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College of Administrative and Financial Sciences

Assignment 2

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Deadline: 28-03-2020 @ 23:59

Course Name: Intro to International Business

Student’s Name:

Course Code: MGT-321

Student’s ID Number:

Semester: II

CRN:

Academic Year: 1440/1441 H

For Instructor’s Use only

Instructor’s Name:

Students’ Grade: Marks Obtained/Out of

Level of Marks: High/Middle/Low

Instructions – PLEASE READ THEM CAREFULLY
· The Assignment must be submitted on Blackboard (WORD format only) via allocated folder.
· Assignments submitted through email will not be accepted.
· Students are advised to make their work clear and well presented, marks may be reduced for poor presentation. This includes filling your information on the cover page.
· Students must mention question number clearly in their answer.
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· Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions.
· All answered must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism).
· Submissions without this cover page will NOT be accepted.

Assignment Regulation:

· All students are encouraged to use their own word.
· Assignment -2 should be submitted on or before the end of Week-11 in Black Board only.
· This assignment is an individual assignment.
· Citing of references is also necessary in APA style.

Assignment Structure:

A.No

Type

Marks

Assignment-2

Critical Thinking

10

Total

10

Learning Outcomes:

· Analyze the effects of culture, politics and economic systems in the context of international business (Lo 1.9 & 2.1)
· Identify the major components of international business management (Lo 1.2)
· Carry out effective self-evaluation through discussing economic systems in the international business context (Lo. 3.6)

Critical Thinking

Please read Case 2: “Venezuela under Hugo Chávez and Beyond” available in your e-book (page no.611), and answer the following questions:

Assignment Question(s): (Marks: 10)
1. Under Chávez’s leadership, what kind of economic system was put in place in Venezuela? How would you characterize the political system?
2. How do you think that Chávez’s unilateral changes to contracts with foreign oil companies will affect future investment by foreigners in Venezuela?
3. How will the high level of public corruption in Venezuela affect future growth rates?
4. During the Chávez years, many foreign multinationals exited Venezuela or reduced their exposure there. What do you think the impact of this has been on Venezuela? What needs to be done to reverse the trend?
5. By 2016, Venezuela’s economy appeared to be on the brink of total collapse. What do you think needs to be done to reverse this?

Answer:

1.

2.

3.

4.

5.

&&&&

Cases 611

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 demo-
cratic socialist who won the presidential election by
campaigning against corruption, economic mismanage-
ment, and the “harsh realities” of global capitalism. When
he took office in February 1999, Chávez claimed he had
inherited the worst economic situation in the country’s
recent history. He wasn’t far off the mark. A collapse in
the price of oil, which accounted for 70 percent of the
country’s exports, left Venezuela with a large budget defi-
cit and forced the economy into a deep recession.

Soon after taking office, Chávez worked to consolidate
his hold over the apparatus of government. By 2012, Free-
dom House, which annually assesses political and civil
liberties worldwide, concluded Venezuela was only
“partly free” and that freedoms were being progressively
curtailed. In 2006, for example, Parliament, which was
dominated by his supporters, gave him the power to legis-
late by decree for 18 months. In late 2010, Chávez yet
again persuaded the National Assembly to grant him the
power to rule by decree for another 18 months.

On the economic front, the economy shrank in the
early 2000s, while unemployment remained persistently
high (at 15 to 17 percent) and the poverty rate rose to
more than 50 percent of the population. A 2003 study
by the World Bank concluded Venezuela was one of the
most regulated economies in the world and that state
controls over business activities gave public officials
ample opportunities to enrich themselves by demand-
ing bribes in return for permission to expand opera-
tions or enter new lines of business. Despite Chávez’s
anticorruption rhetoric, Transparency International,
which ranks the world’s nations according to the extent
of public corruption, noted that corruption increased
under Chávez. In 2012, Transparency International
ranked Venezuela 165th out of 174 nations in terms of
level of corruption.

