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(BQ) Part 2 book International business has contents: Multinational enterprises as responsible stakeholders, production strategy, marketing strategy, human resource management strategy, political risk and negotiation strategy, international financial management, european union,...and other contents.
www.downloadslide.com Chapter 11 MULTINATIONAL ENTERPRISES AS RESPONSIBLE STAKEHOLDERS contents objectives of the chapter Introduction 351 “The only thing that is constant is change’ This is particularly the case for the field of international business because it encompasses a wide range of evolving factors at multiple levels: the manager, firm, industry sector, country, and global One of the most prominent changes is the increased attention paid to corporate social responsibility and the obligations of firms to wider stakeholders rather than just shareholders Business ethics and the ethical behavior of firms is a key consideration for managers In this chapter we explore two useful frameworks to help analyze the future of international business First, we consider how multinational enterprises (MNEs) often serve as “flagship” firms at the hubs of business networks We relate this to country-level (environmental) and firm-level strategies and future trends Second, we develop a framework to analyze the impact of civil society on trade and investment agreements This will incorporate a discussion of corporate ethics and the role of non-governmental organizations (NGOs) as they can affect such agreements Developing effective strategies 352 International business research frameworks 355 The five partners business network framework 356 Coping with changing environments 358 The trade and investment framework 362 Environment and MNEs 365 ■ Active Learning Case The environment, NGOs, and MNEs 350 ■ International Business Strategy in Action 3M 354 The specific objectives of this chapter are to: Is The Body Shop an ethical business? 365 Examine how these changing developments will create both challenges and opportunities for MNEs over the next decade ■ Real Cases Explain why research will continue to be of critical importance to the field of international business Dell: B2C 371 Maersk Group 372 Examine three frameworks in which MNEs can cope with their changing political and economic environments Relate the importance of the NGOs and ethical issues to the strategies of multinational enterprises www.downloadslide.com 350 PART three International Business Strategies Active Learning Case The environment, NGOs, and MNEs What Apple, Google, Berkshire Hathaway and Amazon com have in common? In 2015, they were among the world’s most admired companies in the Fortune annual ranking The nine key attributes of reputation are innovation, people management, use of corporate assets, social responsibility, quality of management, financial soundness, long-term investment, quality of products and services, and global competitiveness These rankings are calculated based on a survey of business people’s perceptions The top 20 firms according to business people are shown in Table 11.1 Of course, non-governmental organizations (NGOs) may not like these companies and today, in a world of corporate social responsibility, the viewpoints of NGOs and other stakeholders are important In particular, NGOs are often critical of the poor environmental performance of MNEs Partly in response to this, the survey also highlights eight companies which are devising innovative ways to make their firms greener, including Coca-Cola, Southwest Airlines, Procter & Gamble, Google, Microsoft, FedEx, and Amazon.com Coca-Cola has developed technology to produce fully recyclable plastic bottles which are 30 percent composed of plastic made from sugar cane This reduces the amount of petroleum by-products used to make the plastic Coke wants to share the technology The company has partnered with Heinz so the ketchup maker can use partially plant-based bottles for 120 million ketchup containers Southwest Airlines is one of the few airlines which wash the plane engines at night so that they burn fuel more efficiently during flights the next day Southwest is also investing in the Federal Aviation Administration’s updated navigation system, which helps planes fly the best routes and save excess fuel costs The next initiative is to lighten the cabins of the planes So, Southwest is adding lighter-weight carpeting, seat covers and life vests The company is running its new cabin design by regulators and hopes to make an official announcement about it later this year The end result will be even more fuel-efficient flights, which translate to an even greater profit margin for Southwest IT companies like Google and Microsoft are trying to focus on data center efficiency, which requires lots of power Furthermore, Microsoft has formed partnerships with industry rivals to promote green technology Along with AMD, Intel, Oracle, and other technology giants, Microsoft is on the board of a project called the Green Grid, which is designed to use IT to promote sustainability Table 11.1 The world’s most admired companies, 2015 Rank 2011 10 11 12 13 14 15 16 17 18 19 20 Name Country Sector Apple Google Berkshire Hathaway Amazon.com Starbucks Walt Disney SouthWest Airlines American Express General Electric Coca-Cola Johnson & Johnson FedEx Nike Nordstrom BMW Costco Wholesale Procter & Gamble Whole Foods Market Singapore Airlines