547 LG (formerly Lucky-Goldstar), 64 Limited, The, 468 Limited Brands, 398, 467 Lionel Train Company, 117 Lipton, 395 Liz Claiborne, 468 Lloyd’s of London, 33, 101, 211 London Stock Exchange, 195 L’Oréal, 80, 374, 471 Louvre, 219 LTV, 345 Lufthansa, 376, 393, 516 LVMH Moët Hennessy Louis Vuitton, 80, 321, 355, 360, 367, 382 Lynas Corp., 276 M M H Alshaya Company, 418 Macclesfield Bank, 103 Macy’s, 492, 508 Madame Tussauds’ Wax Museum, 109 Maersk Line, 502 Magna International, 507 Manchester City, Premier League team, 37 Mantrust, 423 Manufacturing Marvel, 511 Marc Rich & Co., 532 Marks & Spencer, 205, 275, 346, 467, 468, 492 Marriott International, 33, 393 Mars, Inc., 481 Marvel Comics, 481 MAS Holdings Ltd., 467, 468 Massimo Dutti, 499 MasterCard, 530 Mast Industries, 467, 468 Matsushita Electric, 191, 255, 335, 394, 421, 577 Mattel, 393 Max Hospital, 447 Maxus Energy Corporation, 380 Mazda, 104, 272, 402, 421, 449, 482, 509 McDonald’s Corporation, 27, 33, 98–100, 123, 136, 157, 167–169, 199, 247, 327, 330, 344, 361, 375–376, 487, 493, 514, 527, 537 McKinsey & Company, 476 Médecins Sans Frontières, 163 Mengui, 405 Mercedes-Benz, 224, 329, 332, 337, 359, 378, 485, 538, 564 Merck, 158–159, 362, 484 Merrill Lynch, 253, 255, 545, 580 MetLife, 139 Metro, 328, 522 Michelin, 432, 503 Microsoft, 202, 336, 555 Midrex Technologies Inc., 76 Millennium Pharmaceuticals, 394 Ministry of Economy, Trade, and Industry, 266–267 Ministry of Finance, 125 Ministry of International Trade and Industry (MITI), 266–267 Minnesota Mining & Manufacturing (3M), 577 Minolta, 368, 388 Minute Maid, 143 Mitac International, 189 Mitsubishi, 158, 204, 390, 394, 400, 493, 532 Mittelstand, 57 Mobil Oil, 162, 587 Molycorp, 276 Monsanto, 190 Montblanc, 472 Moody’s, 390, 526 Morgan Stanley, 195, 253 MorphoSys, 394 Motel 30, 344 Motorola, 90, 148, 151, 261, 350, 409, 572 Movistar, 350 MTV, 135 MultiChoice, 110 Multilateral Investment Guarantee Agency (MIGA), 213, 214 N Naaldwijk, 177 Nanfang South China Motor Corporation, 399 Nasdaq Stock Market, 195 National Assembly of Vietnam, 104 National Bank of Ethiopia, 277 National Basketball Association, 485 National Football League, 492 National Geographic, 495 National Hockey League, 237 National Institute for Mental Health and ­Neurosciences (NIMHANS), 447 National Institute of Industrial Property, 79 National Resource Defense Council, 398 National Semiconductor, 187 National Trade Data Bank, 493 NatSteel, 383 NBC, 27 Nestlé Corporation, 87, 143, 144, 156, 202, 254, 335, 387, 390, 391, 395, 402, 403, 421, 425, 471, 486, 502, 564 Nestlé-Rowntree, 425 New Balance, 399 New United Motor Manufacturing, Inc (NUMMI), 392, 396 New York Stock Exchange (NYSE), 97 New York Times, 148 Nike, 123, 363, 376, 398, 467, 472, 474, 475, 480 Nikon, 346, 388 Nintendo Company, 372 Nippon Steel, 291 Nippon Telephone and Telegraph, 394 Nissan Motor Corporation, 104, 149, 269, 282, 378, 418, 420, 465–467, 509, 538 Nokia Corporation, 64, 201, 341, 342 Nomura Securities, 253, 545, 567 Nordstrom, 508 Novica, 495–496 Nucor Corp., 75 Nucor Steel, 589–591 O OAO AvtoVAZ, 401 OAO Lebedyansky, 226, 379 OAO Yukos, 83 06/03/14 9:52 PM Find more at http://www.downloadslide.com 612    COMPANY index Occupational Safety and Health Administration (OSHA), 166 Office of the U.S Trade Representative, 285 Old Navy, 473 Oleg Cassini, 374 Olivetti, 402 Olympus, 160 Omnicom, 358 OMX AB, 195 ONGC Videsh, 104 Organisation for Economic Cooperation and ­Development (OECD), 44 Organization of Petroleum Exporting Countries (OPEC), 220–221 Oriental Land Company, 327 Oxfam, 280 P P F Chang, 418 Pace, Inc., 365 Pacific Enterprises, Inc., 405 Pan Am, 389 Panasonic, 27, 28, 204, 343 Pantene, 471 Paramount Pictures, 392, 393 Parc Asterix, 328 Paris Air Show, 489 Patagonia, 157, 159 Peerless Manufacturing, 506 Pemex, 482 Pentagon, 340 People’s Liberation Army (PLA), 261 PepsiCo, 36, 373, 374, 379, 391, 395, 427, 480, 493, 544, 572 PETRONAS of Malaysia, 172 Petron Corporation, 379 Pfizer, 537 Philadelphia Exchange, 245 Philip Morris, 489 Philips, 97, 116, 149, 500, 564 Philips Electronics, 516 Philips Industries, 324 Phillips Petroleum, 577 Pilkington PLC, 85 Pillsbury, 118 Pinkberry, 418 Pioneer Corporation, 343 Pirelli SpA, 291, 344, 356 Pixar, 345 Pizza Hut, 167–169, 375 PKL of Switzerland, 531 Plant-Tech Concrete Solutions, 101 Plaza Hotel, 219 Poland Springs, 425 Polar SA, 324 Porsche, 192, 195, 501 Pottery Barn, 418 PPG, 396 Prada, 321 PricewaterhouseCooper, 513 Procter & Gamble (P&G), 36, 114, 153, 190, 202, 357, 469, 471, 479–480, 491–492, 537 ProMark Associates, 365 ProQuest, 136 Proview Technology, 79 Province of Ontario, 255 Prudential Insurance, 139, 571 Publicis Groupe SA, 358 Q Qantas, 393, 514, 525 Qatar Investment Authority, 195 Qatar Petroleum International, 391 Quaker Oats, 567 Quality Coils, 580 Z03_GRIF8218_08_SE_CIDX.indd 612 R R J Reynolds, 489 Raba, 400 Rainforest Alliance, 398 Ralph Lauren, 468 Range Rover, 510 Raychem, 572 Regal Springs Tilapia, 157 Renault, 299, 465–466 Resteaze, Inc., 404 Retail Council of Canada, 237 Rewe Zentral AG, 305 Rijnsburg, 177 Rio Tinto, 390, 436 RMC Group, 379 Rockefeller Center, 234 Rolex, 321, 346, 472, 474, 501, 535, 536 Rolls-Royce, 79 Round Island One Ltd., 555 Royal Ahold NV, 144 Royal Dutch Shell, 31, 52, 75, 99, 152, 161, 163, 174, 377, 424, 455–456, 500 Rubbermaid, 402 S Sadara Chemical Company, 392 Safeway, 491 Saft Groupe SA, 403 Saks Fifth Avenue, 372, 474, 508, 535–536 Samhi Hotels Pvt Ltd., 393 Samsung Group, 27, 28, 36, 64, 191, 202, 262, 291, 299, 337, 342, 378, 396, 409, 412, 541 Sanlu, 401 Sanrio, 253 São Paulo, 350 Sara Lee, 468 SAS, 393 Saturn, 396 Satyam Computer Services, 144 Saudi Arabian Oil Company, 392 Saudi Aramco, 377 Schlumberger, 565 Seagate Technology, 291 Sears, 507 Securities and Exchange Commission (SEC), 150 7–Eleven, 432 Shanghai Automotive Industry Corporation (SAIC), 87, 396, 397 Sharp Corporation, 337, 392 Sherritt Corporation, 85 Shin Corporation, 195 Showa Shell Seikyu KK, 424 Siam Cement, 361 Siemens, 150, 162, 237, 261, 299, 361, 400, 458, 563 SI Group, 148 Singapore Airlines, 36, 344, 393, 525, 534 Six Flags, 339 Sky Television, 403 SlimFast Foods Company, 469 Slimline, Ltd., 467–468 Sofitel, 344 Sony, 33, 64, 143, 158, 191, 195, 204, 245, 291, 335, 343, 368, 390, 392, 409, 450, 453, 459, 500, 505, 545, 577 Sony Records, 505 Sorbonne, 224 Source Perrier SA, 517 South African Airways, 393 Sports Illustrated, 201 Ssangyong Oil Refining Company, 64, 379 Starbucks, 92, 201, 359, 361, 418 State Trading Corporation of India, 531 Ste Suisse Microelectronique et d’Horlogerie SA (SMH), 473–474, 492 Stetson, 485 Subway, 321 Suning, 368 Suzuki, 401 Swatch, 474 Swiss National Bank, 209 Symantec, 261 Synclayer, 45 Sysco, 157 T Target, 270–271, 346, 472, 474, 507 Tata Consultancy Services, 377, 382 Tata Global Beverages, 383 Tata Group, 382–383, 471 Tata Motors, 226 Tate & Lyle, 542–543 Tatung, 189 Telebras, 350 Telecom Italia, 351 Telefónica de Espa, 349–350 Telefónica del Peru, 350 Telefónica SA, 349–351, 358 Telefonos de Mexico, 54 Telemundo, 114 Temasek Holdings of Singapore, 195 Terra Networks SA, 350 Tesco, 148, 205, 522 Teva Pharmaceutical Industries, 226, 362 Texaco, 151, 587 Texas Instruments (TI), 92, 337, 417, 519 Texas Roadhouse, 418 Textron, 345 TF1, 276 Thomas Cook, 211 Thomas J Lipton Co., 391 3Com Communications, 261 Tianjin Datian W Group, 403 Tiffany & Co., 80 Timberland, 157 Time, 201 Time Warner, 328 Timex, 347, 472, 473, 474, 508 TNT, 340 Tokyo Auto Mart, 489 Tokyo Disneyland, 327, 328, 337, 374 Tokyo Stock Exchange, 139 Tokyo University, 124 Toll Dnata Airport Services (TDAS), 358 Toll Holdings, 358 Tommy Hilfiger, 468 Toon Disney, 328 Toshiba, 143, 191, 204, 265–266, 409, 458 Total, 99, 116, 195 Touchstone, 345 Toyota Motor Corporation, 44–45, 104, 125, 190, 199, 201, 202, 204, 255, 269, 272, 282–283, 299, 331, 358, 362, 392, 394, 396, 421–422, 427, 441–442, 465, 466, 478, 479, 482, 487, 489, 492, 507, 509, 538, 547–548, 560, 580 Toyota Tsusho Corporation, 276 Toys ‘R’ Us, 334, 481, 582 Trader Joe’s, 522 Transcom Worldwide SA, 377 Transparency International, 172 TRESemme, 471 Tri-Union Seafood, 423 Tropicana, 143 TRW Steering Systems, 510 Tsinghua Tongfang, 322 Turkish Airlines, 393 20th Century Fox, 109, 393 Twining & Company, 210 Twitter, 191 Tyco, 94, 144 Tyson Foods, 329–330 06/03/14 9:52 PM Find more at http://www.downloadslide.com COMPANY index    613  U Umicore, 158 Unilever, 31, 36, 190, 202, 299, 335, 357, 391, 399, 422–423, 468–469, 471–472, 492 Unilever N.V., 471 Unilever PLC, 471 United Airlines, 388–389, 393, 500, 525, 582 United Distillers PLC, 425 United Nations General Assembly, 53 U.S Air, 389 U.S Central Intelligence Agency, 74 U.S Court of Appeals, 163 U.S Customs Service, 271, 285 U.S Department of Commerce, 273, 281, 489, 492, 526 U.S Department of Defense, 323 U.S Department of Energy, 104, 166 U.S Environmental Protection Agency (EPA), 158 U.S Federal Reserve Bank, 209, 217, 228 U.S Food and Drug Administration (FDA), 84–85, 90–91, 274 U.S Internal Revenue Service (IRS), 96, 552, 555, 587 U.S International Trade Commission (ITC), 281, 286 U.S Justice Department, 150 U.S Small Business Association, 486 U.S Steel, 76, 588–589 U.S Supreme Court, 163 U.S Tax Court, 587 U.S Treasury, 209, 228 United Steelworkers, 283 Universal Studios, 339 Univision, 114 Upjohn and Pharmacia, 567 Z03_GRIF8218_08_SE_CIDX.indd 613 Urban Outfitters, 500, 