Consistent with his socialist rhetoric, Chávez progres-
sively took various enterprises into state ownership and
required that other enterprises be restructured as “work-
ers’ cooperatives” in return for government loans. In addi-
tion, the government took over large rural farms and
ranches that Chávez claimed were not sufficiently pro-
ductive and turned them into state-owned cooperatives.

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 econ-
omy grew at a robust rate. Chávez used the oil revenues to

boost government spending on social programs, many of
them modeled after programs in Cuba. These included ultra-
cheap gasoline and free housing for the poor.

In 2006, he announced plans to reduce the stakes held
by foreign companies in oil projects in the Orinoco re-
gions, to increase the royalties they had to pay to the
Venezuelan government, and to give the state-run oil com-
pany a majority position. Simultaneously, he replaced
professional managers at the state-owned oil company
with his supporters, many of whom knew little about the
oil business. They extracted profits to support Chávez’s
social programs but at the cost of low investments in the
oil company, and over time its output started to fall.

Notwithstanding his ability to consolidate political
power, on the economic front, Venezuela’s performance
under Chávez was mixed. His main achievements were to
reduce poverty, which fell from 50 percent to 28 percent
by 2012, and to bring down unemployment from 14.5 per-
cent at the start of his rule to 7.6 percent in February
2013. Profits from oil helped Chávez achieve both these
goals. However, despite strong global demand and mas-
sive reserves, oil production in Venezuela fell by a third
between 2000 and 2012 as foreign oil companies exited
the country and the state-run oil company failed to make
up the difference. Inflation surged and was running at
around 28 percent per annum between 2008 and 2012,
one of the highest rates in the world. To compound mat-
ters, the budget deficit expanded to 17 percent of GDP in
2012 as the government spent heavily to support its social
programs and various subsidies.

Following Chávez’s death, his handpicked successor,
Nicolas Maduro, took over the presidency. Maduro con-
tinued the policies introduced by Chávez. Things did not
go well. By 2014, the country was in a recession. The
economy contracted by 4 percent that year, while infla-
tion surged to around 65 percent. The situation contin-
ued to deteriorate in 2015 and 2016. Exacerbated by a
sharp fall in oil prices and hence government revenues,
the economy was forecasted by the IMF to be 23 percent
smaller in 2017 than it was in 2013, the worst decline in
the world. By 2015, widespread shortages of basic goods
had emerged. In 2016, an estimated 75 percent of Venezu-
elans lost weight, averaging 8.7 kg per person, because of
a scarcity of food. Unemployment was rising. Inflation
increased to 741 percent by the end of 2016 (the highest in
the world). The poverty rate was back up over 30 percent.
To cap this litany of disaster, the value of the Venezuelan
currency, the bolivar, fell from 64 per U.S. dollar in 2014
to 960 per dollar by 2016.

Parliamentary elections held in December 2015 re-
sulted in large losses for the ruling United Socialist
Party. For the first time since 1999, the opposition
gained a majority of seats in Parliament. Maduro’s

Venezuela under Hugo Chávez and Beyond

612 Part 7 Cases

Case Discussion Questions

1. Under Chávez’s leadership, what kind of economic
system was put in place in Venezuela? How would
you characterize the political system?

2. How do you think that Chávez’s unilateral changes
to contracts with foreign oil companies will affect
future investment by foreigners in Venezuela?

3. How will the high level of public corruption in
Venezuela affect future growth rates?

4. During the latter part of Chávez’s rule, Venezuela
benefited from high oil prices. Since 2014, however,
oil prices have fallen substantially. What has the af-
fect of this has been on government finances and
the Venezuelan economy?

5. During the Chávez years, many foreign multina-
tionals exited Venezuela or reduced their exposure
there. What do you think the impact of this has
been on Venezuela? What needs to be done to
reverse the trend?

6. By 2016, Venezuela’s economy appeared to be on
the brink of total collapse. What do you think needs
to be done to reverse this?

response was to have the supreme court, which was
populated with Chavez appointees, exercise “parlia-
mentary power” while declaring the legislature to be in
contempt of the court. In effect, Venezuela has become
a full-f ledged dictatorship.