Microsoft United States United States United States United States United States United States United States United States United States United States United States United States United States United States Germany United States United States United States Singapore United States Computers IT/search engine Investment Online retail Beverage Media/leisure Airlines Credit card Diversified FMCG Pharmaceuticals Express courier Apparel General merchandise Automotive Speciality retailers Cosmetics Food and drug stores Airlines IT Source: Adapted from “Survey of the world’s most admired companies,” Fortune, 2015 http://fortune.com/worlds-most-admired-companies/google-2/ www.downloadslide.com CHAPTER 11 Multinational Enterprises as Responsible Stakeholders Amazon.com doesn’t make many tangible things, but it ships large quantities of books every day And when the online store asked customers how it could improve the shopping experience, buyers said they wanted less packaging Amazon has worked with suppliers such as Philips to cut out the clamshells and stick with boxes that are easy to open and made from recyclable materials By cutting wasteful packaging, the company has also reduced its carbon footprint This was not enough for many of the firm’s critics and in 2015, both to improve its reputation and to initiate some real changes to its strategy, Amazon appointed a “director of social responsibility” Christine Bader, a long-term advocate for large firms to be positive social and environmental forces in the world, took on the role Her book, The Evolution of a Corporate Idealist: When Girl Meets Oil was a product of many years working at BP on social responsibility issues, although she left before the Deepwater Horizon oil spill when her expertise was needed most 351 In general, the managers of both large MNEs and smaller firms are extremely aware of their wider social and ethical responsibilities Most of these firms have developed explicit environmental programs and have appointed senior managers responsible for corporate social responsibility activities Some firms have even hired former NGO activists and environmental politicians to help improve the firms’ environmental policy and social programs However, the success of these managerial initiatives remains open to question, as discussed in this chapter Websites: www.coca-cola.com, www.amazon.com, www.google.com, www.microsoft.com, www.fedex.com, www.pg.com, www.southwest com Source: “Survey of the world’s most admired companies,” Fortune, March, 2015 issue, http://money.cnn.com/magazines/fortune/mostadmired/2015/full_list/; “Eight green stars at most admired companies”, Fortune, http://money.cnn.com/ galleries/2011/fortune/1103/gallery.most_admired_green_leaders.fortune/7 html; Christine Bader, The Evolution of a Corporate Idealist: When Girl Meets Oil (Boston, MA: Bibliomotion, 2014) How have NGOs changed the external environment in which MNEs operate? Why is Apple the world’s most admired firm among business people? Why is a firm like Google likely to be more admired by NGOs? As MNEs operate across the world and NGOs operate globally, why are there no “global” or “international” environmental agreements to set rules for sustainable development? Where would a company like Coca-Cola, or others in Table 11.1, be positioned in Figure 11.7? Why? Introduction Many observers believe that paying attention to stakeholders, rather than just shareholders, is a relatively recent development for firms Shareholders have an ownership interest They make money if the firm makes money and this tends to drive firms to focus on performance and profits, sometimes regardless of other social or environmental considerations Stakeholders represent a wider set of interests, including employees and customers, but also other interest groups that might be affected by (and/ or can affect) the behavior of firms But while this shift toward the considerations of stakeholders is new for many Western MNEs, it is something that firms based in other countries have always practiced Japanese firms have historically put employees above profits, and family businesses from other parts of Asia and the Middle East, for example, put the extended family group and the wider community ahead of other kinds of performance Those MNEs that have more recently started to pay attention to a wider set of interests, from environmental sustainability to employee welfare, have been motivated by two kinds of pressures The first is external, from a wide range of increasingly well-informed, connected, and coordinated lobby groups These include consumers (who want better, safer products and fairer pricing), suppliers (who want reasonable margins), employee groups (who want a fair wage and reasonable working conditions), and others who might be negatively affected by a firm’s actions The second driver for change comes from the firm’s own leadership and management “Enlightened” managers adopt a set of values or respect a www.downloadslide.com 352 PART three International Business Strategies code of ethics which influences their decisions and drives the firm to consider the wider interests of the communities affected by their actions But there are also firms that adopt the appearance of being stakeholder oriented, by marketing themselves as caring and compassionate members of society, but really only when this attracts more customers and boosts profits As increased attention is paid to corporate social responsibility, it