Global business today 10e hill & hult mcgraw hill 2018

Global Business Today

9e

Global Business Today

9e

Charles W. L. Hill University of Washington

G. Tomas M. Hult Michigan State University

GLOBAL BUSINESS TODAY, NINTH EDITION Published by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121. Copyright © 2016 by McGraw-Hill Education. All rights reserved. Printed in the United States of America. Previous editions © 2014, 2011, 2009 and 2008. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of McGraw-Hill Education, including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning.

Some ancillaries, including electronic and print components, may not be available to customers outside the United States.

This book is printed on acid-free paper.

1 2 3 4 5 6 7 8 9 0 RMN/RMN 1 0 9 8 7 6 5 4

ISBN 978-0-07-811291-1 MHID 0-07-811291-5

Senior Vice President, Products & Markets: Kurt L. Strand Vice President, General Manager, Products & Markets: Michael Ryan Vice President, Content Design & Delivery: Kimberly Meriwether David Managing Director: Susan Gouijnstook Brand Manager: Anke Braun Weekes Product Developer: Andrea Scheive Marketing Manager: Michael Gedatus Marketing Coordinator: Elizabeth Steiner Director of Development: Ann Torbert Digital Product Developer: Kerry Shanahan Director, Content Design & Delivery: Terri Schiesl Program Manager: Mary Conzachi Content Project Managers: Danielle Clement, Judi David Buyer: Debra R. Sylvester Design: Matt Diamond Content Licensing Specialist: Keri Johnson Cover Image: © Veer Compositor: Aptara®, Inc. Printer: R. R. Donnelley

All credits appearing on page or at the end of the book are considered to be an extension of the copyright page.

Library of Congress Cataloging-in-Publication Data

Hill, Charles W. L. Global business today / Charles W. L. Hill, University of Washington, G. Tomas M. Hult, Michigan State University.—9e [edition]. pages cm ISBN 978-0-07-811291-1 (alk. paper)—ISBN 0-07-811291-5 (alk. paper) 1. International business enterprises—Management. 2. International trade. 3. Investments, Foreign. 4. Capital market. I. Hult, G. Tomas M. II. Title. HD62.4.H548 2016 658’.049—dc23

2014037047

The Internet addresses listed in the text were accurate at the time of publication. The inclusion of a website does not indicate an endorsement by the authors or McGraw-Hill Education, and McGraw-Hill Education does not guarantee the accuracy of the information presented at these sites.

www.mhhe.com

For June and Mike Hill, my

par en

ts

—C ha

rle s H

ill

For Gert and Margare ta H

ult , m

y p are

nts —T oma

s Hult

iv

about the authors Charles W. L. Hill is the Hughes M. Blake Professor of International Business at the Foster School of Business, University of Washington. Professor Hill received his Ph.D. in industrial organi- zation economics in 1983 from the University of Manchester’s Institute of Science and Technology (UMIST) in Great Britain. In addition to his position at the University of Washington, he has served on the faculties of UMIST, Texas A&M University, and Michigan State University.

Professor Hill has published some 50 articles in peer-reviewed academic journals. He has also published four college textbooks, one on strategic management, one on principles of management, and the other two on international business (one of which you are now holding). He serves on the editorial boards of several academic journals and previously served as consulting editor at the Academy of Management Review.

Professor Hill teaches in the MBA and executive MBA programs at the University of Washington and has received awards for teaching excellence in both programs. He has also taught on several customized executive programs. He lives in Seattle with his wife, Lane, and his children.

G. Tomas M. Hult is the John W. Byington Endowed Chair, Professor of Marketing and Interna- tional Business, and Director of the International Business Center in the Eli Broad College of Business at Michigan State University. Dr. Hult is an Elected Fellow of the Academy of International Business (AIB) and serves as the Executive Director and Foundation President of AIB. He also serves on the U.S. District Export Council and holds board member positions of the International Trade Center of Mid-Michigan and the Sheth Foundation.

Several studies have ranked Professor Hult as one of the most cited scholars in the world in business and management (e.g., Thomson Reuters’ Essential Science Indicators). He has served as editor of Journal of the Academy of Marketing Science and has published 50 articles in premier business journals—Journal of International Business Studies, Academy of Management Journal, Strategic Management Journal, Journal of Management, Journal of Marketing, Journal of the Acad- emy of Marketing Science, Journal of Retailing, Journal of Operations Management, and Decision Sciences. Dr. Hult has also published several books, e.g., Global Supply Chain Management (2014), Total Global Strategy (2012), and Extending the Supply Chain (2005).

Professor Hult is a well-known keynote speaker on global supply chain management, global strategy, and marketing strategy. He teaches in doctoral, master’s, and undergraduate programs at Michigan State University, plus he is a visiting professor at Leeds University (United Kingdom) and Uppsala University (Sweden). He also teaches frequently in executive development programs and has developed a large clientele of the world’s top multinational corporations. Tomas Hult is a dual citizen of the United States and Sweden and lives in Okemos, Michigan, with his wife, Laurie, and their children, Daniel and Isabelle.

Charles and Tomas at a top-volume S tarb

uck s in

Se at

tle !

v

brief contents

THE PROVEN CHOICE FOR INTERNATIONAL BUSINESS xiii

PART ONE Introduction and Overview 2 Chapter One Globalization 3

PART TWO National Differences 36 Chapter Two National Differences in Political, Economic, and Legal Systems 37 Chapter Three National Differences in Economic Development 61 Chapter Four Differences in Culture 89 Chapter Five Ethics, Corporate Social Responsibility, and Sustainability 127

PART THREE The Global Trade and Investment Environment 158 Chapter Six International Trade Theory 159 Chapter Seven Government Policy and International Trade 195 Chapter Eight Foreign Direct Investment 223 Chapter Nine Regional Economic Integration 253

PART FOUR The Global Monetary System 284 Chapter Ten The Foreign Exchange Market 285 Chapter Eleven The International Monetary System 311

PART FIVE The Strategy of International Business 336 Chapter Twelve The Strategy of International Business 337 Chapter Thirteen Entering Foreign Markets 371

PART SIX International Business Functions 396 Chapter Fourteen Exporting, Importing, and Countertrade 397 Chapter Fifteen Global Production and Supply Chain Management 419 Chapter Sixteen Global Marketing and Research and Development 449 Chapter Seventeen Global Human Resource Management 487

GLOSSARY 512

PHOTO CREDITS 520

NAME INDEX 521

SUBJECT INDEX 522

ACRONYMS

COUNTRIES AND THEIR CAPITALS

WORLD MAP

Looking for a briefer text? Consider some of these alternate combined chapters to create a 14 chapter text with Hill and Hult’s marketleading content.