Sources
D. Luhnow and P. Millard, “Chávez Plans to Take More Con-
trol of Oil away from Foreign Firms,” The Wall Street Journal,
April 24, 2006, p. A1; R. Gallego, “Chávez’s Agenda Takes
Shape,” The Wall Street Journal, December 27, 2005, p. A12;
“The Sickly Stench of Corruption: Venezuela,” The Economist,
April 1, 2006, p. 50; “Chávez Squeezes the Oil Firms,” The
Economist, November 12, 2005, p. 61; “Glimpsing the Bottom
of the Barrel: Venezuela,” The Economist, February 3, 2007,
p. 51; “The Wind Goes Out of the Revolution—Defeat for Hugo
Chávez,” The Economist, December 8, 2007, pp. 30–32; “Oil
Leak,” The Economist, February 26, 2011, p. 43; “Medieval Poli-
cies,” The Economist, August 8, 2011, p. 38; “Now for the Reck-
oning,” The Economist, May 5, 2013; “Heading for a Crash,” The
Economist, January 23, 2016; Matt O’Brian, “Venezuela Is on
the Brink of Complete Economic Collapse,” The Washington
Post, January 29, 2016; “How Chavez and Maduro Have Impov-
erished Venezuela,” The Economist, April 6, 2017.

For decades, the Southeast Asian nation of Myanmar
(formerly known as Burma) was an international pariah.
Ruled by a brutal military dictatorship since the 1960s,
political dissent was not tolerated, the press was tightly
controlled, and opposition parties were shut down. Much
economic activity was placed in the hands of the state—
which effectively meant the hands of the military elite,
who siphoned off economic profits for their own benefit.
Corruption was rampant. In the 1990s, America and the
European Union imposed sweeping economic sanctions
on the country to punish the military junta for stealing
elections and jailing opponents. The de facto leader of
the country’s democratic opposition movement, Nobel
Peace Prize–winner Aung San Suu Kyi, was repeatedly
placed under house arrest from 1989 through 2010.

None of this was good for the country’s economy. De-
spite having a wealth of natural resources—including timber,
minerals, oil, and gas—the economy stagnated while its
Southeast Asian neighbors flourished. By 2012, Myanmar’s
GDP per capita was $1,400. In neighboring Thailand, it
was $10,000 per capita. The economy was still largely rural,
with 70 percent of the country’s nearly 60 million people
involved in agriculture. This compares with 8.6 percent in
Thailand. Few people own cars or cell phones, and there
are no major road or rail links between Myanmar and its
neighbors—China, India, and Thailand.

In 2010, the military again won elections that were
clearly rigged. Almost no one expected any changes, but

the new president, Thein Sein, was to defy expectations.
The government released hundreds of political prisoners,
removed restrictions on the press, freed Aung San Suu
Kyi, and allowed opposition parties to contest seats in a
series of by-elections. When Aung San Suu Kyi won a by-
election, thrashing her military-backed opponent, they let
her take the seat, raising hopes that Myanmar was at last
joining the modern world. In response, both America and
the European Union began to lift their sanctions.

Thein Sein also started to initiate much-needed eco-
nomic reforms. Even before the 2010 elections, the mili-
tary had begun to quietly privatize state-owned
enterprises, although many were placed in the hands of
cronies of the regime. In 2012, Thein Sein stated that the
government would continue to reduce its role in a wide
range of sectors, including energy, forestry, health care,
finance, and telecommunications. Land reforms are also
under way. The government also abandoned the official
fixed exchange rate for the Myanmar currency, the kyat,
replacing it with a managed float. From 2001 to 2012, the
official exchange rate for the kyat varied between 5.75
and 6.70 per U.S. dollar, while the black-market rate was
between 750 and 1,335 per U.S. dollar. The official fixed
exchange rate had effectively priced Myanmar’s exports
out of the world market, although it did benefit the mili-
tary elite who were able to exchange their worthless kyat
for valuable U.S. dollars on very favorable terms. Imple-
mented in April 2012, the managed float valued the kyat