is important to know how to differentiate firms that are genuinely focused on the needs of stakeholders and those that are only superficially concerned about non-shareholders Stakeholder theory argues that the purpose of a firm is to maximize value for stakeholders, rather than just shareholders More broadly it represents a field of study which addresses how firms should, could, or incorporate ethics and values in decision making.1 We must not forget though that no firm can survive and therefore continue adding value for stakeholders and/or shareholders without sustaining some level of competitive advantage If, by addressing the concerns of the wider society and “the planet,” a firm ceases to be profitable, then it will cease to exist It is important to link the new frameworks developed here back to the familiar firm and country factors in the FSA–CSA matrix of Chapter Essentially environmental regulations, and other societal pressures on the firm, can be regarded as CSAs Whether they are positive or negative CSAs can be shown on the vertical axis of the FSA–CSA matrix The novel thinking developed in this chapter is that the firm can evolve a sophisticated response to outside pressure groups and regulations which support stakeholders, such that it becomes an FSA Of course, this FSA would be shown in quadrant or cell of the FSA–CSA matrix Thus this chapter is an extension of the thinking first developed in Chapter and then related to strategic management (Chapter 8), organization structure (Chapter 9), and the integration/responsiveness framework (Chapter 10) Another way of looking at environmental regulations, or the activities of lobby groups, is as part of the home-country diamond (in Porter’s single-diamond model) They can also be part of the host-country CSAs in terms of the double-diamond framework, as discussed in Chapter 10 We will come back to corporate ethics and the challenges of “stakeholder capitalism” later in this chapter First, we go back to some of the basics to understand how MNEs develop effective strategies more generally, in a changing environment This involves introducing a number of useful frameworks, including the “five partners business network” framework and the idea of the “flagship firm,” alongside the trade and investment framework Developing Effective Strategies MNEs are supplementing or supplanting their old strategies in a number of ways in order to compete more effectively worldwide Two of the most recent developments include going where the action is and developing new business networks with governments, suppliers, customers, and competitors Going where the action is One strategy that is proving increasingly important is the need to go international in order to keep up with the competition Successful multinationals have operations in the home countries of their major triad competitors For example, IBM’s strongest competitors are located in the United States, Europe, and Japan In turn the company has facilities in all three places, to monitor the competition as well as to conduct research Moreover, the communication network among the company’s facilities allows each one to share information with the others and to provide assistance This also helps the company to maintain a strong competitive posture.2 Another reason for locating near major competitors is that some markets develop faster than others and the experience and knowledge that is learned here can help in other markets www.downloadslide.com CHAPTER 11 Multinational Enterprises as Responsible Stakeholders 353 For example, in the US market IBM is now trying to develop a strategy of providing the best service in the industry In the past the company had often referred service problems to its dealers However, now the firm is attempting to address these issues directly, ensuring a higher level of service and taking back customers who were lured away by smaller firms with better service, support, and prices If this strategy works well, the company is likely to use it in other worldwide locations where small firms have been gaining market share Today, IBM makes very sizable profits from software and services Now IBM is customerled, it is asked by its clients for what they want from IBM, and IBM is producing solutions rather than specific products to link together the complicated global infrastructure IBM is also making a big push into cloud computing, developing software to move big corporate clients into the cloud and building vast data centers to host them It is also looking at ways in which technology can make an impact in the healthcare sector, with sensors to monitor patients remotely But these are competitive sectors where IBM may struggle to achieve the kind of market dominance it once achieved in mainframe computers.3 Another important aspect of a location-focused strategy is that MNEs often establish a home base for each major product line, and a multiproduct-line company will have “centers for excellence” all over the world These centers are responsible for providing global leadership for their respective product lines For example, Asea Brown Boveri, a Swiss firm, uses Sweden as the home base for transmission equipment Research, development, and production are centralized in that country Nestlé, the giant food company, has the world headquarters for its confectionery business in the UK because this home base is more dynamic in terms of the marketing environment and the high per capita