• Country Difference in Political Systems, Economic Systems and Development (Chapter 2 & 3 combined)

• International Trade Theory and Policy (Chapter 6 & 7 combined)

• Entering Foreign Markets (Chapter 13 & 14 combined) To preview this content and build your custom text, please visit www.mcgrawhillcreate.com/hill.

vi

contents THE PROVEN CHOICE FOR INTERNATIONAL BUSINESS xiii

PART ONE Introduction and Overview 2

Chapter One Globalization 3 Opening Case: The Globalization of Production at Boeing 3 Introduction 4 What Is Globalization? 6

The Globalization of Markets 6

The Globalization of Production 7

The Emergence of Global Institutions 9 Drivers of Globalization 11

Declining Trade and Investment Barriers 11

The Role of Technological Change 13

The Changing Demographics of the Global Economy 15

The Changing World Output and World Trade Picture 15

The Changing Foreign Direct Investment Picture 16

The Changing Nature of the Multinational Enterprise 19

The Changing World Order 20

The Global Economy of the Twenty-First Century 22

The Globalization Debate 22 Antiglobalization Protests 22

Globalization, Jobs, and Income 23

Globalization, Labor Policies, and the Environment 26

Globalization and National Sovereignty 27

Globalization and the World’s Poor 28

Managing in the Global Marketplace 29 Key Terms 31 Summary 31 Critical Thinking and Discussion Questions 32 Research Task 32

Closing Case: Who Makes the Apple iPhone? 32 Endnotes 33

PART TWO National Differences 36

Chapter Two National Differences in Political, Economic, and Legal Systems 37

Opening Case: Putin’s Russia 37 Introduction 39 Political Systems 40

Collectivism and Individualism 40

Democracy and Totalitarianism 43

Economic Systems 44 Market Economy 45

Command Economy 46

Mixed Economy 46

Legal Systems 47 Different Legal Systems 47

Differences in Contract Law 48

Property Rights and Corruption 49

The Protection of Intellectual Property 52

Product Safety and Product Liability 54

Focus on Managerial Implications 55 Key Terms 55 Summary 56 Critical Thinking and Discussion Questions 56 Research Task 57

Closing Case: Ghana: An African Dynamo 57 Endnotes 58

Chapter Three National Differences in Economic Development 61

Opening Case: Political and Economic Reform in Myanmar 61 Introduction 62 Differences in Economic Development 63

Broader Conceptions of Development: Amartya Sen 66

Political Economy and Economic Progress 68

Innovation and Entrepreneurship Are the Engines of Growth 68

Innovation and Entrepreneurship Require a Market Economy 68

Innovation and Entrepreneurship Require Strong Property Rights 69

The Required Political System 69

Economic Progress Begets Democracy 70

Geography, Education, and Economic Development 71

States in Transition 72 The Spread of Democracy 72

The New World Order and Global Terrorism 74

The Spread of Market-Based Systems 75

The Nature of Economic Transformation 77 Deregulation 77

Privatization 77

Legal Systems 79

Implications of Changing Political Economy 79 Focus on Managerial Implications 80 Key Terms 84 Summary 84 Critical Thinking and Discussion Questions 85 Research Task 85

Closing Case: Revolution in Egypt 86 Endnotes 87

Chapter Four Differences in Culture 89 Opening Case: Best Buy and eBay in China 89 Introduction 91 What Is Culture? 92

Values and Norms 92

Culture, Society, and the Nation-State 94

The Determinants of Culture 95

Social Structure 95 Individuals and Groups 95

Social Stratification 97

Religious and Ethical Systems 100 Christianity 102

Islam 103

Hinduism 106

Buddhism 107

Confucianism 108

Language 109 Spoken Language 110

Unspoken Language 111

Education 111 Culture and Business 112 Cultural Change 115

Focus on Managerial Implications 117 Key Terms 120 Summary 120 Critical Thinking and Discussion Questions 121 Research Task 121

Closing Case: World Expo 2020 in Dubai, UAE 122 Endnotes 123

Chapter Five Ethics, Corporate Social Responsibility, and Sustainability 127

Opening Case: Making Toys Globally 127 Introduction 128 Ethical Issues in International Business 129

Employment Practices 130

Human Rights 130

Environmental Pollution 132

Corruption 134

Ethical Dilemmas 136 The Roots of Unethical Behavior 137

Personal Ethics 137

Decision-Making Processes 138

Organization Culture 139

Unrealistic Performance Goals 139

Leadership 139

Societal Culture 139

Philosophical Approaches to Ethics 140 Straw Men 140

Utilitarian and Kantian Ethics 142

Rights Theories 143

Justice Theories 144

Focus on Managerial Implications 145 Key Terms 152 Summary 153 Critical Thinking and Discussion Questions 153 Research Task 154

Closing Case: Bitcoin as an Ethical Dilemma 154 Endnotes 155

PART THREE The Global Trade and Investment Environment 158

Chapter Six International Trade Theory 159 Opening Case: Creating the World’s Biggest Free Trade Zone 159 Introduction 160 An Overview of Trade Theory 160

The Benefits of Trade 161

The Pattern of International Trade 162

Trade Theory and Government Policy 162

Contents vii

viii Contents

Mercantilism 163 Absolute Advantage 163 Comparative Advantage 166

The Gains from Trade 167

Qualifications and Assumptions 168

Extensions of the Ricardian Model 169

Heckscher-Ohlin Theory 174 The Leontief Paradox 174

The Product Life-Cycle Theory 175 Product Life-Cycle Theory in the Twenty-First Century 176

New Trade Theory 176 Increasing Product Variety and Reducing Costs 178

Economies of Scale, First-Mover Advantages, and the Pattern of Trade 179

Implications of New Trade Theory 179

National Competitive Advantage: Porter’s Diamond 180

Factor Endowments 181

Demand Conditions 182

Related and Supporting Industries 182

Firm Strategy, Structure, and Rivalry 182

Evaluating Porter’s Theory 183

Focus on Managerial Implications 183 Key Terms 185 Summary 185 Critical Thinking and Discussion Questions 186 Research Task 187

Closing Case: The Rise of India’s Drug Industry 187 Appendix A International Trade and the Balance of Payments 189 Endnotes 192

Chapter Seven Government Policy and International Trade 195

Opening Case: Sugar Subsidies Drive Candy Makers Abroad 195 Introduction 196 Instruments of Trade Policy 197

Tariffs 197

Subsidies 198

Import Quotas and Voluntary Export Restraints 199

Local Content Requirements 200

Administration Policies 201

Antidumping Policies 201

The Case for Government Intervention 202

Political Arguments for Intervention 203

Economic Arguments for Intervention 205

The Revised Case for Free Trade 207 Retaliation and Trade War 207

Domestic Policies 208

Development of the World Trading System 208 From Smith to the Great Depression 209

1947–1979: GATT, Trade Liberalization, and Economic Growth 209

1980–1993: Protectionist Trends 209

The Uruguay Round and the World Trade Organization 210

WTO: Experience to Date 211

The Future of the WTO: Unresolved Issues and the Doha Round 212

Focus on Managerial Implications 216 Key Terms 217 Summary 218 Critical Thinking and Discussion Questions 218 Research Task 219

Closing Case: China Limits Exports of Rare Earth Materials 219 Endnotes 220

Chapter Eight Foreign Direct Investment 223 Opening Case: Foreign Direct Investment in Nigeria 223 Introduction 224 Foreign Direct Investment in the World Economy 224