Political and Economic Reform in Myanmar

  • Cover
  • Title Page
  • Copyright Page
  • Dedication
  • About the Authors
  • Brief
  • Contents
  • Contents

  • Acknowledgments
  • part one Introduction and Overview
  • CHAPTER 1 Globalization
    Opening Case Globalization of BMW, Rolls-Royce, and the MINI
    Introduction
    What Is Globalization?
    The Globalization of Markets
    The Globalization of Production
    Management Focus Boeing’s Global Production System
    The Emergence of Global Institutions
    Drivers of Globalization
    Declining Trade and Investment Barriers
    Role of Technological Change
    The Changing Demographics of the Global Economy
    The Changing World Output and World Trade Picture
    The Changing Foreign Direct Investment Picture
    Country Focus India’s Software Sector
    The Changing Nature of the Multinational Enterprise
    Management Focus Wanda Group
    The Changing World Order
    Global Economy of the Twenty-First Century
    The Globalization Debate
    Antiglobalization Protests
    Globalization, Jobs, and Income
    Country Focus Protesting Globalization in France
    Globalization, Labor Policies, and the Environment
    Globalization and National Sovereignty
    Globalization and the World’s Poor
    Managing in the Global Marketplace
    Chapter Summary
    Critical Thinking and Discussion Questions
    Research Task
    Closing Case Uber: Going Global from Day One
    Endnotes

  • part two National Differences
  • CHAPTER 2 National Differences in Political, Economic, and Legal Systems
    Opening Case The Decline of Zimbabwe
    Introduction
    Political Systems
    Collectivism and Individualism
    Democracy and Totalitarianism
    Country Focus Putin’s Russia
    Economic Systems
    Market Economy
    Command Economy
    Mixed Economy
    Legal Systems
    Different Legal Systems
    Differences in Contract Law
    Property Rights and Corruption
    Country Focus Corruption in Brazil
    Management Focus Did Walmart Violate the Foreign Corrupt Practices Act?
    The Protection of Intellectual Property
    Management Focus Starbucks Wins Key Trademark Case in China
    Product Safety and Product Liability
    Focus on Managerial Implications: The Macro Environment Influences Market Attractiveness
    Chapter Summary
    Critical Thinking and Discussion Questions
    Research Task
    Closing Case Economic Transformation in Vietnam
    Endnotes
    CHAPTER 3 National Differences in Economic Development
    Opening Case Economic Development in Bangladesh
    Introduction
    Differences in Economic Development
    Map 3.1 GNI per capita, 2016
    Map 3.2 GNI PPP per capita, 2016
    Map 3.3 Average annual growth rate in GDP (%), 2007–2016
    Broader Conceptions of Development: Amartya Sen
    Map 3.4 Human Development Index, 2015
    Political Economy and Economic Progress
    Innovation and Entrepreneurship Are the Engines of Growth
    Innovation and Entrepreneurship Require a Market Economy
    Innovation and Entrepreneurship Require Strong Property Rights
    The Required Political System
    Country Focus Emerging Property Rights in China
    Economic Progress Begets Democracy
    Geography, Education, and Economic Development
    States in Transition
    The Spread of Democracy
    Map 3.5 Freedom in the world, 2017
    The New World Order and Global Terrorism
    The Spread of Market-Based Systems
    Map 3.6 Index of economic freedom, 2017
    The Nature of Economic Transformation
    Deregulation
    Privatization
    Country Focus India’s Economic Transformation
    Legal Systems
    Implications of Changing Political Economy
    Focus on Managerial Implications: Benefits, Costs, Risks, and Overall Attractiveness of Doing Business Internationally
    Chapter Summary
    Critical Thinking and Discussion Questions
    Research Task
    Closing Case The Political and Economic Evolution of Indonesia
    Endnotes
    CHAPTER 4 Differences in Culture
    Opening Case The Swatch Group and Cultural Uniqueness
    Introduction
    What Is Culture?
    Values and Norms
    Culture, Society, and the Nation-State
    Determinants of Culture
    Social Structure
    Individuals and Groups
    Social Stratification
    Country Focus India and Its Caste System
    Religious and Ethical Systems
    Map 4.1 World Religions
    Christianity
    Islam
    Country Focus Secularism in Turkey
    Hinduism
    Buddhism
    Confusianism
    Management Focus China and Its Guanxi
    Language
    Spoken Language
    Unspoken Language
    Education
    Culture and Business
    Cultural Change
    Focus on Managerial Implications: Cultural Literacy and Competitive Advantage
    Chapter Summary
    Critical Thinking and Discussion Questions
    Research Task
    Closing Case The Emirates Group and Employee Diversity
    Endnotes
    CHAPTER 5 Ethics, Corporate Social Responsibility, and Sustainability
    Opening Case Woolworths Group’s Corporate Responsibility Strategy 2020
    Introduction
    Ethics and International Business
    Employment Practices
    Management Focus “Emissionsgate” at Volkswagen
    Human Rights
    Environmental Pollution
    Corruption
    Ethical Dilemmas
    Roots of Unethical Behavior
    Personal Ethics
    Decision-Making Processes
    Organizational Culture
    Unrealistic Performance Goals
    Leadership
    Societal Culture
    Philosophical Approaches to Ethics
    Straw Men
    Utilitarian and Kantian Ethics
    Rights Theories
    Justice Theories
    Focus on Managerial Implications: Making Ethical Decisions Internationally
    Management Focus Corporate Social Responsibility at Stora Enso
    Chapter Summary
    Critical Thinking and Discussion Questions
    Research Task
    Closing Case UNCTAD Sustainable Development Goals
    Endnotes