consumption of confectionery products At the same time Nestlé has made its Italian company, Buitoni, the world center for pasta operations Meanwhile, Siemens has designated the United States as the world home base for medical electronics because this is where the market is most dynamic and will provide the company with the best chance of developing and maintaining state-of-the-art products It is also important to realize that the product line will dictate the degree of globalization For example, food companies in Europe tend to be less international and more regional in focus Local tastes vary widely and there are only modest gains to be achieved through large-scale operations, so European food companies tend to have an extensive local presence The same is true for home appliances, which are often produced for regional markets On the other hand, when European companies have become truly global, they have tended to focus on products that not require high levels of integration on a worldwide basis So some companies have a need for global centers throughout the world, whereas others tend to stay in closer geographic proximity because of the nature of their product lines Still others combine both of these approaches, as seen in the case International Business Strategy in Action: 3M ✔ Active learning check Review your answer to Active Learning Case question and make any changes you like Then compare your answer to the one below How have NGOs changed the external environment in which MNEs operate? Why NGOs have captured public attention and won a lot of support in North America and western Europe for their “green” and anti-globalization agendas MNEs cannot afford to ignore NGOs, especially US and EU MNEs whose home base “diamond” is threatened by NGOs which can ▼ is Apple the world’s most admired firm among business people? Why is a firm like Google likely to be more admired by NGOs? www.downloadslide.com 354 PART three International Business Strategies influence government policy and regulation Apple has gained recognition as the most successful MNE because it has an innovative approach to consumer electronics such as the iPhone and iPad, which are very successful with consumers around the world In contrast, Google while still being consumer friendly has also developed an explicit environmental energy-saving strategy, making it more popular with green environmentalists International Business Strategy in Action 3M 3M is a major MNE with over 55,000 products sold in 200 countries, comprising everything from office supplies to construction and building maintenance to chemicals In 2015 it employed over 89,000 people and had operations in more than 70 countries Taking this into account, one may question: how does the firm manage such a large international operation? One way is by matching its global strategies with the needs of the local market The company balances its global strategies and national responses on a region-by-region basis For example, in Europe the company has set up a series of business centers to address local differences The company also uses European management action teams (EMATs) to balance the needs of subsidiaries in responding to local expectations with the corporation’s need for global direction Today, 3M has 50 EMATs in Europe, each consisting of from to 14 people, most of whom are marketing personnel These groups are charged with bringing the firm’s global plans to life by helping their execution at the local level EMAT meetings, which usually occur quarterly, are designed to create action plans for the European subsidiaries When the meetings are over, the members then return to their respective subsidiaries and begin executing the plans In Asia the company uses a different approach, relying heavily on its Japanese operation to provide much of the needed direction to the subsidiaries At the same time there are regional centers in Singapore and South Korea that help subsidiaries to address their local markets In Latin America, meanwhile, 3M uses a macro approach, conducting business on a national rather than regional basis 3M is seen by some as one of the first global manufacturing firms to integrate environmental sustainability into its global strategy, across all its operations, despite the obvious organizational complexity outlined above It was among the first group of firms to be listed on the Dow Jones Sustainability Index when it started in 1999 In 2014 it won the US Environmental Protection Agency’s (EPA) ENERGY STAR® award for the tenth year in a row for its worldwide energy-conservation efforts These awards, alongside a range of indicators which the firm uses to measure its progress as a responsible company, suggest that it is genuinely concerned about its wider stakeholders These examples come from its Annual Sustainability Report (2015): ■ 3M’s Pollution Prevention Pays program has prevented nearly million tons of air, water, and waste pollution, and the reduction of the company’s global greenhouse gas emissions by 57 percent from 2002 to 2013 on an absolute basis (even as the company sales grew 30 percent over the same period of time) ■ Ongoing support to protect and restore vital ecosystems around the world By working with partners such as The Nature Conservancy, the 3M Foundation has provided more than $21 million to preserve more than million acres ■ More than $61.6 million in global cash and in-kind product donations in 2013 ■ In 2014 3M joined the United Nations