513 UTV Software Communications, 109 V Vale, 276, 436 Vale Canada, Ltd., 360 Van Camp Seafood, 423 Vectis, 388 Verizon, 567 Veuve Clicquot, 355 Victoria’s Secret, 376, 418, 467, 468 VISA, 530 Vizio, 64, 291, 347 Vodafone, 157 Voestalpine, 76 Volkswagen, 195, 262, 331, 358 Volvo, 30 Vox Africa, 110 W Wall Street Journal, 367 Walmart, 148, 205, 275, 398, 474, 481, 510, 522 Walt Disney Company, 33, 109, 255, 327–328, 336–341, 344–345, 374, 379, 403, 433, 481, 509, 537, 546 Walt Disney World, 327 Wanda Cinema Line, 389 Waterford Wedgewood, 346 Weyerhaeuser, 397 Wharton, 468 Whirlpool Corporation, 149, 237, 323–325, 356, 477, 567 Whistler Radar, 433 Whole Foods, 522 Wickes, 152 Wicresoft, 322 Williams-Sonoma, 418 World Bank Group, 53, 58, 74, 101, 104, 150, 172–173, 213–215, 232, 254–255, 299, 377, 538 WorldCom, 94, 144 World Health Organization, 144 World Intellectual Property Organization (WIPO), 80 World Trade Center, 340 World Trade Organization (WTO), 28, 37, 274, 309, 514 World Wildlife Foundation, 157 World Wildlife Fund, 398 WPP, 358 X Xerox, 160, 187, 518 Xi’an Dnata Aviation Services Co Ltd., 358 Xstrata, 158, 436–437 Y Yafod International, 475 Yahoo! Inc., 80 Yale University, 217, 251, 310 Yamaha, 91–92 Yamaichi Securities, 580 Yili, 27 Yoplait, 486 YouTube, 109, 139 YPF SA, 380 Yum Brands, 167–169, 258 Z Zara, 499–501, 513 Zojirushi, 45 06/03/14 9:52 PM Find more at http://www.downloadslide.com Subject Index A absolute advantage, 180–181 acceptance, 133, 528 accommodative stance, 157 Accord on Fire and Building, 165 accounting See also balance of payments (BOP) accounting system capital markets and, impact on, 97–98 Chinese, 95 control, systems for, 432 environment of, 92–98 reserves of, use of, 96–97 Accounting Standards Board, 93 accounts balance of, 225 capital, 225–226 clearinghouse, 532 official reserves, 226–227 opening, 527 records of, 223–225 acculturation, 136, 569, 569f ACFTU See All-China Federation of Trade Unions (ACFTU) acquisition strategy, 379–380 adaptive behaviors, 111 adjustable peg, 216 administrative distance, 29 ad valorem tariffs, 270 advanced payments, 526–527 advance pricing agreement (APA), 552 advantage absolute, 180 comparative, 181–184 competitive, 191, 202, 391 home field, 363 internalization, 200, 361–362 location, 200, 360–361 ownership, 199–200, 336, 360 advertising foreign, 487 global, 487 local, 487 medium of, 486 message of, 485 promotion and, 485–487 advised letter of credit, 529 affiliated banks, 253 Africa marketplaces in, 68 regional trading blocs, initiatives for establishing, 315–316 AFTA See ASEAN Free Trade Area (AFTA) age, attitudes towards, 124 agglomeration economies, 194 aggressive goal behaviors, 134 agreeableness, 443 Agreement on Trade-Related Aspects of Intellectual Property Rights, 296 agreements advance pricing, 552 boundaries of, 373 duration of, 373–374 free trade, 311–315 international licensing, boundaries of, 373 Jamaica, 218 shared management, 399 Trade-Related Investment Measures, 296 Alien Tort Claims Act, 163, 164 All-China Federation of Trade Unions (ACFTU), 559 Alliance for Bangladesh Worker Safety, 165 alliances See also international strategic alliances comprehensive, 391–392 financial, 393 importance of, 398 learning potential of, 396 marketing, 392–393 OneWorld, 393 partners with, relative safeness of, 395–396 production, 392 research & development, 394 SkyTeam, 393 strategic, 388 alternatives evaluating, 457 foreign markets, 356–359 identifying, 456 to international strategic management, 332–336 selecting, 457 American Institute of Certified Public Accountants, 93 American Recovery and Reinvestment Act, 276, 286, 318 analysis of foreign markets, 356–360 public choice, 267–269 SWOT, 338–341 Andean Community, 313 Anglo-Saxon approach, 161 Anti-Bribery Convention of the Organization for Economic Cooperation and Development, 163 antidumping regulations, 282–283 ANZCERTA See Australia–New Zealand Closer Economic Relations Trade Agreement ­(ANZCERTA) APA See advance pricing agreement (APA) APEC See Asia-Pacific Economic Cooperation (APEC) arbitrage, 246 covered-interest, 250 geographic, 249 of goods, 246–247 markets, 246–251 of money, 247–251 three-point, 249 two-point, 249 arbitrageurs, 243 arbitration, 88–89 area, organizational design of, 413–414 arguments industry-level, 263–266 infant industry, 264 national defense, 263 Arms Control Export Act, 85 arm’s length test, 551 ASEAN See Association of Southeast Asian Nations (ASEAN) ASEAN Free Trade Area (AFTA), 314 Asia corporate social responsibility, approach to, 161 marketplaces in, 61–67 Asian contagion, 221 Asia-Pacific Economic Cooperation (APEC), 315 Asia-Pacific region, free trade agreements in, 313–315 assets foreign, 33, 226 offsetting, 536–537 ownership of, 226 revaluation of, 95–96 valuation of, 95–96 assigned arrangement, 400 Association of Southeast Asian Nations (ASEAN), 105, 314–315 attitudes, 123–125 about education, 124–125 about time, 124 culture and, 123–125, 445–446 defined, 445 towards age, 124 towards status, 125 Australia marketplace, 61–63 Australia–New Zealand Closer Economic Relations Trade Agreement (ANZCERTA), 314 authoritarianism, 445 autonomous leadership, 454 autonomy, loss of, 402–403 Auto Pact, 228 B backtranslation, 118 Baker Plan, 221 balance of payments (BOP) accounting system, 210, 222–232, 246 capital account in, 225–226 current account records in, 223–225 deficits in, 230–232 errors and omissions in, 227 major components of, 223–227 official reserves account in, 226–227 standards for, 225 surpluses and, 230–232 United States, 234–235, in 227–230 balances on merchandise, 224 official settlements, 231 on services, 224 of working capital, 540–541 balance sheet expatriate, 575, 576f hedge, 537 banker’s acceptance, 528 banks/banking affiliated, 253 branch, 253 commercial, 253 foreign exchange market, role in, 241–244 international, 252–253 investment, 253 regional development, 214–215 subsidiary, 253 barter, 531 beggar-thy-neighbor policies, 213 behaviors adaptive, 111 aggressive goal, 134 ethical, 144 individual, 442–448 international control, aspects of, 433–434 learned, 110 passive goal, 134 unethical, 144 benchmarking, 518 benefits packages, 574–576 Benelux nations, 300 Berne Convention for the Protection of Literary and Artistic Works, 90 “Big Five” personality traits, 442–444 Big Ten countries, 38 bilateral netting, 541 bill of exchange, 527 bill of lading, 527 board of managers, 582 boards of directors, 420–421 Bollywood, 109–110 Bolsa Família, 72–73 bond markets, 254–255 bonds, 254 BOP See balance of payments (BOP) accounting system border tax adjustments (BTAs), 286 B-O-T project, 377 614 Z04_GRIF8218_08_SE_SIDX.indd 614 06/03/14 9:53 PM Find more at http://www.downloadslide.com Subject index    615  boundaryless global economy, 29 bounded rationality, 456 BPO See business process outsourcing (BPO) Brady Plan, 221 branch banks, 253 brand names, 481 Bretton Woods system, 213–218 dollar-based gold standard and, 216 end of, 216–218 International Bank for Reconstruction and Development and, 213–215 International Monetary Fund and, 215 restoring, 222 Bribery Act, 164 BRIC countries, 38 brokers, 370 brown goods, 323 BSA See Business Software Alliance (BSA) BTAs See border tax adjustments (BTAs) Buddhism, 120 budgeting for international capital, 543–545 bunkering, 174 bureaucratic laws, 83–84 business See international business business activity, international, 31–34 business process outsourcing (BPO), 377, 447 Business Software Alliance (BSA), 90, 321 business strategies for international marketing, 472–474 for international strategic management, 345–347 buy-back, 531 C CAFTA-DR See Central America-Dominican Republic Free Trade Agreement (CAFTA-DR) Cairns Group, 295 call centers, 447 call option, 245 Canada marketplaces, 52–53 Canadian dollar, 237–238 CAP See Common Agricultural Policy (CAP) capacity planning, 513 capital export of the services of, 224 flight, 52, 227 import of the services of, 225 international, 543–545 international investment, 545–552 working, 540–543 capital account, 225–226 capital budgeting, 543–545 capitalization, 97 capital markets, 97–98 Caribbean Basin Initiative (CBI), 311 Caribbean Community and Common Market, 311 Caribbean marketplaces, 54 carry trade, 252 Cassis de Dijon case, 303 Caterpillar Fundamental English (CFE), 118 Cayman Islands, 550–551, 551m CBI See Caribbean Basin Initiative (CBI) CCP See Chinese Communist Party (CCP) CCTs See conditional cash transfers (CCTs) CEMAC See Economic and Monetary Community of Central Africa (CEMAC) Central America-Dominican Republic Free Trade Agreement (CAFTA-DR), 311 Central America marketplaces, 54 Central American Common Market, 311 Central Asia marketplaces, 58–60 centralization, 420, 563 centralized cash management, 540 Central Powers, 211 CEO See chief executive officer (CEO) certificates, 529 CFC See controlled foreign corporation (CFC) Z04_GRIF8218_08_SE_SIDX.indd 615 CFE See Caterpillar Fundamental English (CFE) CFO See chief financial officer (CFO) chaebol, 64, 215, 382, 412 changing circumstances, 402–403 channel length, 491 channels of distribution, 491–493 charismatic leadership, 454 chief executive officer (CEO), 94, 130, 331, 409, 511 chief financial officer (CFO), 94 China accounting in, 95 Japanese competing in markets in, 331 manufacturing in, 258–259 marketplace in, 65–66 Chinese Communist Party (CCP), 401 Christianity, 120 Christian theology, 123 CIS See