  • part three The Global Trade and Investment Environment
  • CHAPTER 6 International Trade Theory
    Opening Case Donald Trump on Trade
    Introduction
    An Overview of Trade Theory
    The Benefits of Trade
    The Pattern of International Trade
    Trade Theory and Government Policy
    Mercantilism
    Country Focus Is China Manipulating Its Currency in Pursuit of a Neo-Mercantilist Policy?
    Absolute Advantage
    Comparative Advantage
    The Gains from Trade
    Qualifications and Assumptions
    Extensions of the Ricardian Model
    Country Focus Moving U.S. White-Collar Jobs Offshore
    Heckscher–Ohlin Theory
    The Leontief Paradox
    The Product Life-Cycle Theory
    Product Life-Cycle Theory in the Twenty-First Century
    New Trade Theory
    Increasing Product Variety and Reducing Costs
    Economies of Scale, First-Mover Advantages, and the Pattern of Trade
    Implications of New Trade Theory
    National Competitive Advantage: Porter’s Diamond
    Factor Endowments
    Demand Conditions
    Related and Supporting Industries
    Firm Strategy, Structure, and Rivalry
    Evaluating Porter’s Theory
    Focus on Managerial Implications: Location, First-Mover Advantages, and Government Policy
    Chapter Summary
    Critical Thinking and Discussion Questions
    Research Task
    Closing Case The Trans Pacific Partnership (TPP)
    Appendix International Trade and the Balance of Payments
    Endnotes
    CHAPTER 7 Government Policy and International Trade
    Opening Case Boeing and Airbus Are in a Dogfight over Illegal Subsidies
    Introduction
    Instruments of Trade Policy
    Tariffs
    Subsidies
    Country Focus Are the Chinese Illegally Subsidizing Auto Exports?
    Import Quotas and Voluntary Export Restraints
    Export Tariffs and Bans
    Local Content Requirements
    Administrative Policies
    Antidumping Policies
    The Case for Government Intervention
    Management Focus Protecting U.S. Magnesium
    Political Arguments for Intervention
    Economic Arguments for Intervention
    The Revised Case for Free Trade
    Retaliation and Trade War
    Domestic Policies
    Development of the World Trading System
    From Smith to the Great Depression
    1947–1979: GATT, Trade Liberalization, and Economic Growth
    1980–1993: Protectionist Trends
    The Uruguay Round and the World Trade Organization
    WTO: Experience to Date
    The Future of the WTO: Unresolved Issues and the Doha Round
    Country Focus Estimating the Gains from Trade for America
    Multilateral and Bilateral Trade Agreements
    The World Trading System under Threat
    Focus on Managerial Implications: Trade Barriers, Firm Strategy, and Policy Implications
    Chapter Summary
    Critical Thinking and Discussion Questions
    Research Task
    Closing Case Is China Dumping Excess Steel Production?
    Endnotes
    CHAPTER 8 Foreign Direct Investment
    Opening Case Foreign Direct Investment in Retailing in India
    Introduction
    Foreign Direct Investment in the World Economy
    Trends in FDI
    The Direction of FDI
    The Source of FDI
    Country Focus Foreign Direct Investment in China
    The Form of FDI: Acquisitions versus Greenfield Investments
    Theories of Foreign Direct Investment
    Why Foreign Direct Investment?
    Management Focus Foreign Direct Investment by Cemex
    The Pattern of Foreign Direct Investment
    The Eclectic Paradigm
    Political Ideology and Foreign Direct Investment
    The Radical View
    The Free Market View
    Pragmatic Nationalism
    Shifting Ideology
    Benefits and Costs of FDI
    Host-Country Benefits
    Host-Country Costs
    Home-Country Benefits
    Home-Country Costs
    International Trade Theory and FDI
    Government Policy Instruments and FDI
    Home-Country Policies
    Host-Country Policies
    International Institutions and the Liberalization of FDI
    Focus on Managerial Implications: FDI and Government Policy
    Chapter Summary
    Critical Thinking and Discussion Questions
    Research Task
    Closing Case Burberry Shifts Its Strategy in Japan
    Endnotes
    CHAPTER 9 Regional Economic Integration
    Opening Case Renegotiating NAFTA
    Introduction
    Levels of Economic Integration
    The Case for Regional Integration
    The Economic Case for Integration
    The Political Case for Integration
    Impediments to Integration
    The Case against Regional Integration
    Regional Economic Integration in Europe
    Evolution of the European Union
    Map 9.1 Member states of the European Union in 2017
    Political Structure of the European Union
    Management Focus The European Commission and Intel
    The Single European Act
    The Establishment of the Euro
    Country Focus The Greek Sovereign Debt Crisis
    Enlargement of the European Union
    British Exit from the European Union (BREXIT)
    Regional Economic Integration in the Americas
    Map 9.2 Economic integration in the Americas
    The North American Free Trade Agreement
    The Andean Community
    Mercosur
    Central American Common Market, CAFTA, and CARICOM
    Regional Economic Integration Elsewhere
    Association of Southeast Asian Nations
    Map 9.3 ASEAN countries
    Regional Trade Blocs in Africa
    Other Trade Agreements
    Focus on Managerial Implications: Regional Economic Integration Threats
    Chapter Summary
    Critical Thinking and Discussion Questions
    Research Task
    Closing Case The Push toward Free Trade in Africa
    Endnotes