Global Compact, formalizing its commitment to the ten principles of the Compact in the areas of human rights, labor, the environment, and anti-corruption Some firms develop sophisticated vision and mission statements or advertising campaigns to promote their ethical or environmental credentials It is always worth looking at the evidence and in 3M’s case the rhetoric does seem to be matched by the numbers Website: www.3m.com Sources: Adapted from Harry Mammerly, “Matching global strategies with national responses,” Journal of Business Strategy (March/April 1992), pp 8–13; www.3m.com; 3M, Annual Report, 2009–14; 3M Sustainability Report (2015) at: http://www.3m.com/3M/en_US/sustainability-us/ www.downloadslide.com CHAPTER 11 Multinational Enterprises as Responsible Stakeholders 355 International Business Research Frameworks No study of international business would be complete without paying attention to the role and importance of theoretical frameworks In Chapter we introduced the firm (FSA) and country (CSA) matrix, while in Chapter 10 we used the integration and national responsiveness matrix Much of what has been discussed in this book is based on the research findings leading to such basic frameworks In many cases the data were drawn from government statistics, company records, and business reports on recent developments and strategies In other cases the information was garnered from formal studies that examined managerial behaviors among senior managers Collectively, research provides important input for building international business theories and for formulating and implementing future strategies As a result, it is useful to both academicians and practitioners Unfortunately, research findings can be confusing and contradictory For example, many studies are extremely limited in focus and thus cannot be generalized to a universal setting Similarly, when research is broadly based, it is likely that the findings cannot be generalized to specific situations Porter’s diamond, for example, helps to explain how triad nations develop competitive advantage However, its value to non-triad nations, as explained in Chapter 10, is limited and the findings must be revised and modified in order to apply them Despite such shortcomings, however, international business research will continue to be of critical importance to the field Such research will allow us to test theories and to refine their practical applications Theories of international business A great many theories have relevance to the study of international business In some cases these are first constructed and then tested A good example is Adam Smith’s theory of labor specialization Smith presented this concept over 200 years ago in his Wealth of Nations, and in recent years learning curve analysts have confirmed these findings Of course, not all theories have had to wait centuries before being proven However, this example does illustrate that international business research can be advanced through the formulation of useful theories.4 In other cases, theories are being tested for the purpose of reconfirming earlier findings This is particularly important in learning how well a theory stands the test of time A good example is the theory of lifetime employment in Japan For many years, theorists have argued that lifetime employment creates a highly motivated workforce and Western organizations would be wise to copy this approach More recent research, however, reveals that lifetime employment is less useful as a motivator than as a control tool for ensuring worker loyalty and performance In return for guaranteed employment, workers stay with the firm for their entire career, work hard, and are compliant with management’s wishes Sometimes unions are employer dominated and then they serve more to maintain harmony within the employee ranks than to represent the workers Based on an analysis of empirical data collected on this topic, two researchers concluded: “lifetime employment is offered within a context of loyalty and benevolence based on cultural values Its impact, however, is to increase the control of Japanese employees by managers.”5 Moreover, these researchers found that lifetime employment was not widely used by firms in tight labor markets because it was not possible to control the workers, who could easily find jobs with other companies and who derived little motivation from such guarantees This type of research is also important because it generates new hypotheses for testing For example, as workers in large companies with guaranteed lifetime employment near www.downloadslide.com 356 PART three International Business Strategies retirement (55 to 60 years of age), will management replace them with younger people who are not given such guarantees? As the competitive environment increases, will companies stop offering these guarantees because they reduce the firms’ flexibility in responding to changing conditions? Will young workers entering the Japanese workforce during this decade be motivated by such guarantees, or will they turn them down because they are unwilling to commit their career to one firm in return for job security? These types of questions will be focal points for future international business research efforts, since changing economic, cultural, and social environments are creating new conditions in which MNEs must compete Research can help to shed light on the effect of these changes Practical applications of the theory