Commonwealth of Independent States (CIS) civilization, cradle of, 68 civil laws, 82 civil society, 161 classical country-based trade theories, 179–186 absolute advantage, 180–181 comparative advantage, 181–184 mercantilism, 179–180 relative factor endowments, 185–187 Clean Water Act, 166 clearinghouse accounts, 532 cluster/clustering, 126, 194 co-decision procedure, 303 code of ethics, 149–150 codetermination, 582–583 cohesion funds, 307 collective bargaining, 582 collectivism, 129 comity, principle of, 88 commercial banking, 253 commercial customers, 241 commitment, organizational, 446 commodity chips, 191 Common Agricultural Policy (CAP), 302 common laws, 82 common markets, 298, 305–309 Commonwealth of Independent States (CIS), 60 communication, 118–120 culture and, 118–120 gift-giving as form of, 119–120 hospitality as form of, 119–120 nonverbal, 118–119 communism, 401 comparative advantage, 181–184 with money, 182–184 theory of, 181 comparative labor relations, 581–582 compatibility of partners, 395 compensation, 573–577 determining, 373 equity in, 576–577 for expatriate managers, 573–574 in international business, 573–577 for nonmanagerial employees, 580–581 competition language as, weapon as, 114–116 within markets, 358 national, 110 with rivals, 36 competitive advantage exploitation of, 202 international strategic alliances and, 391 theory of national, 191 compliance ethical, 158 legal, 157–158 managing, 157–159 social responsibility and, managing, 157–159 compound tariffs, 270 comprehensive alliances, 391–392 conditional cash transfers (CCTs), 72 conditions demand, 191 factor, 191 confirmed letter of credit, 529 confiscation, 86 conflict diamonds, 163 conflicts of importation, 275–276 over distribution of earnings, 402 conglomerates, 345 conscientiousness, 443 Conservation Alliance, 159 constraints establishing, 373 of foreign ownership, 86–87 contemporary theories of leadership, 451–454 Continental European approach, 161–162 contract, 33, 376 control accounting, systems for, 432 centralization of, 563 costs and, trade-offs between, 505 decentralization of, 563 defined, 422 essential techniques for, 432–433 external locus of, 444 framework for, 342 generic organizational, 425 internal locus of, 444 international, 428–431, 433–434 international managerial staffing needs and, 563 international strategic management, framework for, 342 locus of, 444 managing, 428–434 numerical export, 273–274 operations, 427–428 organizational, 425–427 organizational design, function in, 422–434 performance, standards for, 428 planning process, 425 regulatory, 277 resistance to, 433–434 responsibility center, 425 statistical process, 517 strategic, 422–425 controlled foreign corporation (CFC), 549 convergence criteria, 307 conversion costs, 541–542 convertible currencies, 216, 243 cooperation international, 290–316 international corporate, 388–389 coordination, 421–422 core competencies, 36 corollary approach, 411 corporate cooperation, 388–389 corporate culture, 151 corporate social audit, 160 corporate social responsibility (CSR), 151–156 Anglo-Saxon approach to, 161 Asian approach to, 161 Continental European approach to, 161–162 cross-cultural contexts of, 151–156 economic mission and, 152 general social welfare and, 154 international contexts of, 151–156 managing, 161–162 natural environment and, 152–153 sustainability and, 152–153 corporate strategy, 343–345 correspondent relationship, 252 cost-of-living allowance, 574 06/03/14 9:53 PM Find more at http://www.downloadslide.com 616    Subject index costs control and, trade-offs between, 505 conversion, 541–542 flexibility and, trade-off between, 506–507 of foreign markets, 359 opportunity, 181 production, 201 risks and, trade-offs between, 505–506 transaction, 199 cotton subsidies, 280 Council of the European Union, 301–302 counterpurchase, 531 countertrade, 530–533, 532f countervailing duty (CVD), 282 countries Big Ten, 38 BRIC, 38 developing, 53 funds, 255 home, 32 host, 32 location, influence on decision about, 507–510 lower-income, 53 newly industrialized, 63 country similarity theory, 189 Country Studies, 136 covered-interest arbitrage, 250 cradle of civilization, 68 credit checking, 526 letter of, 529–530, 530f credit cards, 530 cross-cultural literacy, 136 cross-cultural teams, managing, 459 cross rate, 249 CSR See corporate social responsibility (CSR) cultural cluster approach, 126 cultural distance, 29 cultural multinational corporations, 87 culture attitudes across, 123–125, 445–446 characteristics of, 110–111 communication and, 118–120 convergence of, 135 corporate, 151 cultural cluster approach to, 126 defined, 110 descriptive model across, 457 dimensions of, 127–135 elements of, 111–125 high-context, 125–126 international management, differences in, 135–137 Internet, impact on, 110 interrelated, 111 in Japan, 112 language and, 114–118 low-context, 125–126 motivational processes across, 449 need-based models across, 449–450 new, understanding, 135–136 normative model across, 456–457 perception across, 446–447 personality differences across, 442–445 process-based models across, 450 product policy, influences of, 479–480 reinforcement model across, 451 religion and, 120–123 role of, 108–137 shared, 111 shock of, 569 social responsibility and, 159 social structure of, 111–114 stress across, 447 values across, 123–125, 448–449 culturegrams, 136 currency See also money choice of, 526 Z04_GRIF8218_08_SE_SIDX.indd 616 conversion costs of, 541–542 convertible, 216, 243 foreign, 228 future, 245 global, 209–210 hard, 243 inconvertible, 244 invoicing, 52 markets, 246–251 nontariff barriers, controls as, 277 options for, 245 soft, 244 Swiss francs, 535–536 transaction, 241 value of, 243, 538, 539m current account balance, 225 current account records, 223–225 customers access to, 201 commercial, 241 mobility of, 202 organizational design for, 416 services, role in, 514 customized/customization in international marketing, 475–478 products, 479 customs union, 298 CVD See countervailing duty (CVD) cybersquatters, 80 D date draft, 528 debt crisis, 220–222 decentralization, 420, 563 decision making, 455–458 See also culture; ­decisions defined, 455 descriptive model of, 455 models of, 455–456 normative model of, 455 decisions See also decision making make-or-buy, 505 of World Trade Organization, 296–297 defensive stance, 156–157 deferral rules, 549 deflection of trade, 297 delegated arrangement, 400 demand conditions for, 191 curve for, 239 derived, 238 factors for, 201–202 demography, 43–46 in Japan, 112 demurrage, 529 deployment of resources, 337 derived demand, 238 descriptive model, 455, 457 designs See also organizational design area, 413–414 customer, 416 functional, 414–416 global matrix, 416–418 H-form, 412 M-form, 412 product, 412–413 developing countries, 53 development, 570–572 of banks, 214–215 defined, 570 economic, 202 of nonmanagerial employees, 580 sustainable, 153 deviations, responding to, 430–431 differences/differentiation, 345–346 of goods, 185, 189 in legal environments, systems of, 80–84 direct exchange rates, 239 direct exporting, 365–366 direct quote, 239 direct sales, 491 dirty float, 218 dispute resolution, 88–89 dissatisfaction of jobs, 445 distance, 29 distinctive competence, 336 distribution, 490–493 channels of, 491–493 defined, 490 of earnings, 402 exporting, issues with, 368–369 international, 490 networks for, 274–276 physical, 510 diversification related, 344 strategies for, 343 unrelated, 345 documentary collection, 527–529 Doha Round, 295 dollar-based gold standard, 216 domestically oriented laws, 84–85 domestic sales requirements, 296 Double Irish, 555 drafts date, 528 defined, 527 shift, 528, 528f sight, 528 time, 528 dual-use products, 85 dumping, 282 Dunning’s eclectic theory, 199–200 Dutch Sandwich, 555 E earnings, distribution of, 402 Eastern Europe marketplaces, 58–60 Eastern Orthodox, 120 EC See European Community (EC) eclectic theory, 199–200 economic agents, treatment of, 148–149 Economic and Monetary Community of Central Africa (CEMAC), 315 economic and monetary union (EMU), 307 Economic Community of West African States (ECOWAS), 315 economic development programs, 266 economic distance, 29 economy agglomeration, 194 development of, 202 exposure in, 537–539 Germany, growth in, 57 global, 29 integration into, 297–299 mission in, 152 multinational corporations, impact on host ­countries, 87 newly industrialized, 63 product policy, factors of, 480 restructuring of, 58 of scale, 189–190, 329 of scope, 190–191, 329 union, 298 world, 178–179 ECOWAS See Economic Community of West African States (ECOWAS) education, attitudes about, 124–125 EEC See European Economic Community (EEC) EEZ See exclusive economic zone (EEZ) electronic waste, 158 Emancipation of the Niger Delta (MEND), 174 embargo, 85, 274 06/03/14 9:53 PM Find more at http://www.downloadslide.com Subject index    617  EMC See export management company (EMC) emerging markets, 38–40 emotional stability, 443–444 employees See also nonmanagerial employees economic agents, treatment of, 148–149 organizations, treatment of, 146–148 EMS See European Monetary System (EMS) EMU See economic and monetary union (EMU) endangered species protection, 293–294 endowments, 185–187 energy green, 285–287 markets, 75–77 energy market, 75–77 environment accounting, 92–98 globalization, causes of, 37–38 legal, 79–89, 358–359 markets, 358–359 natural, 152–153 political, 37, 98–101 safety within, 