  • part four The Global Monetary System
  • CHAPTER 10 The Foreign Exchange Market
    Opening Case The Mexican Peso, the Japanese Yen, and Pokemon Go
    Introduction
    The Functions of the Foreign Exchange Market
    Currency Conversion
    Insuring against Foreign Exchange Risk
    Management Focus Embraer and the Gyrations of the Brazilian Real
    The Nature of the Foreign Exchange Market
    Economic Theories of Exchange Rate Determination
    Prices and Exchange Rates
    Country Focus Quantitative Easing, Inflation, and the Value of the U.S. Dollar
    Interest Rates and Exchange Rates
    Investor Psychology and Bandwagon Effects
    Summary of Exchange Rate Theories
    Exchange Rate Forecasting
    The Efficient Market School
    The Inefficient Market School
    Approaches to Forecasting
    Currency Convertibility
    Focus on Managerial Implications: Foreign Exchange Rate Risk
    Chapter Summary
    Critical Thinking and Discussion Questions
    Research Task
    Closing Case Apple’s Earnings Hit by Strong Dollar
    Endnotes
    CHAPTER 11 The International Monetary System
    Opening Case Egypt and the IMF
    Introduction
    The Gold Standard
    Mechanics of the Gold Standard
    Strength of the Gold Standard
    The Period between the Wars: 1918–1939
    The Bretton Woods System
    The Role of the IMF
    The Role of the World Bank
    The Collapse of the Fixed Exchange Rate System
    The Floating Exchange Rate Regime
    The Jamaica Agreement
    Exchange Rates since 1973
    Country Focus The U.S. Dollar, Oil Prices, and Recycling Petrodollars
    Fixed versus Floating Exchange Rates
    The Case for Floating Exchange Rates
    The Case for Fixed Exchange Rates
    Who Is Right?
    Exchange Rate Regimes in Practice
    Pegged Exchange Rates
    Currency Boards
    Crisis Management by the IMF
    Financial Crises in the Post–Bretton Woods Era
    Country Focus The IMF and Iceland’s Economic Recovery
    Evaluating the IMF’s Policy Prescriptions
    Focus on Managerial Implications: Currency Management, Business Strategy, and Government Relations
    Management Focus Airbus and the Euro
    Chapter Summary
    Critical Thinking and Discussion Questions
    Research Task
    Closing Case China’s Exchange Rate Regime
    Endnotes
    CHAPTER 12 The Global Capital Market
    Opening Case Saudi Aramco
    Introduction
    Benefits of the Global Capital Market
    Functions of a Generic Capital Market
    Attractions of the Global Capital Market
    Management Focus The Industrial and Commercial Bank of China Taps the Global Capital Market
    Growth of the Global Capital Market
    Global Capital Market Risks
    Country Focus Did the Global Capital Markets Fail Mexico?
    The Eurocurrency Market
    Genesis and Growth of the Market
    Attractions of the Eurocurrency Market
    Drawbacks of the Eurocurrency Market
    The Global Bond Market
    Attractions of the Eurobond Market
    The Global Equity Market
    Foreign Exchange Risk and the Cost of Capital
    Focus on Managerial Implications: Growth of the Global Capital Market
    Chapter Summary
    Critical Thinking and Discussion Questions
    Research Task
    Closing Case Alibaba’s Record-Setting IPO
    Endnotes