Trends in FDI 224

The Direction of FDI 225

The Source of FDI 226

The Form of FDI: Acquisitions versus Greenfield Investments 228

Theories of Foreign Direct Investment 228 Why Foreign Direct Investment? 228

The Pattern of Foreign Direct Investment 232

The Eclectic Paradigm 232

Political Ideology and Foreign Direct Investment 234

The Radical View 234

The Free Market View 234

Pragmatic Nationalism 235

Shifting Ideology 236

Benefits and Costs of FDI 237 Host-Country Benefits 237

Host-Country Costs 239

Home-Country Benefits 241

Contents ix

Home-Country Costs 241

International Trade Theory and FDI 241

Government Policy Instruments and FDI 242 Home-Country Policies 242

Host-Country Policies 243

International Institutions and the Liberalization of FDI 244

Focus on Managerial Implications 244 Key Terms 247 Summary 247 Critical Thinking and Discussion Questions 247 Research Task 248

Closing Case: Foreign Retailers in India 248 Endnotes 249

Chapter Nine Regional Economic Integration 253

Opening Case: Tomato Wars 253 Introduction 254 Levels of Economic Integration 256 The Case for Regional Integration 257

The Economic Case for Integration 258

The Political Case for Integration 258

Impediments to Integration 258

The Case against Regional Integration 259 Regional Economic Integration in Europe 260

Evolution of the European Union 260

Political Structure of the European Union 260

The Single European Act 263

The Establishment of the Euro 265

Enlargement of the European Union 269

Regional Economic Integration in the Americas 270

The North American Free Trade Agreement 270

The Andean Community 273

Mercosur 274

Central American Common Market, CAFTA, and CARICOM 274

Free Trade Area of the Americas 275

Regional Economic Integration Elsewhere 275 Association of Southeast Asian Nations 276

Asia-Pacific Economic Cooperation 277

Regional Trade Blocs in Africa 278

Focus on Managerial Implications 278 Key Terms 280 Summary 280 Critical Thinking and Discussion Questions 281 Research Task 281

Closing Case: I Want My Greek TV! 282 Endnotes 283

PART FOUR The Global Monetary System 284

Chapter Ten The Foreign Exchange Market 285 Opening Case: Embraer and the Wild Ride of the Brazilian Real 285 Introduction 286 The Functions of the Foreign Exchange Market 287

Currency Conversion 287

Insuring against Foreign Exchange Risk 289

The Nature of the Foreign Exchange Market 291 Economic Theories of Exchange Rate Determination 292

Prices and Exchange Rates 293

Interest Rates and Exchange Rates 298

Investor Psychology and Bandwagon Effects 299

Summary of Exchange Rate Theories 300

Exchange Rate Forecasting 300 The Efficient Market School 300

The Inefficient Market School 301

Approaches to Forecasting 301

Currency Convertibility 302 Focus on Managerial Implications 303 Key Terms 306 Summary 306 Critical Thinking and Discussion Questions 307 Research Task 307

Closing Case: The Rise (and Fall) of the Japanese Yen 308 Endnotes 309

Chapter Eleven The International Monetary System 311

Opening Case: The IMF and Iceland’s Economic Recovery 311 Introduction 312 The Gold Standard 313

Mechanics of the Gold Standard 313

Strength of the Gold Standard 314

The Period between the Wars, 1918–1939 314

The Bretton Woods System 315 The Role of the IMF 315

The Role of the World Bank 316

The Collapse of the Fixed Exchange Rate System 317

The Floating Exchange Rate Regime 318 The Jamaica Agreement 318

Exchange Rates since 1973 318

Fixed versus Floating Exchange Rates 322 The Case for Floating Exchange Rates 322

The Case for Fixed Exchange Rates 323

Who Is Right? 324

Exchange Rate Regimes in Practice 324 Pegged Exchange Rates 324

Currency Boards 325

Crisis Management by the IMF 326 Financial Crises in the Post–Bretton Woods Era 326

Evaluating the IMF’s Policy Prescriptions 328

Focus on Managerial Implications 330 Key Terms 333 Summary 333 Critical Thinking and Discussion Questions 334 Research Task 334

Closing Case: Currency Trouble in Malawi 334 Endnotes 335

PART FIVE The Strategy of International Business 336

Chapter Twelve The Strategy of International Business 337

Opening Case: IKEA 337 Introduction 338 Strategy and the Firm 339

Value Creation 339

Strategic Positioning 341

Operations: The Firm as a Value Chain 342

Global Expansion, Profitability, and Profit Growth 346

Expanding the Market: Leveraging Products and Competencies 347

Location Economies 348

Experience Effects 350

Leveraging Subsidiary Skills 352

Profitability and Profit Growth Summary 352

Cost Pressures and Pressures for Local Responsiveness 353 Pressures for Cost Reductions 353

Pressures for Local Responsiveness 354

Choosing a Strategy 357 Global Standardization Strategy 357

Localization Strategy 359

Transnational Strategy 359

International Strategy 360

The Evolution of Strategy 361

Strategic Alliances 362 The Advantages of Strategic Alliances 362

The Disadvantages of Strategic Alliances 363

Making Alliances Work 364 Key Terms 366 Summary 366 Critical Thinking and Discussion Questions 367 Research Task 367

Closing Case: Ford’s Global Strategy 367 Endnotes 368

Chapter Thirteen Entering Foreign Markets 371

Opening Case: Market Entry at Starbucks 371 Introduction 372 Basic Entry Decisions 373

Which Foreign Markets? 373

Timing of Entry 374

Scale of Entry and Strategic Commitments 376

Market Entry Summary 377

Entry Modes 377 Exporting 378

Turnkey Projects 379

Licensing 380

Franchising 382

Joint Ventures 383

Wholly Owned Subsidiaries 384

Selecting an Entry Mode 385 Core Competencies and Entry Mode 386

Pressures for Cost Reductions and Entry Mode 386

Greenfield Venture or Acquisition? 387 Pros and Cons of Acquisition 387

Pros and Cons of Greenfield Ventures 389

Greenfield Venture or Acquisition? 390 Key Terms 390 Summary 390 Critical Thinking and Discussion Questions 391 Research Task 392

Closing Case: JCB in India 392 Endnotes 393

PART SIX International Business Functions 396

Chapter Fourteen Exporting, Importing, and Countertrade 397

x Contents

Opening Case: Growing Through Exports 397 Introduction 398 The Promise and Pitfalls of Exporting 398 Improving Export Performance 401

An International Comparison 401

Information Sources 401

Utilizing Export Management Companies 402

Export Strategy 403

Export and Import Financing 405 Lack of Trust 405

Letter of Credit 406

Draft 407

Bill of Lading 408

A Typical International Trade Transaction 408

Export Assistance 409 Export–Import Bank 409

Export Credit Insurance 410

Countertrade 410 The Popularity of Countertrade 411

Types of Countertrade 411

Pros and Cons of Countertrade 413 Key Terms 413 Summary 414 Critical Thinking and Discussion Questions 414 Research Task 415