143 scan of, 338–341 technological, 37–38, 89–92 equity in compensation, 576–577 ERM See exchange rate mechanism (ERM) errors and omissions, 227 ethical behavior, 144 code of ethics and guidelines for, 149–150 corporate culture and, 151 ethics training and, 150–151 managing, 149–151 organizational practices and, 151 ethical compliance, 158 ethics, 144–146 code of, 149 cross-cultural contexts of, 146–149 defined, 144, 146 international, 146–149, 162–163 Protestant, 120 training on, 150–151 ethnocentric approach, 475 ethnocentric staffing model, 564–565 euro, 307 Eurobond, 254 Eurocurrency, 254 Eurodollar market, 254 Eurodollars, 254 European Central Bank, 308 European Commission, 302 European Community (EC), 300 European Council, 301 European Court of Justice, 302–303 European Economic Area, 310 European Economic Community (EEC), 300 European Free Trade Association, 310 European Monetary System (EMS), 219 European Parliament, 302 European Union, 299–310 challenges of, 318–319 common market in, 305–309 Council of the, 301–302 European Commission of, 302 European Council of, 301 European Court of Justice of, 302–303 European Parliament of, 302 governing, 301–305 legislative process of, 303–305 lobbying, 306 evaluations, 457 e-waste, 158 exchange bill of, 527 foreign, 534–539 exchange rate mechanism (ERM), 219 exchange rates, 210 direct, 239 Z04_GRIF8218_08_SE_SIDX.indd 617 fixed, 210, 219 flexible, 218–219 indirect, 239 exclusive economic zone (EEZ), 49, 103 exit interview, 579 Exon-Florio Act, 196 expatriate managers, 573–576 benefits packages for, 574–576 compensating, 573–574 expatriates, 564 balance sheet and, 575, 576f failure of, 568 expatriation, 569–570 experience curve, 191 exploitation of competitive advantages, 202 export brokers, 370 export department, 411, 562 export/exporting, 364–370 defined, 32 direct, 365–366 distribution issues with, 368–369 financing programs for, 281 to foreign markets, 364–370 forms of, 365–367 government policies on, 367 indirect, 365 intermediaries for, 369–370 international business activity and, 32 licensing for, 529 logistical considerations for, 368 marketing concerns with, 367 of merchandise, 224 numerical controls of, 273–274 promotion and, 72 of rare earths, 275–276 of the services of capital, 224 tariffs on, 270 Export-Import Bank of the United States (Eximbank), 281 export management company (EMC), 369 Export Trade Act, 369 exposure economic, 537–539 transaction, 534–537, 536t translation, 537 expropriation, 86 external locus of control, 444 extraterritoriality, 85 extroversion, 444 F facilities international banking, 254 investments in, 506 factor conditions, 191 factor endowments, 185 factors/factoring, 527 demand, 201–202 influencing foreign direct investment, 200–202 political, 202 supply, 200–201 fair trade, 262 families nuclear, 113 social structure of, 113 FASB See U.S Financial Accounting Standards Board (FASB) FCPA See Foreign Corrupt Practices Act (FCPA) FDI See foreign direct investment (FDI) FIFO See first in, first out (FIFO) inventories filmmaking, 109–110 finances/financing exporting, programs for, 281 international, management of, 524–552 international trade, issues in, 525–534 financial alliances, 393 financial leases, 97 firms economic integration, impact on, 298–299 rivalry of, 192–193 strategy of, 192–193 structure of, 192–193 first in, first out (FIFO) inventories, 96 first-tier suppliers, 507 fixed exchange rates, 210, 219 flexibility costs and, trade-off between, 506–507 multinational, 329–330 flexible exchange rates, 218–219 flight capital, 52, 227 float, 211, 218 floating exchange rates, 218 flows of payments, without netting, 541, 541f focus strategy, 347 follow-ups, 457 foreign advertising, 487 foreign assets, 226 foreign bonds, 254 Foreign Corrupt Practices Act (FCPA), 150, 162, 164 foreign currency, 228 foreign direct investment (FDI), 31, 83, 209, 225, 291, 388 acquisition strategy for, 379–380 defined, 32, 195 factors influencing, 200–202 in foreign markets, 378–380 greenfield strategy for, 378–379 growth of, 196–197 joint ventures for, 380 United States and, 197–198 foreign exchange, 534–539 defined, 238 economic exposure and, 537–539 economics of, 238–240 rates of, 296 risks of, 534–539, 542–543 transaction exposure and, 534–537, 536t translation exposure and, 537 foreign exchange market See also foreign markets; markets banks role in, 241–244 structure of, 241–251 foreign financial assets, 33 foreign firms, laws directly against, 86–87 foreign markets See also markets alternative, 356–359 analysis of, 356–360 benefits of, 359 costs of, 359 exporting to, 364–370 foreign direct investment in, 378–380 international franchising in, 375–376 international licensing for, 370–374 mode of entry into, 360–363 risks of, 360 specialized entry modes for, 376–377 foreign ownership, constraints of, 86–87 foreign portfolio investment (FPI), 33, 195, 225 foreign-service premium, 574 Foreign Sovereign Immunities Act, 102 foreign subsidiary income, 549 foreign trade zone (FTZ), 279, 509 forum shopping, 88 forward discount, 245 forward markets, 244–246 forward premium, 245 “Four Tigers” marketplace, 63–65 FPI See foreign portfolio investment (FPI) fracking, 75–76 franchisee, 375 franchising, 33, 136 advantages of, 375–376 basic issues with, 375 defined, 375 06/03/14 9:53 PM Find more at http://www.downloadslide.com 618    Subject index franchising (continued) disadvantages of, 375–376 in foreign markets, 375–376 international, 33, 375–376 franchisor, 375 free trade, 262, 285–287 free trade agreements, 311–315 in Americas, 311–313 in Asia-Pacific region, 313–315 free trade area, 297 freight forwarders, 370 FTZ See foreign trade zone (FTZ) functional alliances, 392–394 functional organizational design, 414–416 functional skills, 563 functional strategy, 347 funds cohesion, 307 country, 255 sovereign wealth, 70, 195–196 future currency, 245 G GAAP See generally accepted accounting principles (GAAP) GATT See General Agreement on Tariffs and Trade (GATT) GDP See gross domestic product (GDP) General Agreement on Tariffs and Trade (GATT), 37, 292–295, 296 defined, 292 role of, 292–295 General Agreement on Trade in Services, 296 generalized system of preferences (GSP), 294 generally accepted accounting principles (GAAP), 93, 283 general social welfare, 154 generic organizational control, 425 geocentric approach, 475, 476 geocentric staffing model, 565 geographic arbitrage, 249 geographic distance, 29 Germany, economic growth in, 57 gift-giving, 119–120 glasnost, 58 global advertising, 487 global area design, 413–414 global bonds, 254 global currency, 209–210 global customer design, 416 global economy, boundaryless, 29 global efficiencies, 329 global equity market, 255 global functional design, 414–416 globalization benefits of, 37 challenges of, 37, 143 contemporary causes of, 34–40 defined, 34 emerging markets and, 38–40 environmental causes of, 37–38 strategic imperatives for, 36 global matrix design, 416–418 global organizational design, 411–422 of area, 413–414 coordination in, 421–422 for customers, 416 functional, 414–416 hybrid, 418–420 issues related to, 420–422 matrix of, 416–418 of products, 412–413 global organizations, 562 global product design, 412–413 Global Recession, 318 GLOBE leadership project, 454 GNI See gross national income (GNI) Z04_GRIF8218_08_SE_SIDX.indd 618 goals of international strategic management, 341 orientation, 134–135 strategic, 341 gold standard, 210–213 collapse of, 211–213 defined, 210 dollar-based, 216 sterling-based, 211 “go naked” approach, 535 goods arbitrage of, 246–247 brown, 323 differentiated, 185, 189 imported, 286 undifferentiated, 189 white, 323–325 goodwill, 97 governing/government in European Union, 301–305 intergovernmental, 301 policies of, 367, 509 regulations of, 502 supranational, 301 taxation by, 549 gray markets, 484 Greek yogurt, 486 green energy, 285–287 Green Energy and Green Economy Act, 285–286 greenfield investments, 126 greenfield strategy, 378–379 gross domestic product (GDP), 32, 53, 151, 173, 178, 356 gross national income (GNI), 53 groups, 458–459 defined, 458 dynamics of, nature of, 458–459 social structure of, 113 grupos, 382 GSP See generalized system of preferences (GSP) H hard currencies, 243 hard loan policy, 214 hardship premium, 574 harmonization, 305 harmonized tariff schedule (HTS), 271 HCNs See host country nationals (HCNs) headhunters, 567 Heckscher-Ohlin theory, 185 hedges, 537–538 Helms-Burton Act, 85–86 H-form design, 412 high-context culture, 125–126 Hinduism, 120 hiring locally, 563 Hollywood movies, 109–110 home countries, 32 home field advantage, 363 Hong Kong marketplace, 65 hospitality, 119–120 host countries, 32, 87 host country nationals (HCNs), 564 HR See human resources (HR) HRM See human resource management (HRM) HTS See harmonized tariff schedule (HTS) humane-oriented leadership, 454 human resource management (HRM), 560, 561f of compensation, 573–577 of development, 570–572 of international managerial staffing needs, 562–566 of labor relations, 581–583 nature of, 560–561 of nonmanagerial employees, 579–581 performance appraisal and, 573 of recruitment, 566–570, 566f retention and, 578–579 of selection, 566–570, 566f strategic significance of, 560 of training and development, 570–572 turnover and, 578–579 human resources (HR), 579–581 See also human resource management (HRM) hybrid organizational design, 418–420 I IBF See international banking facility (IBF) IBRD See International Bank for Reconstruction and Development (IBRD) IDA See International Development Association (IDA) IFC See International Finance Corporation (IFC) IFRS See International Financial Reporting Standards (IFRS) ILO See International Labor Organization (ILO) IMF See International Monetary Fund (IMF) implementation, 457 import brokers, 370 imported goods, 286 imports/importing/importation conflicts of, 275–276 defined, 32 international business activity and, 32 of merchandise, 224 parallel, 484 of the services of capital, 225 tariffs on, 270 incentives of economic development, 202 income foreign subsidiary, 549 gross national, 53 levels of, 53 passive, 549 per capita, 53 subpart F, 549 incompatibility of partners, 400–402 inconvertible currencies, 244 India, marketplace in, 67 indirect exchange rates, 239 indirect exporting, 365 indirect quote, 239–240 individual behavior, 442–448 individual country markets, 563 individualism, 127–128 See also individuals individuals behaviors of, 442–448 (See also culture) social structure of, 113 industrial policy, 267 industries national trade policies on, 266–267 related, 191 supporting, 191 industry-level arguments, 263–266 infant industry argument, 264 informal management network, 422 information access to, 402 defined, 518 for international strategic alliances, 403 management of, 518–519 systems of, 519 inspection certificates, 529 Institutes of Chartered Accountants, 93 intangible services, 513 intellectual property, 33 intellectual property rights (IPR), 190, 296, 321 intergovernmental government, 301 interindustry trade, 189 intermediaries, 369–370 internalization advantage, 200, 361–362 internalization theory, 199 internal locus of control, 444 06/03/14 9:53 PM Find more at http://www.downloadslide.com Subject index    619  internal markets, 305 internal rate of return, 544 International Bank for Reconstruction and ­Development (IBRD), 213–215 international banking facility (IBF), 254 international banks, 252–253 international bond market, 254–255 international business See also globalization compensation in, 573–577 decision making in, 455–458 defined, 28–29, 33 dispute resolution in, 88–89 early era of, 31 ethics in, 144–146 groups in, 458–459 individual behavior in, 442–448 information management in, 518–519 leadership in, 451–454 motivation in, 448–451 overview of, 26–41 performance appraisal in, 573 productivity management in, 515–516 quality management in, 516–518 reasons for studying, 29–30 social responsibility in, 144–146 specialized entry modes for, 376–377 teams in, 458–459 international business activity, 31–34 exporting, 32 importing, 32 international investments, 32–33 other forms of, 33–34 international business transactions, 85–86 international capital budgeting for, 543–545 internal rate of return and, 544 markets and, 251–256 net present value and, 543–544 payback period and, 544–545 international capital budgeting, 543–545 international capital market, 251–256 Eurocurrency market and, 254 global equity market and, 255 international banks and, 252–253 international bond market and, 254–255 offshore financial centers and, 255–256 international control, 428–431, 433–434 behavioral aspects of, 433–434 establishing systems of, 428–431 International Convention for the Protection of Industrial Property Rights, 90 international cooperation, 290–316 corporate, 388–389 economic integration and, 297–299 European Union and, 299–310 General Agreement on Tariffs and Trade, 292–295 regional trading blocs and, 310–316 World Trade Organization, 295–297 international debt crisis, 220–222 International Development Association (IDA), 214 international distribution, 490 international division, 411, 562 international ethics, 162–163 International Finance Corporation (IFC), 214 international financial management, 524–552 foreign exchange and, 534–539 international capital budgeting and, 543–545 international investment capital and, 545–552 international trade and, 525–534 working capital management and, 540–543 International Financial Reporting Standards (IFRS), 97–98 international Fisher effect, 251 international franchising See franchising international human resource management See human resource management (HRM) Z04_GRIF8218_08_SE_SIDX.indd 619 international investment, 32–33 See also foreign direct investment (FDI) defined, 32 overview of, 195–198 theories of, 199–200 types of, 195 international investment capital, 545–552 external sources of, 545–546 internal sources of, 546, 547f tax havens and, 550–552 transfer pricing and, 547–549 internationalization scope of, 562–563 International Labor Organization (ILO), 163 international licensing, 33, 370–374 advantages of, 374 agreement boundaries of, 373 basic issues with, 373–374 disadvantages of, 374 international logistics, 510–513 international management, 33, 135–137 of contract, 33 cultural differences and, 135–137 international managerial staffing needs, 562–566 control and, 563 internationalization and, 562–563 staffing philosophy and, 564–566 international managers, developing, 572 international marketing, 470–493 business strategies for, 472–474 customization in, 475–478 distribution in, 490–493 management of, 472–478 marketing mix in, 474 pricing in, 481–484 product policy in, 478–481 promotion in, 485–489 standardization in, 475–478 International Monetary Fund (IMF), 215 international monetary system Bretton Woods system and, 213–218 defined, 209–210 gold standard and, 210–213 history of, 210–222 international debt crisis and, 220–222 performance of, 218–222 post-World War II conferences on, 219–220 international operations management, 498–519, 501f complexities of, 502–503 information management and, 518–519 of international service operations, 513–515 nature of, 500–503 production management and, 503–513 productivity management and, 515–516 quality management and, 516–518 strategic context of, 501–502 international order cycle time, 490 international organizational design, 410–411 international service business, 513 international service operations, 513–515 characteristics of, 513–514 international services trade, role of government in, 514 managing, 514–515 international services trade, 514 international strategic alliances, 386–403 autonomy of, loss of, 402–403 benefits of, 389–391 changing circumstances of, 403 competitive advantages and, 391 comprehensive alliances and, 391–392 distribution of earnings for, conflicts over, 402 functional alliances and, 392–394 implementation of, 395–400 information for, 403 international corporate cooperation and, 388–389 joint management considerations for, 399–400 ownership and, forms of, 396–399 partners for, 395–396, 400–402 pitfalls of, 400–403 scope of, 391–394 international strategic management, 326–347 alternatives to, 332–336 business strategy for, 345–347 challenges of, 328–331 components of, 336–337 control framework for, 342 corporate strategy for, 343–345 defined, 328 developing, 338–342 distinctive competence and, 336 environmental scanning and, 338–341 functional strategy for, 347 goals of, 341 levels of, 343–347 mission statement and, 338 resource deployment and, 337 scope of operations and, 337 SWOT analysis and, 338–341 synergy and, 337 tactics of, 341 international strategy implementation, 348 international trade See also trade/trading barriers to, 270–278 classical country-based theories of, 179–186 defined, 178 export financing programs for, 281 financial issues in, 525–534 foreign trade zones for, 279 growth of, 177–178 modern firm-based theories of, 187–194 Porter’s theory of national competitive advantage and, 191–194 promotion of, 278–281 subsidies for, 278–279 theory of, 187 world economy and, 178–179 international trading company, 369–370 Internet culture, impact on, 110 laws of, 80 interrelated culture, 111 interview, 579 intracorporate transfers, 366–367 intraindustry trade, 187, 189 inventories, 96 investments See also foreign direct investment (FDI) banking, 253 in facilities, 506 foreign portfolio, 33, 195, 225 greenfield, 126 international, 32–33, 195–200 long-term foreign portfolio, 225 nontariff barriers, controls as, 277–278 in people, 506 short-term foreign portfolio, 225 in technology, 506 invisible trade, 32, 224 invoicing currencies, 52 iPhone, 79 IPR See intellectual property rights (IPR) irrevocable letter of credit, 529 Islam, 120, 122 Islamic finance, 122 ISO 9000, 516–517 ISO 14000, 516 J Jamaica Agreement, 218 Japan China, competing in markets in, 331 culture in, 112 demography in, 112 marketplace in, 61 06/03/14 9:53 PM Find more at http://www.downloadslide.com 620    Subject index JIT See just-in-time (JIT) systems jobs dissatisfaction of, 445 maintenance of existing, 264 satisfaction of, 445–446 joint management, 399–400 joint ventures (JV), 388 for foreign direct investment, 380 mixing and matching in, 458 Jones Act, 268–269 just-in-time (JIT) systems, 30, 202, 510 JV See joint ventures (JV) K keiretsu, 61, 95, 370, 382, 465, 466, 505, 532 Kimberley Process, 163 knowledge, shared, 390 Koran, 82–83 L labor relations, 581–583 codetermination and, 582–583 collective bargaining and, 582 comparative, 581–582 union, influence on, 582–583 lading, bill of, 527 language, 114–118 as competitive weapon, 114–116 culture and, 114–118 of lingua franca, 116–117 “no,” saying, 118 translation of, 117–118 last in, first out (LIFO) inventories, 96 launch aid, 322–323 laws bureaucratic, 83–84 civil, 82 common, 82 