  • part five The Strategy and Structure of International Business
  • CHAPTER 13 The Strategy of International Business
    Opening Case Sony’s Global Strategy
    Introduction
    Strategy and the Firm
    Value Creation
    Strategic Positioning
    The Firm as a Value Chain
    Global Expansion, Profitability, and Profit Growth
    Expanding the Market: Leveraging Products and Competencies
    Location Economies
    Experience Effects
    Leveraging Subsidiary Skills
    Profitability and Profit Growth Summary
    Management Focus Leveraging Skills Worldwide at ArcelorMittal
    Cost Pressures and Pressures for Local Responsiveness
    Pressures for Cost Reductions
    Pressures for Local Responsiveness
    Management Focus Viacom International Media Networks
    Choosing a Strategy
    Global Standardization Strategy
    Localization Strategy
    Transnational Strategy
    International Strategy
    Management Focus Evolution of Strategy at Procter & Gamble
    The Evolution of Strategy
    Chapter Summary
    Critical Thinking and Discussion Questions
    Research Task
    Closing Case IKEA’s Global Strategy
    Endnotes
    CHAPTER 14 The Organization of International Business
    Opening Case Unilever’s Global Organization
    Introduction
    Organizational Architecture
    Organizational Structure
    Vertical Differentiation: Centralization and Decentralization
    Management Focus Walmart International
    Horizontal Differentiation: The Design of Structure
    Integrating Mechanisms
    Management Focus Dow—(Failed) Early Global Matrix Adopter
    Control Systems and Incentives
    Types of Control Systems
    Incentive Systems
    Control Systems, Incentives, and Strategy in the International Business
    Processes
    Organizational Culture
    Creating and Maintaining Organizational Culture
    Organizational Culture and Performance in the International Business
    Management Focus Lincoln Electric and Culture
    Synthesis: Strategy and Architecture
    Localization Strategy
    International Strategy
    Global Standardization Strategy
    Transnational Strategy
    Environment, Strategy, Architecture, and Performance
    Organizational Change
    Organizational Inertia
    Implementing Organizational Change
    Chapter Summary
    Critical Thinking and Discussion Questions
    Research Task
    Closing Case Organizational Architecture at P&G
    Endnotes
    CHAPTER 15 Entry Strategy and Strategic Alliances
    Opening Case Gazprom and Global Strategic Alliances
    Introduction
    Basic Entry Decisions
    Which Foreign Markets?
    Management Focus Tesco’s International Growth Strategy
    Timing of Entry
    Scale of Entry and Strategic Commitments
    Market Entry Summary
    Management Focus The Jollibee Phenomenon
    Entry Modes
    Exporting
    Turnkey Projects
    Licensing
    Franchising
    Joint Ventures
    Wholly Owned Subsidiaries
    Selecting an Entry Mode
    Core Competencies and Entry Mode
    Pressures for Cost Reductions and Entry Mode
    Greenfield Venture or Acquisition?
    Pros and Cons of Acquisitions
    Pros and Cons of Greenfield Ventures
    Which Choice?
    Strategic Alliances
    Advantages of Strategic Alliances
    Disadvantages of Strategic Alliances
    Making Alliances Work
    Chapter Summary
    Critical Thinking and Discussion Questions
    Research Task
    Closing Case Starbucks’ Foreign Entry Strategy
    Endnotes