Closing Case: MD International 415 Endnotes 416

Chapter Fifteen Global Production and Supply Chain Management 419

Opening Case: Apple: The Best Supply Chain in the World? 419 Introduction 421 Strategy, Production, and Supply Chain Management 421 Where to Produce 424

Country Factors 424

Technological Factors 426

Production Factors 428

The Hidden Costs of Foreign Locations 431

Make-or-Buy Decisions 433 Global Supply Chain Functions 436

Global Logistics 436

Global Purchasing 438

Managing a Global Supply Chain 439 Role of Just-in-Time Inventory 440

Role of Information Technology 440

Coordination in Global Supply Chains 441

Interorganizational Relationships 441

Key Terms 443 Summary 443 Critical Thinking and Discussion Questions 444 Research Task 445

Closing Case: H&M: The Retail–Clothing Giant 445 Endnotes 446

Chapter Sixteen Global Marketing and Research and Development 449

Opening Case: Global Branding of Avengers and Iron Man 449 Introduction 450 Globalization of Markets and Brands 452 Market Segmentation 453 Product Attributes 455

Cultural Differences 455

Economic Development 456

Product and Technical Standards 456

Distribution Strategy 457 Differences Between Countries 457

Choosing a Distribution Strategy 460

Communication Strategy 461 Barriers to International Communication 461

Push Versus Pull Strategies 462

Global Advertising 464

Pricing Strategy 466 Price Discrimination 466

Strategic Pricing 468

Regulatory Influences on Prices 469

Configuring the Marketing Mix 469 International Market Research 472 Product Development 475

The Location of R&D 476

Integrating R&D, Marketing, and Production 477

Cross-Functional Teams 478

Building Global R&D Capabilities 478 Key Terms 480 Summary 480 Critical Thinking and Discussion Questions 481 Research Task 481

Closing Case: Domino’s Pizza Worldwide 482 Endnotes 483

Chapter Seventeen Global Human Resource Management 487

Opening Case: The Strategic Role of Human Resources at IBM 487

Contents xi

Introduction 488 The Strategic Role of International HRM 489 Staffing Policy 490

Types of Staffing Policy 490

Expatriate Managers 494

The Global Mindset 497

Training and Management Development 498 Training for Expatriate Managers 498

Repatriation of Expatriates 499

Management Development and Strategy 500

Performance Appraisal 501 Performance Appraisal Problems 501

Guidelines for Performance Appraisal 502

Compensation 502 National Differences in Compensation 502

Expatriate Pay 503

International Labor Relations 505

The Concerns of Organized Labor 505

The Strategy of Organized Labor 505

Approaches to Labor Relations 506 Key Terms 507 Summary 507 Critical Thinking and Discussion Questions 508 Research Task 508

Closing Case: MMC China 508 Endnotes 509

GLOSSARY 512 PHOTO CREDITS 520 NAME INDEX 521 SUBJECT INDEX 522 ACRONYMS COUNTRIES AND THEIR CAPITALS WORLD MAP

xii Contents

xiii

the proven choice for international business

Current. Application Rich. Relevant. Integrated. Global Business Today is intended for the first international business course at either the Undergraduate or MBA level. As the market leader, the goal in creating this package has been to set a new standard for international business teaching. We have attempted to cre- ate resources that

• Are comprehensive and up-to-date. • Go beyond an uncritical presentation and shallow explanation of the body of

knowledge. • Focus on rich applications of international business concepts. • Tightly integrate progression of topics among chapters. • Are fully integrated with results-driven technology.

Over the years, and through now nine editions, Dr. Charles Hill has worked hard to adhere to these goals. The ninth edition, with Dr. Tomas Hult as a co-author, follows the same ap- proach. It has not always been easy. An enormous amount has happened over the past de- cade, both in the real world of economics, politics, and business, and in the academic world of theory and empirical research. Often, we have had to significantly rewrite chapters, scrap old examples, bring in new ones, incorporate new theory and evidence into the material, and phase out older theories that are increasingly less relevant to the modern and dynamic world of international business. As noted later, there have been significant changes in this edition—and that will no doubt continue to be the case in the future. In deciding what changes to make, we have been guided not only by our own reading, teaching, and re- search, but also by the invaluable feedback we received from professors and students around the world who use the product, from reviewers, and from the editorial staff at McGraw-Hill. Our thanks go out to all of them.

xiv The Proven Choice for International Business

Comprehensive and Up-to-Date To be comprehensive, an international business package must

• Explain how and why the world’s countries differ. • Present a thorough review of the economics and politics of international trade and

investment. • Explain the functions and form of the global monetary system. • Examine the strategies and structures of international businesses. • Assess the special roles of an international business’s various functions.

This text has always endeavored to do all of these things. Too many other products have paid insufficient attention to the strategies and structures of international businesses and to the implications of international business for firms’ various functions. This omission has been a serious deficiency. Many of the students in these international business courses will soon be working in international businesses, and they will be expected to understand the implications of international business for their organization’s strategy, structure, and func- tions. This package pays close attention to these issues.

Comprehensiveness and relevance also require coverage of the major theories. It has always been a goal to incorporate the insights gleaned from recent academic work into the work. Consistent with this goal, over the past nine editions, insights from the following research have been incorporated:

• The new trade theory and strategic trade policy. • The work of Nobel Prize–winning economist Amartya Sen on economic development. • The work of Hernando de Soto on the link between property rights and economic

development. • Samuel Huntington’s influential thesis on the “clash of civilizations.” • The new growth theory of economic development championed by Paul Romer and

Gene Grossman. • Empirical work by Jeffrey Sachs and others on the relationship between international

trade and economic growth. • Michael Porter’s theory of the competitive advantage of nations. • Robert Reich’s work on national competitive advantage. • The work of Nobel Prize winner Douglass North and others on national institutional

structures and the protection of property rights. • The market imperfections approach to foreign direct investment that has grown out of

Ronald Coase and Oliver Williamson’s work on transaction cost economics. • Bartlett and Ghoshal’s research on the transnational corporation. • The writings of C. K. Prahalad and Gary Hamel on core competencies, global

competition, and global strategic alliances. • Insights for international business strategy that can be derived from the resource-based

view of the firm. • Paul Samuelson’s critique of free trade theory.

In addition to including leading-edge theory, in light of the fast-changing nature of the international business environment, we have made every effort to ensure that this product was as up-to-date as possible when it went to press. A significant amount has happened in the world since we began revisions of this book. By 2014, more than $3.5 trillion per day was flowing across national borders. The size of such flows fueled concern about the ability of short-term speculative shifts in global capital markets to destabilize the world economy. The World Wide Web emerged from nowhere to become the backbone of an emerging global network for electronic commerce. The world continued to become more global. Several Asian Pacific economies, most notably China, continued to grow their economies at a rapid rate. New multinationals continued to emerge from developing nations in addi- tion to the world’s established industrial powers. Increasingly, the globalization of the world economy affected a wide range of firms of all sizes, from the very large to the very

The Proven Choice for International Business xv

small. And unfortunately, in the wake of the terrorist attacks on the United States that took place September 11, 2001, global terrorism and the attendant geopolitical risks emerged as a threat to global economic integration and activity.