Strategic fit A strategic management concept which holds that an organization must align its resources in such a way as to mesh effectively with the environment Research is also going to play an increasing role in helping to uncover how and why multinationals succeed In particular, greater attention will be given to strategy research that is designed to explain why some firms better than others and how these strategies are changing For example, during the 1970s traditional international business strategy gave strong support to strategic fit, the notion that an organization must align its resources in such a way as to mesh with the environment Auto firms had to design and build cars that were in demand, and this might mean a variety of models and accessories, depending on the number of markets being served Similarly, electronics firms had to maintain state-ofthe-art technology so as to meet consumer demand for new, high-quality, high-performance products Today, however, successful multinationals realize that they must much more than attempt to attain a strategic fit The rapid pace of competitive change is requiring linkages between all segments of the business from manufacturing down to point-of-purchase selling, and in every phase of operation there must be attention to value-added concepts So the basic strategic concepts of the past, once widely accepted, must be reconsidered and sometimes reformulated Other research areas likely to receive future attention will be cross-national collaborative research by individuals from two or more countries and joint efforts by international and non-international researchers The world of international business is getting larger every day, and it is critical that research be designed not only to help explain what is happening and why it is occurring, but also to help predict future developments and thus better prepare students and practitioners for the international challenges of the twenty-first century The Five Partners Business Network Framework In the future governments will become more selective in their approach to industrial policy, aware that in the past billions of dollars have been wasted by bureaucratic efforts to streamline and refocus economic efforts This recent trend is likely to result in more government– business efforts However, the success of international business firms will depend more heavily on the companies themselves than on the government Some of these developments will include the forging of new business networks for competitive advantage and the development of new relationships with non-business sector groups.6 Forging new business networks Increasingly, the relationship of successful MNEs with their suppliers, customers, and competitors is changing New strategies based on trust and reciprocal support are replacing the old business–client relationship in which companies sought to dictate the terms and conditions of sales and services www.downloadslide.com CHAPTER 11 Multinational Enterprises as Responsible Stakeholders Flagship firms Multinational firms characterized by global competitiveness and international benchmarks 357 In the case of suppliers, the current trend is toward reducing this number to a small group of reliable, efficient, and highly responsive firms These suppliers are then brought into a close working relationship with the MNE so that both sides understand the other’s strategy and plans can be formulated for minimizing working problems The multinational will detail its needs and the supplier will draw up plans that ensure timely, accurate delivery Another trend is the increase in the amount of responsibility being given to suppliers Previously they were charged only with manufacturing, assembly, and delivery Now many MNEs use their network partners to develop new materials and components, to perform industrial engineering functions, and to assume liability for warranties In the case of customers, network linkages now involve changing the focus of the relationship from one in which sales representatives would work directly with MNE purchasing agents to one in which sellers interact more directly with their customers D’Cruz and Rugman have explained this idea in the case of flagship firms, characterized by global competitiveness and international benchmarks.7 In the conventional system the flagship firm and its customers maintain an arm’s-length relationship However, new relationships are now being forged in which there is a direct link between the flagship firm and its most important customers (see Figure 11.1, segments and 2), whereas traditional relations are maintained with some distributors to serve the firm’s less important customers At the same time, network linkages are being developed with key distributors to serve other customers better (again see Figure 11.1, segments and 4, etc.) Network arrangements are also being created between international competitors in the form of joint ventures, technology transfers, and market-sharing agreements, such as a Japanese firm selling the product of a US firm in the Japanese market in return for a similar concession in the United States Mazda and Ford Motor are excellent examples Figure 11.1 Network linkage and the changing shape of international distribution systems Source: © Alan Rugman and Joseph R D’Cruz, 2000 Reprinted from Multinationals as Flagship Firms: Regional Business Networks by Alan M Rugman and Joseph R D’Cruz (2000) www.downloadslide.com 358 PART