domestically oriented, 84–85 foreign firms, directly against, 86–87 international business transactions, directly affecting, 85–86 of Internet, 80 religious, 82–83 rule of, 83–84 statutory, 82 unfair practices of trade, enforcing on, 283 leadership, 451–454 autonomous, 454 charismatic, 454 contemporary theories of, 451–454 defined, 451 GLOBE leadership project for, 454 humane-oriented, 454 overall cost strategy for, 346–347 participative, 454 self-protective, 454 team-oriented, 454 Toyota, issues at, 441–442 tranformational, 461–462 value-based, 454 leads and lags strategy, 542 learned behaviors, 110 learning alliances, potential of, 396 worldwide, 330 legal compliance, 157–158 legal environments, 79–89 See also laws differences in systems of, 80–84 dispute resolution and, 88–89 of markets, 358–359 multinational corporations, impacts of, 87 legislative process of European Union, 303–305 Leontief paradox, 186 letter of credit, 529–530, 530f advised, 529 confirmed, 529 Z04_GRIF8218_08_SE_SIDX.indd 620 irrevocable, 529 revocable, 529 leveraging, 36 liability of foreignness, 360 LIBOR See London Interbank Offer Rate (LIBOR) licensee, 370 license/licensing defined, 370 export, 529 international, 33, 370–374 licensor, 370 LIFO See last in, first out (LIFO) inventories lingua franca, 116–117 literacy, cross-cultural, 136 lobbying, 306 local advertising, 487 local hiring, 563 local-purchase requirements, 276–277 location advantage, 200, 360–361 complex issues with, 503 countries, influence on decision about, 507–510 government policies for, 509 location efficiencies, 329 locus of control, 444 logistics, 201 complex issues with, 503 exporting, considerations for, 368 international, 510–513 London Interbank Offer Rate (LIBOR), 254 long-term foreign portfolio investments, 225 loonie, 237–238 Louvre Accord, 219–220 low-context culture, 125–126 lower-income countries, 53 luxuries, 355 M Maastricht Treaty, 307, 317 macropolitical risks, 98 make-or-buy decisions, 505 managed float, 218 managed trade, 262 managerial staffing needs, 562–566 managers board of, 582 expatriate, 573–576 international, developing, 572 recruitment of, 567 selection of, 568–569 managing/management See also specific types of centralized cash, 540 of compliance, 157–159 contract, 376 of control, 428–434 corporate social responsibility and, 161–162 of ethical behavior, 149–151 human resource, 560 information, 518–519 international, 33, 135–137 of international marketing, 472–478 joint, 399–400 materials, 510–513 operations, 498–519, 501f production, 503–513 productivity, 515–516 quality, 516–518 service operations, 503 social responsibility, 156–160 supply chain, 503–507 total quality, 517–518, 517f working capital, 540–543 manufacturers’ agents, 370 manufacturers’ export agents, 370 manufacturing Chinese, 258–259 contract, 376 maquiladora, 279 market-based transfer pricing, 547 marketing advantages of, 201–202 alliances in, 392–393 defined, 471 exporting, concerns with, 367 four Ps of, 474 international, 470–493 marketing mix, 474 marketplaces in Africa, 68 in Asia, 61–67 in Australia, 61–63 in Canada, 52–53 in Caribbean, 54 in Central America, 54 in Central Asia, 58–60 in China, 65–66 in Eastern Europe, 58–60 in “Four Tigers,” 63–65 in Hong Kong, 65 in India, 67 in Japan, 61 in Mexico, 54 in Middle East, 68–70 in New Zealand, 61–63 in North America, 50–55 in Singapore, 64–65 in South America, 70–73 in Southeast Asia, 67 in South Korea, 63–64 in Taiwan, 64 in United States, 50–52 in Western Europe, 55–58 markets See also foreign markets; specific types of arbitrage, 246–251 bond, 254–255 capital, 97–98 Chinese, Japanese competing in, 331 common, 298, 305–309 competition within, 358 currency, 246–251 emerging, 38–40 energy, 75–77 entry into, ease of, 389–390 environments of, 358–359 Eurodollar, 254 foreign exchange, 241–251 forward, 244–246 gray, 484 individual country, 563 internal, 305 international bond, 254–255 international capital, 251–256 legal environments of, 358–359 policy formulation process, role in, 161 political environment of, 358–359 potential of, 356–358 price/pricing, 483–484 seeking new, 36 sociocultural influences on, 359 spot, 244–246 swap, 546 materials management, 510–513 maturing product stage, 187–188 medium, 486 MEND See Emancipation of the Niger Delta (MEND) mercantilism, 179–180 merchandise, 32, 224 Mercosur Accord, 37, 292, 311–312 message, 485 Mexico marketplaces, 54 MFN See most favored nation (MFN) principle M-form design, 412 micropolitical risks, 98 06/03/14 9:53 PM Find more at http://www.downloadslide.com Subject index    621  Middle East marketplaces, 68–70 MIGA See Multilateral Investment Guarantee Agency (MIGA) mining new organizational design, 436–437 mission, in economy, 152 mission statement, 338 MNCs See multinational corporations (MNCs) MNE See multinational enterprises (MNE) MNO See multinational organization (MNO) mobility of customers, 202 social, 113–114 models of decision making, 455–456 descriptive, 455, 457 ethnocentric staffing, 564–565 geocentric staffing, 565 need-based, 449–450 normative, 456–457 polycentric staffing, 565 process-based, 449–450 reinforcement, 449, 451 shareholder, 152 stakeholder, 152 modern firm-based trade theories, 187–194 country similarity theory, 189 new trade theory, 189–191 product life cycle theory, 187–189 money See also currency arbitrage of, 247–251 comparative advantage with, 182–184 most favored nation (MFN) principle, 292, 294 motivations, 448–451 See also culture culture, processes across, 449 defined, 448 need-based models of, 449 proactive, 365 process-based models of, 449 reinforcement models of, 449 mullahs, 82 Multilateral Investment Guarantee Agency (MIGA), 101, 214 multilateral netting, 541 multinational corporations (MNCs), 31, 42 defined, 33 host countries, impact on, 87 legal environments, impacts of, 87 multinational enterprises (MNE), 33 multinational flexibility, 329–330 multinational organization (MNO), 33 mutual recognition, 305 N NAFTA See North American Free Trade Agreement (NAFTA) National Commission on the BP Deepwater Oil Spill and Offshore Drilling, 166 national competitive advantage theory, 191–194 national competitiveness, 110 national defense argument, 263 nationalization, 86 national trade policies for economic development programs, 266 formulation of, 260–284 industrial, 266–267 industry-level arguments for, 263–266 public choice analysis of, 267–269 rationales for, 262–269 national treatment, 296 National Wool Act, 263 natural environment, 152–153 natural hedge, 538 natural resources, availability of, 201 Navigation Act, 180 need-based models, 449–450 needs across culture, 448–449 Z04_GRIF8218_08_SE_SIDX.indd 621 defined, 448 managerial staffing, 562–566 for training, 570–571 neomercantilists, 180 net present value, 543–544 netting, 541 network for distribution, 274–276 informal management, 422 new culture, understanding, 135–136 Newly Independent States (NIS), 60 newly industrialized countries (NICs), 63 newly industrialized economies (NIEs), 63 new product stage, 187 new trade theory, 189–191 defined, 189 economies of scope, achieving, 190–191 experience curve, exploiting of, 191 intellectual property rights, owning, 190 modern firm-based trade theories, 189–191 research & development, investing in, 190 New Zealand marketplace, 61–63 NGOs See nongovernmental organizations (NGOs) NICs See newly industrialized countries (NICs) NIEs See newly industrialized economies (NIEs) NIS See Newly Independent States (NIS) “no,” saying, 118 Nollywood, 109–110 nongovernmental organizations (NGOs), 152, 280, 398 nonmanagerial employees compensation for, 580–581 development of, 580 human resource issues for, 579–581 performance appraisals for, 580–581 recruitment of, 579–580 selection of, 579–580 training of, 580 nonmarket-based transfer pricing, 547–549, 548t nontariff barriers (NTB), 272–278, 292, 367 currency controls as, 277 defined, 272 distribution networks as, restricted access to, 274–276 investment controls as, 277–278 local-purchase requirements as, 276–277 numerical export controls as, 273–274 product and testing standards as, 274 public-sector procurement policies as, 276 quotas as, 272–273 regulatory controls as, 277 types of other, 274 nonverbal communication, 118–119 normal trade relations (NTR), 294 normative models, 456–457 North America marketplaces, 50–55 North American Free Trade Agreement (NAFTA), 37, 54, 246, 274, 291, 292, 511–512 regional trading blocs and, 310–311 Northwest Passage, 49–50 NTB See nontariff barriers (NTB) NTR See normal trade relations (NTR) nuclear family, 113 numerical export controls, 273–274 O obstructionist stance, 156 OECD See Organization for Economic Cooperation and Development (OECD) OEM See original equipment manufacturer (OEM) official reserves account, 226–227 Official Secrets Act, 82 official settlements balance, 231 offset purchases, 531 offsetting assets, 536–537 offshore financial centers, 255–256 oligarchs, 83 Olympics, 27–28 OneWorld alliance, 393 opening accounts, 527 openness, 58, 444 operating risks, 98 operational hedge, 538 operations controlling, 427–428 management of, 498–519, 501f service, 503, 513–515 OPIC See Overseas Private Investment Corporation (OPIC) opportunity cost, 181 options, 245 organizational commitment, 446 organizational control, 425–427 organizational design control in, 422–434 defined, 410 global, 411–422 international, 410–411 mining new, 436–437 organizational practices, 