New in the Ninth Edition The most obvious change to the ninth edition of Global Business Today is the addition of a co-author, G. Tomas M. Hult. Professor Hult is the John W. Byington Endowed Chair, Professor of Marketing and International Business, and Director of the International Busi- ness Center in the Eli Broad College of Business at Michigan State University. He is a notable scholar in the area of international business, marketing and management, and a well-known expert on global supply chain management, global strategy, and marketing strategy. In addition, he has played a major role in the Academy of International Business, and is currently the Executive Director and Foundation President of the Academy of Inter- national Business.

I am delighted to have Tomas on the book. Tomas has been a long-term user of the book and has contributed end-of-chapter material to the book for many editions (he is responsi- ble for the Research Tasks that use Michigan State’s globalEDGE.msu.edu knowledge re- source). I believe that his skills complement my own. His energy, enthusiasm, and knowledge base should help make an already strong book even better. Tomas has made significant new contributions to all chapters in this edition, including most notably Chapters 4 and 5 on Culture and Ethics/CSR/Sustainability and Chapters 15 and 16 on Global Production and Supply Chain Management and Marketing and R&D.

The success of the first eight editions of Global Business Today was based in part upon the incorporation of leading-edge research into the text, the use of up-to-date examples and statistics to illustrate global trends and enterprise strategy, and the discussion of current events within the context of the appropriate theory. Building on these strengths, our goals for the ninth revision have been to:

1. Incorporate new insights from recent scholarly research wherever appropriate. 2. Make sure the content of the text covers all appropriate issues. 3. Make sure the text is as up-to-date as possible with regard to current events, statistics,

and examples. 4. Add new and insightful opening and closing cases in most chapters. 5. Add question-driven boxed materials in each chapter to motivate class discussion. 6. Incorporate value-added globalEDGE features in every chapter. 7. Connect every chapter to a focus on managerial implications.

As part of the overall revision process, changes have been made to every chapter in the book. All statistics have been updated to incorporate the most recently available data, which typ- ically refers to 2013. These data were mostly released by national and international agen- cies early in 2014. For example: New examples, cases, and boxes have been added and older examples updated to reflect new developments. For example, in Chapter 2, (1) the Opening Case looks at how the policies of Russian President Vladimir Putin have shaped the eco- nomic, political, and legal systems of that nation and affect the attractiveness of Russia as a destination for international business, (2) a new Management Focus feature discusses allega- tions that Walmart violated the Foreign Corrupt Practices Act while doing business in Mexico; and (3) a new Closing Case discusses the economic growth in Ghana.

New material has been inserted wherever appropriate to reflect recent academic work or important current events. Detailed discussion of the 2008–2009 global financial crisis and its aftermath, including the 2010–2013 sovereign debt crises in the Euro Zone and its implica- tions for international business, have been included in many chapters. Similarly, further discussion of the unrest that continues to sweep across the Middle East following the Arab Spring of 2011 and the ongoing turmoil in Egypt and Syria has been added to the book.

Importantly, for every chapter, the ninth edition of Global Business Today has two new features spearheaded by Tomas. First, we added question-driven materials in each chapter to motivate class discussion. These are four “boxes” per chapter that illustrate a specific

xvi The Proven Choice for International Business

situation and then ask students to “debate” the issue. These “question boxes” are great ways to practically illustrate the chapter material and get the students engaged. Second, we incorporated value-added globalEDGE features in every chapter. The Google number-one ranked globalEDGE.msu.edu site (for “international business resources”) is used in each chapter to add value to the chapter material and provide up-to-date data and information.

In addition to updating all statistics, figures, and maps to incorporate most recent pub- lished data major chapter-by-chapter changes include the following:

CHAPTER 1: GLOBALIZATION • New Opening Case: The Globalization of Production at Boeing. • New Closing Case: Who Makes the Apple iPhone?

CHAPTER 2: NATIONAL DIFFERENCES IN POLITICAL, ECONOMIC, AND LEGAL SYSTEMS • New Opening Case: Putin’s Russia. • Discussion of pseudo democracies added to section on democracy and totalitarianism.

These are countries that are democratic in name only where authoritarian elements have captured some or much of the machinery of state and use this in an attempt to deny basic political and civil liberties (e.g., as in Russia).

• New Management Focus: Did Walmart Violate the Foreign Corrupt Practices Act? • New Closing Case: Ghana: An African Dynamo.

CHAPTER 3: NATIONAL DIFFERENCES IN ECONOMIC DEVELOPMENT • New Opening Case: Political and Economic Reform in Myanmar. • Extended discussion of the 2008–2009 global financial crisis as an example of economic

risk. • New Closing Case: Revolution in Egypt.

CHAPTER 4: DIFFERENCES IN CULTURE • New Opening Case: Best Buy and eBay in China. • Deeper treatment of culture, values, and norms. • Social media issues inserted into the culture discussion. • Added four basic principles to social stratification. • Added depth and coverage of the economic implications of Buddhism. • Updated the Hofstede culture framework with new research. • New Closing Case: World Expo 2020 in Dubai, UAE.

CHAPTER 5: ETHICS, CORPORATE SOCIAL RESPONSIBILITY, AND SUSTAINABILITY • New Opening Case: Making Toys Globally. • Deeper treatment of corruption. • New focus on corporate social responsibility (CSR). • Added Management Focus on Stora Enso to illustrate CSR. • New focus on sustainability. • Added Management Focus on Umicore to illustrate global sustainability. • New Closing Case: Bitcoins as an Ethical Dilemma.

CHAPTER 6: INTERNATIONAL TRADE THEORY • New Opening Case: Creating the World’s Biggest Free Trade Zone. • New Closing Case: The Rise of India’s Drug Industry.

CHAPTER 7: GOVERNMENT POLICY AND INTERNATIONAL TRADE • New Opening Case: Sugar Subsidies Drive Candy Makers Abroad. • New Country Focus: Are the Chinese Illegally Subsidizing Auto Exports? • New Closing Case: China Limits Exports of Rare Earth Materials.

The Proven Choice for International Business xvii

CHAPTER 8: FOREIGN DIRECT INVESTMENT • New Opening Case: Foreign Direct Investment in Nigeria. • New Closing Case: Foreign Retailers in India.

CHAPTER 9: REGIONAL ECONOMIC INTEGRATION • New Opening Case: Tomato Wars. • New Closing Case: I Want My Greek TV!

CHAPTER 10: THE FOREIGN EXCHANGE MARKET • New Opening Case: Embraer and the Wild Ride of the Brazilian Real. • New Closing Case: The Rise (and Fall) of the Japanese Yen.

CHAPTER 11: THE INTERNATIONAL MONETARY SYSTEM • New Opening Case: The IMF and Iceland’s Economic Recovery. • New Closing case: Currency Trouble in Malawi.

CHAPTER 12: THE STRATEGY OF INTERNATIONAL BUSINESS • New Opening Case: IKEA. • Discussion of the rise of regionalism added to section on Pressures for Local

Responsiveness. • New Closing Case: Ford’s Global Strategy.