three International Business Strategies Figure 11.2 Network linkages for successful MNEs Source: © Alan Rugman and Joseph R D’Cruz, 2000 Reprinted from Multinationals as Flagship Firms: Regional Business Networks by Alan M Rugman and Joseph R D’Cruz (2000) Five partners A business network consisting of five partner organizations: the flagship firm (a multinational enterprise), key suppliers, key customers, key competitors, and the nonbusiness infrastructure These strategic relationships among suppliers, customers, and competitors are becoming integral parts of MNE strategies, as are linkages to non-business organizations such as unions, with which multinationals are now sharing their strategies in the hope of creating a working relationship that will save jobs and ensure company profitability Partnerships are also being fostered with universities that can help to educate and train human resources, and research institutions that can provide scientific knowledge that is useful for helping organizations to develop and maintain worldwide competitiveness Another group that is getting increased attention is government, since this institution can be particularly helpful in supporting legislation that will encourage the upgrading of the workforce, development of state-of-the-art technology and products, exports, and the building of world-class competitors Figure 11.2 provides an illustration of the basic structure of the five partners in an effective network Notice how these relationships go beyond commercial transactions and involve network linkages to a wide variety of other groups This is one of the waves of the future in international business Coping With Changing Environments The international environment of the future will continue to be one of rapid change, and MNEs will have to stay abreast of a number of developments The political and economic environments will present the greatest challenges Political environment As already seen, the political environment affects MNE activities in many ways For example, all major triad groups have trade barriers that are designed to limit the sale of foreign goods in their countries This in turn typically results in trade negotiations that are designed to open up these markets and/or to reduce trade deficits Protectionism trends are particularly treacherous because they are psychological as well as legislative That is, even when trade barriers are lowered, there is a tendency for people to be protectionist and to “buy local.” www.downloadslide.com index Israel 158, 163, 167 Italy ceramic tile industry 322 competitiveness 322 intelligence gathering 560 leather footwear industry 389 sponsorship 280 strategic management 279–80 subcontracting 279–80 work councils 465 Jaguar 539, 544, 659 Jaguar Land Rover 392, 539, 544 James, LeBron 413 Japan 582–615 see also keiretsu corporate networks (Japan) amakudari 586, 713 automobile industry 337, 403, 590, 592–3, 602, 606–7, 610–13 competitive advantage 668 culture 421, 425 United States 668 banking industry 602–3 barriers to entry 201, 340, 583–4 beer industry 343, 597–8 benkyokai (workshops) 599, 713 business characteristics 593–8 business cards (meishi) 178 capital markets, restructuring 601–2 centralization 340 changes in Japan 601–3 China 184–5, 592–3, 594, 606, 615, 687, 691 economic crisis 2015 231–2 research and development (R&D) 594, 689 chu (loyalty) 586, 713 Coca Cola 393, 425 collectivism 163 collusion 498, 583 communication 308, 599 compensation/remuneration 310, 607 competitiveness 320, 322, 340, 587, 590, 593, 599, 605, 614, 668 computer industry 130–1, 155, 273, 302, 336–7, 340, 344, 352, 467 construction industry, bid rigging in the 498 consumers, changes in buying patterns of 601 corporations 598–601, 605–11 corruption 498, 507 cost-of-living allowances 468–9 costs 583, 601, 605–6, 610, 614–15 cross-shareholding 606 culture 158, 162–4, 166, 172, 175–6, 425, 584–7, 601, 604, 607–11 communication 308, 599 English language 155 European Union 572 labor unions 465 lifetime employment, theory of 355–6, 607, 611 silence 497 socio-cultural forces 421 training 454 uncertainty avoidance 160 customer satisfaction 397 dango 75 decision-making process 307, 600 deregulation 602–3, 605 diversification strategies 594, 599, 605, 607–8 doing business in Japan 583–4 dumping 340, 431 earthquake 2011 606 economic and trade data 588 economic characteristics 586–92, 599, 601, 607–9 economic growth 585, 588, 593, 599, 601, 608, 687 economic integration 340 education 556–7, 586–7 emerging economies 555 endaka (Yen appreciation) 601, 606, 715 Europe 602 European Union 130, 555–6 exchange rate 191 expatriates 468–9 exports and imports 588, 590–3 finance systems 601–2 financial management 537 firm-specific advantages (FSAs) 668 Flying Geese model 664, 666 forecasting systems, developing 531–2 foreign direct investment in 583–4, 587–8, 589, 592, 601–7, 655, 691 foreign exchange 230 free trade 359 gaijin (non-Japanese) 586, 611, 717 GATT 431 GDP 585, 593–4 gender 164–5 giri (duty) 586, 713 global sourcing 38 globalization 340 government role in economy 585–6 hai dilemma 587, 717 high performers, rewarding 310 human resources management (HRM) 355–6, 450, 583, 587, 599, 601, 605–7, 611–15 IBM 155, 344, 352, 467 739 individualism 163, 586 industrial policy 340 information and communications technology (ICT) 592–3 information gathering 262–3 innovation 115–17 international trade 184–6 internationalization 608 just-in-time inventory (JIT) 