151 organizational structure See organizational design Organization for Economic Cooperation and Development (OECD), 53 organization leadership, 159 organizations economic agents, treatment of, 148–149 employees, treatment of, 146–148 global, 562 location, influence on decision about, 510 multinational, 33 nongovernmental, 152, 280, 398 U-form, 414 orientation goal, 134–135 power, 130–132 social, 127–130 time, 135 uncertainty, 133–134 origin, rules of, 297–298 original equipment manufacturer (OEM), 356 Our Common Future, 153 outsourcing, 377, 447 overall cost leadership strategy, 346–347 Overseas Private Investment Corporation (OPIC), 101, 281 ownership advantage, 199–200, 336, 360 of assets, 226 foreign, 86–87 forms of, 396–399 risks of, 98 P Panama Canal, 54 paper gold, 217 parallel barter, 531 parallel importing, 484 parent country nationals (PCNs), 564 participative leadership, 454 partners with alliances, relative safeness of, 395–396 compatibility of, 395 incompatibility of, 400–402 for international strategic alliances, 395–396, 400–402 products and services of, nature of potential, 395 par values, 210 passive goal behaviors, 134 passive income, 549 patent flooding, 91 payback period, 544–545 payments advanced, 526–527 06/03/14 9:53 PM Find more at http://www.downloadslide.com 622    Subject index payments (continued) flows of, without netting, 541, 541f methods of, 526–533, 533t PCNs See parent country nationals (PCNs) peg, adjustable, 216 pegged, defined, 210 people, investments in, 506 People’s Republic of China (PRC), 359 per capita income, 53 perception, 446–447 perestroika, 58 performance control, standards for, 428 of international monetary system, 218–222 measuring actual, 430 ratios of, 432–433 standards and, comparing against, 430 performance appraisal defined, 573 in international business, 573 for nonmanagerial employees, 580–581 personality culture, differences across, 442–445 cultures, differences across, 442–445 defined, 442 traits of, 442–445 personal selling, 488 petro-states, 70 philanthropic giving, 158–159 physical distribution, 510 planning capacity for, 513 process for, 425 strategic, 328–329 Plaza Accord, 219 policies See also trading policies beggar-thy-neighbor, 213 Common Agricultural, 302 formulation process for, 161 government, 509 hard loan, 214 import substitution, 72 industrial, 267 market pricing, 483 national trade, 260–284 on pricing, 482–483 product, 478–481 public-sector procurement, 276 social, 583 standard price, 482 political environment, 37, 98–101 changes in, 37 of markets, 358–359 risks in, 98–101 political factors, 202 political multinational corporations, 87 political risk assessment, 98 political risks, 98 political union, 298 polycentric approach, 475, 476 polycentric staffing model, 565 Porter’s theory of national competitive advantage, 191–194 post-World War II conferences, 219–220 poverty, 280 power orientation, 130–132 power respect, 130 power tolerance, 130–131 PPP See purchasing power parity (PPP) practices/practicing accounting, differences in, 95–97 organizational, 151 unfair, of trade, 281–284 PRC See People’s Republic of China (PRC) premiums, 245, 574 price/pricing, 481–484 defined, 481 Z04_GRIF8218_08_SE_SIDX.indd 622 market, 483–484 policies on, 482–483 transfer, 547–549 two-tiered, 482 primary stakeholders, 152 principles of comity, 88 generally accepted accounting, 93, 283 most favored nation, 292, 294 privatization, 86 privileges, establishing, 373 proactive motivations, 365 proactive stance, 157 problems, recognition of, 456 procedures co-decision, 303 controlling, techniques for, 432 for training, 571–572 process-based models, 449–450 procuring, 520 See also supply chains production See also production management alliances for, 392 cost of, 201 production management, 503–513 international logistics and, 510–513 location decisions and, 507–510 materials management and, 510–513 supply chain management and, 503–507 vertical integration and, 503–507 productivity, 515–516 product life cycle theory, 187–189 product policy, 478–481 on brand names, 481 cultural influences of, 479–480 economic factors of, 480 legal forces in, 479 products certificates of origin of, 529 customized, 479 dual-use, 85 global organizational design of, 412–413 gross domestic, 32, 53, 151, 173, 178, 356 line of, 562 location, influence on decision about, 508–509 nontariff barriers, standards of, 274 partners, nature of potential, 395 services, tied with purchases of, 514 stages of, 187–188 standardized, 189, 479 product-support services, 514 promotion, 485–489 advertising and, 485–487 defined, 485 export, 72 of international trade, 278–281 personal selling and, 488 public relations and, 489 sales, 488–489 promotion mix, 485 prosperity, 291–292 protectionists, 180 Protestant ethics, 120 Protestants, 120 public choice analysis, 267–269 Public Company Accounting Reform and Investor Protection Act, 94 public-private venture, 397–399 Public Procurement and Disposal Act, 276 public relations, 489 public-sector procurement policies, 276 purchasing power parity (PPP), 246–247, 358 put option, 245 Q quality defined, 516 management of, 516–518 quota, 215 defined, 272 as nontariff barriers, 272–273 tariff rate, 272–273, 295 quote, 239–240 R radio frequency identification (RFID), 522 rare earths exports, 275–276 rates cross, 249 of discount, 543 exchange, 210, 218–219, 239 foreign-exchange, 296 hurdle, 544 of return, 544 rationality/rationales bounded, 456 for national trade policies, 262–269 R&D See research & development (R&D) recruitment, 566–570, 566f of managers, 567 of nonmanagerial employees, 579–580 reexporting, 64 regional clustering, 194 regional development of banks, 214–215 regional economic integration, 297–299 regional trading blocs, 310–316 African initiatives for establishing, 315–316 free trade agreements in, 311–315 North American Free Trade Agreement, 310–311 regulations antidumping, 282–283 government, 502 regulatory controls, 277 reinforcement models, 449, 451 related diversification, 344 related industries, 191 relative factor endowments, 185–187 religion, 120–123 religious laws, 82–83 repatriate/repatriation, 87, 569–570 Republic of China (ROC), 359 research & development (R&D) alliances and, 394 capitalization of, 97 consortium of, 394 new trade theory, investing in, 190 resource deployment, 337 resources acquiring, 36 complex issues with, 502 natural, availability of, 201 retention, 578–579 revaluation of assets, 95–96 revocable letter of credit, 529 RFID See radio frequency identification (RFID) rights Agreement on Trade-Related Aspects of Intellectual Property, 296 establishing, 373 intellectual property, 190, 321, 322 special drawing, 217 Trade-Related Intellectual Property, 90 ringisho, 456 ringi system, 456 risks costs and, trade-offs between, 505–506 foreign exchange, 534–539, 542–543 of foreign markets, 360 macropolitical, 98 micropolitical, 98 operating, 98 ownership, 98 in political environment, 98–101 shared, 390 transfer, 98 06/03/14 9:53 PM Find more at http://www.downloadslide.com Subject index    623  rivals/rivalry competition with, 36 of firm, 192–193 ROC See Republic of China (ROC) Roman Catholics, 120 royalty, 373 rules deferral, 549 of laws, 83–84 of origin, 297–298 trade-balancing, 296 S SADC See Southern African Development ­Community (SADC) safety/safeguards within environment, 143 for trade, 283 Salah, 122 sales direct, 491 domestic, requirements for, 296 promotion, 488–489 sanctions, 85 SAR See special administrative region (SAR) Sarbanes-Oxley Act, 94, 97 satisfaction of jobs, 445–446 satisficing, 456 SBUs See strategic business units (SBUs) scan of environment, 338–341 scope economies of, 329 of internationalization, 562–563 of international strategic alliances, 391–394 of operations, 337 screwdriver plant, 311 SDRs See special drawing rights (SDRs) secondary stakeholders, 152 selecting/selection, 566–570, 566f of alternatives, 457 of managers, 568–569 of nonmanagerial employees, 579–580 self-efficacy, 444 self-esteem, 445 self-protective leadership, 454 self-reference criterion, 135–136 service business, 513 service operations international, 513–515 management of, 503 services customer’s role in, 514 exporting, 32, 224 importing, 32, 224 intangible, 513 of partners, nature of potential, 395 products, tied with purchases of, 514 storable, 513 trade, 32, 514 services trade, 514 shared culture, 111 shared expertise, 390 shared knowledge, 390 shared management agreement, 399 shared risks, 390 shareholder model, 152 shift drafts, 528, 528f short-term foreign portfolio investments, 225 sight draft, 528 silver democracy, 112 Singapore marketplace, 64–65 single-business strategy, 343–344 Single European Act, 305–306, 317, 323 SkyTeam alliance, 393 Smithsonian Conference, 217 Smoot-Hawley Tariff Act, 292 social charter, 583 Z04_GRIF8218_08_SE_SIDX.indd 623 social mobility, 113–114 social orientation, 127–130 social policy, 583 social responsibility accommodative stance to, 157 approaches to, 156–157 compliance and, managing, 157–159 corporate, 151–156 culture and, 159 defensive stance to, 156–157 evaluating, 160 informal dimensions of, 159–160 in international business, 144–146 international ethics and, regulating of, 162–163 managing, 156–160 obstructionist stance to, 156 organization leadership and, 159 proactive stance to, 157 whistle-blowing and, 159–160 social stratification, 113–114 social structure of culture, 111–114 of