CHAPTER 13: ENTERING FOREIGN MARKETS • New Opening Case: Market Entry at Starbucks. • New Closing Case: JCB in India.

CHAPTER 14: EXPORTING, IMPORTING AND COUNTERTRADE • New Opening Case: Growing Through Exports. • New Closing Case: MD International.

CHAPTER 15: GLOBAL PRODUCTION AND SUPPLY CHAIN MANAGEMENT • New Opening Case: Apple: The Best Supply Chains in the World? • Integration of the complete supply chain (logistics, purchasing, production, and

operations). • New section on Strategic Roles for Production Facilities. • New section on Make-or-Buy Decisions. • New section on Global Supply Chain Functions. • New text for the Role of Information Technology. • New section on Coordination of Global Supply Chains. • New section on Interorganizational Relationships. • New Closing Case: H&M: The Retail Clothing Giant.

CHAPTER 16: GLOBAL MARKETING AND RESEARCH AND DEVELOPMENT • New Opening Case: Global Branding of Avengers and Iron Man. • Revised section on Globalization of Markets and Brands. • Revised section on Configuring the Marketing Mix, now with a new table with sample

measures. • New section on International Market Research, including company examples and six

basic steps. • Revised positioning of the Product Development section. • Heavily Revised Closing Case: Domino’s Pizza Worldwide.

xviii The Proven Choice for International Business

CHAPTER 17: GLOBAL HUMAN RESOURCE MANAGEMENT • New Opening Case: The Strategic Role of Human Resources at IBM. • New Closing Case: MMC China.

Beyond Uncritical Presentation and Shallow Explanation Many issues in international business are complex and thus necessitate considerations of pros and cons. To demonstrate this to students, we have adopted a critical approach that presents the arguments for and against economic theories, government policies, business strategies, organizational structures, and so on.

Related to this, we have attempted to explain the complexities of the many theories and phenomena unique to international business so the student might fully comprehend the statements of a theory or the reasons a phenomenon is the way it is. We believe that these theories and phenomena are explained in more depth in this work than they are in the com- petition, which seem to use the rationale that a shallow explanation is little better than no explanation. In international business, a little knowledge is indeed a dangerous thing.

Focuses on Rich Applications of International Business Concepts We have always believed that it is important to show students how the material covered in the text is relevant to the actual practice of international business. This is explicit in the later chapters of the book, which focus on the practice of international business, but it is not always obvious in the first half of the book, which considered many macroeconomic and political issues, from international trade theory and foreign direct investment flows to the IMF and the influence of inflation rates on foreign exchange quotations. Accordingly, at the end of each chapter in Parts Two, Three, and Four—where the focus is on the envi- ronment of international business, as opposed to particular firms—there is a section titled Focus on Managerial Implications. In this section, the managerial implications of the material discussed in the chapter are clearly explained.

FOCUS ON MANAGERIAL IMPLICATIONS

THE MACRO ENVIRONMENT INFLUENCES MARKET ATTRACTIVENESS The material discussed in this chapter has two broad implications for international busi- ness. First, the political, economic, and legal systems of a country raise important ethical issues that have implications for the practice of international business. For example, what ethical implications are associated with doing business in totalitarian countries where citi- zens are denied basic human rights, corruption is rampant, and bribes are necessary to gain

LO 2-4 Explain the implications for management practice of national differences in political economy.

hiL12915_ch02_036-059.indd Page 55 12/09/14 9:57 AM f-w-143 /207/MH02219/hiL12915_disk1of1/0078112915/hiL12915_pagefiles

Did Walmart Violate the Foreign Corrupt Practices Act?

In the early 2000s, Walmart wanted to build a new store in San Juan Teotihuacan, Mexico, barely a mile from ancient pyramids that drew tourists from around the world. The owner of the land was happy to sell to Walmart, but one thing stood in the way of a deal—the city’s new

For several years nothing more happened; then, in April 2012, The New York Times published an article detailing bribery by Walmart. The Times cited the changed zoning map and several other examples of bribery by Walmart—for example, eight bribes totaling $341,000 en- abled Walmart to build a Sam’s Club in one of Mexico City’s most densely populated neighborhoods without a construction license, or an environmental permit, or an urban impact assessment, or even a traffic

management FOCUS

hiL12915_ch02_036-059.indd Page 52 12/09/14 9:57 AM f-w-143 /207/MH02219/hiL12915_disk1of1/0078112915/hiL12915_pagefiles Another tool that I have used to focus on managerial implications are Management

Focus boxes. There is at least one Management Focus in most chapters. Like the opening cases, the purpose of these boxes is to illustrate the relevance of chapter material for the practice of international business.

The Proven Choice for International Business xix

In addition, each chapter begins with an Opening Case that sets the stage for the chap- ter content and familiarizes students with how real international companies conduct busi- ness. There is also a Closing Case to each chapter. These cases are also designed to illustrate the relevance of chapter material for the practice of international business as well as to provide continued insight into how real companies handle those issues.

Use the globalEDGE website (globalEDGE.msu.edu) to complete the following exercises:

1. You are preparing for a business trip to Chile where you will need to interact extensively with local professionals. Therefore, you would like to collect information regarding local culture and business practices prior to your departure. A colleague from Latin America recommends you visit the “Centre for Intercultural Learning” and read through the country

h d d f h l h

characteristics that may affect business interactions in this country.

2. Typically, cultural factors drive the differences in business etiquette encountered during international business travel. In fact, Middle Eastern cultures exhibit significant differences in business etiquette when compared to Western cultures. Prior to leaving for your first business trip to the region, a colleague informed you that a guide named Business Etiquette around the World may help you. Using this guide,

Research Task http://globalEDGE.msu.edu

hiL12915_ch04_088-125.indd Page 121 12/09/14 10:05 AM f-w-143 /207/MH02219/hiL12915_disk1of1/0078112915/hiL12915_pagefiles

Connect® International Business is another tool that provides for application of con- cepts via the great variety of Interactive Application exercises included in this homework assignment and assessment system. For more information, see page xxi.

To help students go a step further in expanding their application level understanding of international business, each chapter incorporates a globalEdge feature authored by Tomas Hult, as well as two globalEDGE research tasks designed and written by Tunga Kiyak and the team at Michigan State University’s globalEDGE.msu.edu site to dovetail with the con- tent just covered.

opening case

The modern Russia state was born in 1991 after the dramatic collapse of the Soviet Union. Early in the post-Soviet era, Russia embraced ambitious policies designed to transform a communist dictatorship with a centrally planned economy into democratic state with a market based economic system. The policies, however, were imperfectly implemented. Political reform left Russia with a strong presidency

that—in hindsight—had the ability to subvert the democratic process. On the economic front, the privatiza-

tion of many state-owned enterprises was done in such a way as to leave large shareholdings in the hands

of the politically connected, many of whom were party officials and factory managers under the old Soviet

system. Corruption was also endemic, and organized crime was able to seize control of some newly priva-

tized enterprises. In 1998, the poorly managed Russian economy went through a financial crisis that nearly

Putin’s Russia

hiL12915_ch02_036-059.indd Page 37 12/09/14 9:56 AM f-w-143 /207/MH02219/hiL12915_disk1of1/0078112915/hiL12915_pagefiles

ccccccloooooooosssiinnnngggggggggg cccccccaaassssssssssssssssssssssseeeeeeeeeeeeeeeeeeeeeeeeeeeee

The West African nation of Ghana has emerged as one of the fastest- growing countries in sub-Saharan Africa during the last decade. Between 2000 and 2013, Ghana’s average annual growth rate in GDP was over 7.5 percent, making it the fastest-growing economy in Africa. In 2011, this country of 25 million people became Africa’s newest middle-income nation. Driving this growth has been strong demand for two of Ghana’s major exports—gold and cocoa—as well as the start of oil production in 2010. Indeed, due to recent oil discoveries, Ghana is set to become one of

states of eastern Europe. In addition, he was pressured by Western gov- ernments and the International Monetary Fund to embrace democratic reforms and economic liberalization policies (the IMF was lending money to Ghana).