396, 593 kaizen (continuous improvement) 393, 403, 593 kanji 336 labor costs 605–6, 614–15 labor relations 462, 464–5, 466 labor unions 462, 464–5, 466 languages 75, 164, 178 largest MNEs, table of 83, 600 liberalization 585 lifetime employment, theory of 355–6, 607, 611 local rivalry 590 location 266 logistics 401 long-termism 600 management style 599–600 manufacturing 392–3, 396, 592–3, 602, 605–7, 610–14 market seeking 57 marketing 420, 425, 600–1 marketing, money and manpower strategy (3 Ms) 600–1 McDonald's 77, 362 meishi 178 mergers and acquisitions 602–3, 605–7 Ministry for Economy, Trade and Industry (METI) 130, 585, 719 Ministry of Finance (MOF) 585–6, 719 Ministry of International Trade and Industry (MITI) 131, 585–6 Ministry of Post and Telecommunications (MPT) 586 MNEs 340 national responsiveness 340 negotiation strategies 493, 497 nemawashi (consultation) 600, 719 OECD 585–6, 594, 598, 601 OPEC oil crisis of 1970s 340 operating costs 583 organizing strategy 291 Plaza Accord 601 political characteristics 585–6, 601, 607–9 Porter's diamond model 668 ports 507–8 privatization 130 process innovation 592 www.downloadslide.com 740 index Japan (continued) product development 276 productivity 587, 599, 614 protectionism 583 public sector employees to private sector, transfer of 586 real estate 528 recession 585, 596, 599, 601–2, 604–5, 608, 610–11 reconstruction after World War II 25–6 reporting systems, developing 531–2 research and development (R&D) 593–4, 599, 614, 689 restructuring corporations 605–8, 610–11 retail 397, 593, 604–5 ringi (consensus) 307, 600, 720 robotics 322 semiconductor industry 467 silence 497 SMEs 71, 75 social characteristics 585, 587, 599, 601, 607–9 standardized goods 333 strategic alliances 272–3, 357, 607, 610–13 strategic business units (SBUs) 266–7 strategic management 266–7, 271, 607–8 structural variables 305–6 technical barriers 201 telecommunications industry 586, 602 Toys “R” Us 77, 583 trade imbalance 587–8 training 467, 599, 607 triad power, as a 587 unemployment 585, 601, 605–7, 611 United States 266, 271, 357, 359, 590, 592–4, 600, 602, 614, 668 free trade 359 GDP 593–4 manufacturing 593 trade conflict with 588 vertical integration 267 yakuza 508 Japan Airlines 197 Japan Brewery Company Ltd 597 Japan Harbor Transportation Association (JHTA) 507–8 Japan Post 130 Japan Telecom 256–7 Jardine Matheson 23, 579, 652–3 Jet Airways 143 Jiang Zemin 126 Jobs, Steve 143 John F Welch Technology Centre (JFWTC) 91 John Lewis Partnership (JLP) 173 Johnson & Johnson 295, 350, 513–14 Johnson, Lyndon 338 Joint Commission International (JCI) 677, 678 joint ventures culture 172–4 emerging economies 273 entry modes 40, 64 equity JVs 60, 64, 66 firm-specific advantages (FSAs) 259 international (IJVs) 64, 259, 273, 718 marketing 421 strategic alliances 142 strategic management 259, 273 Jonathan, Goodluck 478 Jordan, Michael 413 Jospin, Lionel 138, 550 JP Morgan 82, 472 Jumbo Seafoods Pte Ltd 72 Jumex 643–4 just-in-time inventory (JIT) 396, 397, 403–4, 718 JWT 443 Kace Networks Inc 371 Kaeser, Joe 513 kaizen (continuous improvement) 393, 403, 593, 718 Kajima 599 Kamprad, Ingvar 428–9 Kangaroo Computer 649 Karstadt 390 Kawasaki 696 keiretsu corporate networks (Japan) 7, 176, 583–4, 587, 605, 607–8, 611, 718 beverage industry 597–8 collusion 498 co-prosperity pyramid 596, 714 culture 172 customer orientation 598 decline of manufacturing and distribution keiretsu 606 distribution 593, 598, 606 downstream 583 foreign firms, disadvantages to 596 Fuyo keiretsu 594, 595 IBM 404 kinyu (horizontal conglomerates) 594, 718 Kirin Beer 597–8 manufacturing 593, 594, 596, 606 Mitsubishi 404–9, 594–6 Mitsui 404–9 production strategy 404–9 retail 593, 598 return on investment (ROI) 594 SMEs 71, 75, 596 sogo shosha (international trading companies) 594, 721 Toyota 596 upstream 583 vertical conglomerates 594, 596 zaibatsu (pre-war antecedents) 594, 722 Kellogg's 420, 428 Kelly, John 112 Kennedy, John F 338 Kenya flower industry 661–3 Fairtrade 661–2 ports, corruption and 507 textile quotas 484 Khodorkovsky, Mikhail 124, 505 Kia 562, 659, 670 kinesics 308, 718 Kingdee 700 Kirin Brewery 293, 343, 597–8 Kleinfeld, Klaus 512 K-Mart 99, 390 knowledge infrastructure 47 intensive firms 66 knowledge- and technology-intensive (KTI) industries 93–4, 101 location advantages 46, 47 market knowledge 60–1 networks, managing 386 technology 11, 93–4, 101 Kodak 16, 101, 196, 271 Kohli, FC 674 Kola Real Group 425 Konka 700, 706 Korn Ferry 473–4 KPMG 261–2 Krebs, Rudolf 561 Kroger 82 Kuehne & Magel 375 Kuhne & Nagel 569 Kumar, V 286 Kuwait 272 Kuwait Petroleum 598 Kyocera 207 Kyoto Summit 1997 135, 136 Labatt 343 labor see human resource management (HRM) labor relations 460–6, 573 adjustment programs 620 Better Work Program 463–4 centralization and decentralization 462 codetermination 465, 714 ... Number of ships 2, 176,416 1, 923 ,790 1 ,23 1 ,24 5 606,090 593,798 591,710 14.6 12. 9 8 .2 4.1 4.0 4.0 586 460 399 160 1 32 160 *TEU capacity and market-share figures from February 25 , 20 11, from Alphaliner... Management International Review, vol 50, no (October 20 10) Marano, Valentina, and Pete Tashman “MNE/NGO partnerships and the legitimacy of the firm,” International Business Review, vol 21 , no (20 12) ... 14, 20 11, http://www.bbc.co.uk/ news /business- 13 726 776 Otto Andersen, “On the internationalization process of firms: a critical analysis,” Journal of International Business Studies, vol 24 , no