families, 113 of groups, 113 of individuals, 113 social welfare, general, 154 sociocultural influences, 359 SOE See state-owned enterprise (SOE) soft currencies, 244 soga shosha, 532 sourcing, 520 See supply chains South America marketplaces, 70–73 South China Sea, 103–105 Southeast Asia marketplace, 67 Southern African Development Community (SADC), 315 South Korea marketplace, 63–64 sovereign wealth funds (SWFs), 70, 195–196 special administrative region (SAR), 65 special drawing rights (SDRs), 217 specialized entry modes, 376–377 specific tariffs, 270 speculators, 241–242 spot markets, 244–246 Stability and Growth Pact, 308 staffing needs of, 562–566 philosophy of, 564–566 stakeholders, 152 standardization, 475–478 standardized products, 189, 479 standards for BOP accounting system, 225 performance and, comparing against, 430 for pricing, policies on, 482 Star Alliance, 393, 394 state, policy formulation process, role in, 161 state-owned enterprise (SOE), 261 statistical process control, 517 status, attitudes towards, 125 statutory laws, 82 stereotyping, 446 sterling-based gold standard, 211 storable services, 513 strategic alliances, 388 See also international strategic alliances strategic business units (SBUs), 345 strategic control, 422–425 strategic goals, 341 strategic imperatives for globalization, 36 strategic management, 326–347 See also ­international strategic management strategic planning, 328–329 strategic trade theory, 264–266 strategies acquisition, 378 brownfield, 378 business, 345–347, 472–474 corporate, 343–345 differentiation, 345–346 diversification, 343 export promotion, 266 of firm, 192–193 focus, 347 formulation of, 338 functional, 347 global, 333, 563 greenfield, 378–379 home replication, 332 implementation of, 338 import substitution, 266 international, 329, 348 international financial, 347 international human resource, 347 international marketing, 347 international operations, 347 leads and lags, 542 multidomestic, 332–333 overall cost leadership, 346–347 single-business, 343–344 transnational, 333 unrelated diversification, 343 stratification social, 113–114 stress, 447 stressor, 447 studying international business, reasons for, 29–30 subpart F income, 549 subprime meltdown, 222 subsidiary banks, 253 subsidiary boards of directors, 420–421 subsidies cotton, 280 for international trade, 278–279 Suez Canal, 54 suppliers, first-tier, 507 supplies acquiring, 36 factors for, 200–201 supply chains, 522 management of, 503–507 supply curve, 239 supporting industries, 191 supranational government, 301 surpluses, 230–232 sustainability, 152–153 sustainable development, 153 swap markets, 546 swap transaction, 244 SWFs See sovereign wealth funds (SWFs) Swiss francs, 535–536 switching arrangements, 532 SWOT analysis, 338–341 synergy, 337, 391 T TAFTA See Transatlantic Free Trade Agreement (TAFTA) Taiwan marketplace, 64 tariff rate quota (TRQ), 272–273, 295 tariffs, 270–272 ad valorem, 270 compound, 270 defined, 270 export, 270 import, 270, 286 specific, 270 transit, 270 tax authorities, 96 tax equalization system, 574 taxes/taxation on foreign subsidiary income, 549 by government, 549 06/03/14 9:53 PM Find more at http://www.downloadslide.com 624    Subject index taxes/taxation (continued) havens for, 550–552, 554 Tobin, 310 TCNs See third-country nationals (TCNs) team-oriented leadership, 454 teams, 458–459 technological environment, 89–92 changes in, 37–38 technology access to key, 201 investments in, 506 transfers, 90 tests/testing arm’s length, 551 nontariff barriers, standards as, 274 Texas Instruments Registration and Identification Systems (TIRIS), 519 theocracy, 82 theories See also trading theories of absolute advantage, 180 classical country-based trade, 179–186 of comparative advantage, 181 country similarity, 189 Dunning’s eclectic, 199–200 eclectic, 199–200 Heckscher-Ohlin, 185 internalization, 199 of international investment, 199–200 of international trade, 187 modern firm-based trade, 187–194 of national competitive advantage, 191–194 new trade, 189–191 of ownership advantage, 199 product life cycle, 187–189 of purchasing power parity, 246 of relative factor endowments, 185 strategic trade, 264–266 third-country nationals (TCNs), 564 three-point arbitrage, 249 time attitudes about, 124 draft, 528 international order cycle, 490 orientation, 135 TIRIS See Texas Instruments Registration and Identification Systems (TIRIS) Tobin tax, 310 tolerance power, 130–131 total quality management (TQM), 517–518, 517f Toyota, 441–442 TQM See total quality management (TQM) Trade Act, 283 trade-balancing rule, 296 Trade-Related Intellectual Property Rights, 90 trade-related investment measures (TRIMS), 296 Trade-Related Investment Measures Agreement, 296 trade/trading See also international trade; trading policies; trading theories acceptance, 528 antidumping regulations on, 282–283 balance on merchandise, 224 balance on services, 224 barriers to, 202, 297 carry, 252 defined, 178 deflection, 297 fair, 262 free, 262, 285–287 interindustry, 189 international services, 514 intraindustry, 187, 189 invisible, 32, 224 managed, 262 merchandise, 32, 224 prosperity and, 291–292 Z04_GRIF8218_08_SE_SIDX.indd 624 regional blocs for, 310–316 safeguards for, 283 services, 32, 514 surplus, 224 unfair practices of, controlling, 281–284 visible, 32, 224 trading policies for economic development programs, 266 formulation of, 260–284 industrial, 266–267 industry-level arguments for, 263–266 public choice analysis of, 267–269 rationales for, 262–269 trading theories classical country-based, 179–186 modern firm-based, 187–194 new, 189–191 strategic, 264–266 training, 570–572 assessing needs for, 570–571 defined, 570 ethics, 150–151 methods for, 571–572 of nonmanagerial employees, 580 procedures for, 571–572 tranformational leadership, 461–462 transaction cost of, 199 currencies and, 241 international business, 85–86 swap, 244 transaction exposure, 534–537, 536t Transatlantic Free Trade Agreement (TAFTA), 317 transfers conditional cash, 72 intracorporate, 366–367 pricing for, 547–549 risks of, 98 technology, 90 unilateral, 225 transit tariffs, 270 translation exposure, 537 translation of language, 117–118 Treaty for Europe, 308–309 Treaty of Amsterdam, 308–309 Treaty of Nice, 309 Treaty of Rome, 300, 303, 305, 317 Treaty on European Union, 307 Triffin paradox, 217 TRIMS See trade-related investment measures (TRIMS) triple bottom line, 152 Troubled Asset Relief Program, 318 TRQ See tariff rate quota (TRQ) turnkey project, 376–377 turnover, 578–579 two-point arbitrage, 249 two-tiered pricing policy, 482 U U-form organization, 414 Unböring, 334 uncertainty acceptance, 133 uncertainty avoidance, 133 uncertainty orientation, 133–134 UNCLOS See United Nations Convention on the Law of the Sea (UNCLOS) undifferentiated goods, 189 unethical behaviors, 144 unfair practices of trade controlling, 281–284 laws on, enforcing, 283 unilateral transfers, 225 unions customs, 298 economic, 298 economic and monetary, 307 labor relations, influence on, 582–583 political, 298 United Nations Convention on the Law of the Sea (UNCLOS), 49, 103 United States BOP accounting system in, 227–230, 234–235 foreign direct investment and, 197–198 marketplaces in, 50–52 U.S Financial Accounting Standards Board (FASB), 93 U.S Foreign Sovereign Immunities Act of 1976, 89 U.S Freedom of Information Act, 82 U.S International Trade Commission, 286 Universal Copyright Convention, 90 unrelated diversification, 345 Uruguay Round, 90, 272, 294, 296 V valuation, 95–96 value chain, 340 values culture and, 123–125, 448–449 of currency, 243, 538, 539m defined, 146, 448 of leadership, 454 net present, 543–544 par, 210 ventures joint, 380, 388, 458 public-private, 397–399 VERs See voluntary export restraints (VERs) vertical integration, 503–507 visible trade, 32, 224 voluntary export restraints (VERs), 273, 367 W Webb-Pomerene association, 369 Western Europe marketplaces, 55–58 whistle-blowing, 159–160 white goods, 323–325 White Paper on Completing the Internal Market, 305 wineries, 204–206 WIPO See World Intellectual Property Organization (WIPO) without recourse, 528 working capital balances of, 540–541 currency conversion costs and, 541–542 foreign-exchange risk and, 542–543 management of, 540–543 World Bank Group, 213 world economy, 178–179 World Intellectual Property Organization (WIPO), 80 World Trade Organization (WTO), 295–297 Agreement on Trade-Related Aspects of Intellectual Property Rights of, 296 defined, 295 enforcement of decisions of, 296–297 General Agreement on Trade in Services of, 296 international cooperation, 295–297 Trade-Related Investment Measures Agreement of, 296 worldwide learning, 330 WTO See World Trade Organization (WTO) Y yen, 239, 465 Z zero waste, 427 zones exclusive economic, 49, 103 foreign trade, 279, 509 06/03/14 9:53 PM ... Transnational Management, 2nd ed (Chicago: Richard D Irwin, 1995), pp 23 7 24 2 See also Tatiana Kostova, “Transnational transfer of strategic organizational practices: A contextual perspective, ” Academy... discuss the advantages and ­disadvantages of licensing Identify the basic issues in international franchising and discuss the advantages and disadvantages of franchising Analyze contract manufacturing,... 348    Part 3  •  Managing International Businesss Chapter Review Summary International strategic management is a comprehensive and ongoing management planning process aimed at formulating and implementing