Presidential elections were held in 1992. Prior to the elections, the ban on political parties was lifted, restrictions on the press were removed, and all parties were given equal access to the media. Rawlings won the election, which foreign observers declared to be “free and fair.” Ghana

Ghana: An African Dynamo

hiL12915_ch02_036-059.indd Page 57 12/09/14 9:57 AM f-w-143 /207/MH02219/hiL12915_disk1of1/0078112915/hiL12915_pagefiles

Get Insights by Country

The “Get Insights by Country” section of globalEDGE (globalEDGE.msu. edu/global-insights/by/country) is your source for information and sta- tistical data for nearly every country around the world (more than 200 countries). As related to Chapter 2 of the text, globalEDGE has a wealth of information and data on national differences in political economy. These differences are available across a dozen menu categories in the

country sections (e.g., economy, history, government, culture, risk). The “Executive Memos” on each country page are also great for abbrevi- ated fingertip access to current information. At a minimum, we suggest that you take a look at the country pages of the United Kingdom and Sweden because the authors of this text are from those countries— have you figured out who is from the UK and who is from Sweden yet?

hiL12915_ch02_036-059.indd Page 39 12/09/14 9:56 AM f-w-143 /207/MH02219/hiL12915_disk1of1/0078112915/hiL12915_pagefiles

xx The Proven Choice for International Business

Integrated Progression of Topics A weakness of many texts is that they lack a tight, integrated flow of topics from chapter to chapter. In Chapter 1 of this book, students will learn how the book’s topics are related to each other. We have achieved integration by organizing the material so that each chapter builds on the material of the previous ones in a logical fashion.

PART ONE Chapter 1 provides an overview of the key issues to be addressed and ex- plains the plan of the book.

PART TWO Chapters 2, 3, and 4 focus on national differences in political economy and culture, and Chapter 5 examines ethical issues in international business. Most international business textbooks place this material at a later point, but we believe it is vital to discuss national differences first. After all, many of the central issues in international trade and in- vestment, the global monetary system, international business strategy and structure, and international business operations arise out of national differences in political economy and culture. To fully understand these issues, students must first appreciate the differences in countries and cultures. Ethical issues are dealt with at this juncture primarily because many ethical dilemmas flow out of national differences in political systems, economic systems, and culture.

PART THREE Chapters 6 through 9 investigate the political economy of international trade and investment. The purpose of this part is to describe and explain the trade and in- vestment environment in which international business occurs.

PART FOUR Chapters 10 and 11 describe and explain the global monetary system, laying out in detail the monetary framework in which international business transactions are conducted.

PART FIVE In Chapters 12 and 13, attention shifts from the environment to the firm. Here the book examines the strategies that firms adopt to compete effectively in the inter- national business environment.

PART SIX Chapters 14 through 17 explain how firms can perform key functions— production, marketing, research and development, and human resource management to compete and succeed in the international business environment. Throughout the book, the relationship of new material to topics discussed in earlier chapters is pointed out to the students to reinforce their understanding of how the material comprises an inte- grated whole.

Accessible and Interesting The international business arena is fascinating and exciting, and we have tried to com- municate our enthusiasm for it to the student. Learning is easier and better if the sub- ject matter is communicated in an interesting, informative, and accessible manner. One technique we have used to achieve this is weaving interesting anecdotes into the narra- tive of the text, that is, stories that illustrate theory. Prepared by co-author Tomas Hult, of Michigan State University, the use of conversation starters also serve to present controversial questions and allow students to discuss and apply concepts from the chapter.

In addition to the conversation starters, most chapters also have a Country Focus box that provides background on the political, economic, social, or cultural aspects of countries grappling with an international business issue.

The Proven Choice for International Business xxi

Venezuela under Hugo Chávez, 1999–2013

On March 5, 2013, Hugo Chávez, the president of Venezuela, died after losing a battle against cancer. Chávez had been president of Venezuela since 1999. A former military officer who was once jailed for engineer- ing a failed coup attempt, Chávez was a self-styled democratic social- ist who won the presidential election by campaigning against corruption, economic mismanagement, and the “harsh realities” of global capitalism. When he took office in February 1999, Chávez

In mid-2000, the world oil market bailed Chávez out of mounting economic difficulties. Oil prices started to surge from the low $20s in 2003, reaching $150 a barrel by mid-2008. Venezuela, the world’s fifth-largest producer, reaped a bonanza. On the back of surging oil exports, the economy grew at a robust rate. Chávez used the oil reve- nues to boost government spending on social programs, many of them modeled after programs in Cuba. In 2006, he announced plans to re- duce the stakes held by foreign companies in oil projects in the Orinoco regions and to give the state-run oil company a majority position.

country FOCUS

hiL12915_ch02_036-059.indd Page 42 12/09/14 9:56 AM f-w-143 /207/MH02219/hiL12915_disk1of1/0078112915/hiL12915_pagefiles

Results-Driven Technology Across the country, instructors and students continue to raise an important question: How can international business courses further support students throughout the learning process to shape future global business leaders? While there is no one solution, Global Business Today, ninth edition, offers a seamless content and technology solution to improve student engage- ment and comprehension, automation of assignments and grading, and easy reporting to ensure that learning objectives are being met. Connect® International Business provides a wide array of tools and content to improve instructor productivity and student performance. In

How Important Are Intellectual Property Rights? Burundi is a landlocked country in the Great Lake region of Eastern Africa. Neighboring countries include Rwanda, Tanzania, and the Democratic Republic of the Congo. Burundi is hilly and mountainous, with access to Lac Tanganyika. The government system is a republic, with the chief of state and head of govern- ment being the president. Burundi has a traditional economic system in which the allocation of available resources is made on the basis of primitive methods, and many citizens engage in subsistence agriculture. At the same time, Burundi was last of the 131 countries ranked in the 2013 International Property Rights Index (IPRI). The IPRI is conducted by a partnership of 74 international organizations. The IPRI takes into account legal and political environment, physical property rights, and intel- lectual property rights. How much should companies focus on Intellectual Property Rights in making their decision on where to (1) produce their products and (2) sell their products? Does it differ if you produce or sell in the country?

Source: www.internationalpropertyrightsindex.org.

hiL12915_ch02_036-059.indd Page 53 12/09/14 9:57 AM f-w-143 /207/MH02219/hiL12915_disk1of1/0078112915/hiL12915_pagefiles

xxii The Proven Choice for International Business

fact, the aggregated results of 34 Connect adoptions showed an 11 percent improvement in pass rates, a 16 percent improvement in retention, twice as many students receiving an A, and 77 percent reduction in instructor grading time.

McGraw-Hill Connect International Business Connect is an all-digital teaching and learning environment designed from the ground up to work with the way instructors and students think, teach, and learn. As a digital teaching, as- signment, and assessment platform, Connect strengthens the link among faculty, students, and coursework, helping everyone accomplish more in less time.

LearnSmart The smartest way to get from B to A McGraw-Hill LearnSmart is the first and most widely used intelligent adaptive learning resource. It is proven to strengthen memory recall, improve course retention, and boost grades by distinguishing between what students know and what they don’t know, and hon- ing in on the concepts that they are most likely to forget. LearnSmart continuously adapts to each student’s needs by building an individual learning path. As a result, students study smarter and retain more knowledge over time. LearnSmart is available within Connect as well as stand-alone for greater student access.

SmartBook A revolution in learning Fueled by LearnSmart, SmartBook is the first and only adaptive reading experience avail- able today. SmartBook personalizes content for each student in a continuously adapting reading experience. Reading is no longer a passive and linear experience, but an engaging and dynamic one where students are more likely to master and retain important concepts, coming to class better prepared.

Interactive Assignments A higher level of learning Throughout the chapter, students will be prompted to complete a variety of interactive as- signments that will require them to apply what they have learned in a real-world scenario. These online exercises will help students assess their understanding of the concepts.

• Apply concepts from the book to a video case.

The Proven Choice for International Business xxiii

• Make business decisions based on specific scenarios/cases from real-world companies.

• Analyze a case and apply chapter concepts. • Demonstrate problem-solving skills through complex examples and diagrams.

• Demonstrate knowledge about business models and processes.

McGraw-Hill Connect Plus with Integrated Media-Rich E-book McGraw-Hill reinvents the textbook-learning experience for today’s students with Connect Plus, providing students with a cost-saving alternative to the traditional textbook. A seamless integration of a media-rich e-book and Connect, Connect Plus provides all the Connect features plus the following:

• A web-optimized e-book, allowing for anytime, anywhere online access to the textbook. • Powerful search function to pinpoint and connect key concepts in a snap. • Highlighting and note-taking capabilities as well as access to shared instructors’ notations.

Teaching Support International Business offers you a complete package to prepare you for your course.

McGraw-Hill Connect McGraw-Hill Education’s Connect strengthens the link between faculty, students, and coursework, helping everyone accomplish more in less time.

xxiv The Proven Choice for International Business

Student Progress Tracking Connect keeps instructors informed about how each student, section, and class is performing, allowing more productive use of lecture and office hours. The progress tracking function enables instructors to:

• View scored work immediately and track individual or group performance with assignment and grade reports.

• Access an instant view of student or class performance relative to learning objectives.

• Collect data and generate reports required by many accreditation organizations, such as AACSB.

Instructor Library Connect’s instructor library serves as a one-stop, secure site for essential course materials, allowing you to save prep time before class. The instructor resources found in the library include:

Connect and LearnSmart allow me to present course material to students in more ways than just the explanations they hear from me directly. Because of this, students are processing the material in new ways, requiring them to think. I now have more students asking questions in class because the more we think, the more we question. Sharon Feaster, Instructor at Hinds Community College

• Instructor’s Manual. The Instructor’s Manual is a comprehensive resource designed to support you in effectively teaching your course. It includes course outlines; chapter teaching resources, including chapter overviews and outlines, teaching suggestions, chapter objectives, teaching suggestions for opening cases, lecture outlines, answers to critical discussion questions, teaching suggestions for the closing case, and two student activities (some with Internet components); and expanded video notes with discussion questions for each video. The answers to globalEDGE research tasks are included.

• Test Bank. Approximately 100 true-false, multiple-choice, and essay questions per chapter are included in the test bank. We’ve aligned our test bank questions with Bloom’s Taxonomy and AACSB guidelines, tagging each question according to its knowledge and skill areas. Each test bank question also maps to a specific chapter learning objective listed in the text. You can use our test bank software, EZ Test, to easily query for learning objectives that directly relate to the learning objectives for your course. You can use the reporting features of EZ Test to aggregate student results in a similar fashion, making the collection and presentation of assurance-of-learning data quick and easy.

• PowerPoint Presentations. The PowerPoint program consists of one set of slides for every chapter, featuring original materials not found in the text in addition to reproductions and illuminations of key text figures, tables, and maps. Quiz questions to keep students on their toes during classroom presentations are also included, along with instructor notes.

Efficient Administrative Capabilities Connect offers you, the instructor, auto-gradable material in an effort to facilitate teaching and learning.

The Proven Choice for International Business xxv

• McGraw-Hill offers the most current, diverse, and comprehensive video support for the international business classroom. Adopters can request our International Business Instructor Video DVD (ISBN 1259392015) from their McGraw-Hill sales representative. The DVD features 20 clips, selected based on their relevance to the text’s chapter material. Corresponding video notes are available. In addition to the DVD, we provide clips from a variety of online sources, updated monthly.

McGraw-Hill Customer Experience Group Contact Information At McGraw-Hill, we understand that getting the most from new technology can be chal- lenging. That’s why our services don’t stop after you purchase our products. You can e-mail our product specialists 24 hours a day to get product training online. Or you can search our knowledge bank of frequently asked questions on our support website. For customer support, call 800-331-5094, e-mail hmsupport@mcgraw-hill.com, or visit www.mhhe.com/support. One of our technical support analysts will be able to assist you in a timely fashion.

Course Design and Delivery cesim GlobalChallenge Simulation cesim is an international business simulation designed to develop student understanding of the interaction and complexity of various business disciplines and concepts in a rapidly evolving, competitive business environment. The simulation has a particular focus on creat- ing long-term, sustainable, and profitable growth of a global technology company. Student teams make decisions about technology-based product roadmaps and global market and production strategies involving economics, finance, human resources, accounting, procure- ment, production, logistics, research and innovation, and marketing. cesim improves the knowledge retention, business decision-making, and teamwork skills of students.

Create Instructors can now tailor their teaching resources to match the way they teach! With McGraw-Hill Create, www.mcgrawhillcreate.com/hill, instructors can easily rearrange alternate, combined chapters (see brief table to contents on page v). Combine material from other content sources, and quickly upload and integrate their own content, like course syllabi or teaching notes. Find the right content in Create by searching through thousands of leading McGraw-Hill textbooks. Arrange the material to fit your teaching style. Order a Create book, and receive a complimentary print review copy in 3–5 business days or a complimentary electronic review copy (echo) via e-mail within one hour. Go to www.mcgrawhillcreate.com/hill today and register.