  • part six International Business Functions
  • CHAPTER 16 Exporting, Importing, and Countertrade
    Opening Case Tata Motors and Exporting
    Introduction
    The Promise and Pitfalls of Exporting
    Management Focus Ambient Technologies and the Panama Canal
    Improving Export Performance
    International Comparisons
    Information Sources
    Management Focus Exporting with Government Assistance
    Service Providers
    Export Strategy
    Management Focus 3M’s Export Strategy
    The globalEDGE™ Exporting Tool
    Export and Import Financing
    Lack of Trust
    Letter of Credit
    Draft
    Bill of Lading
    A Typical International Trade Transaction
    Export Assistance
    Export-Import Bank
    Export Credit Insurance
    Countertrade
    The Popularity of Countertrade
    Types of Countertrade
    Pros and Cons of Countertrade
    Chapter Summary
    Critical Thinking and Discussion Questions
    Research Task
    Closing Case Embraer and Brazilian Importing
    Endnotes
    CHAPTER 17 Global Production and Supply Chain Management
    Opening Case Alibaba and Global Supply Chains
    Introduction
    Strategy, Production, and Supply Chain Management
    Where to Produce
    Country Factors
    Management Focus IKEA Production in China
    Technological Factors
    Production Factors
    The Hidden Costs of Foreign Locations
    Management Focus H&M and Its Order Timing
    Make-or-Buy Decisions
    Global Supply Chain Functions
    Global Logistics
    Global Purchasing
    Managing a Global Supply Chain
    Role of Just-in-Time Inventory
    Role of Information Technology
    Coordination in Global Supply Chains
    Interorganizational Relationships
    Chapter Summary
    Critical Thinking and Discussion Questions
    Research Task
    Closing Case Amazon’s Global Supply Chains
    Endnotes
    CHAPTER 18 Global Marketing and R&D
    Opening Case ACSI and Satisfying Global Customers
    Introduction
    Globalization of Markets and Brands
    Market Segmentation
    Management Focus Marketing to Afro-Brazilians
    Product Attributes
    Cultural Differences
    Economic Development
    Product and Technical Standards
    Distribution Strategy
    Differences between Countries
    Choosing a Distribution Strategy
    Communication Strategy
    Barriers to International Communication
    Push versus Pull Strategies
    Management Focus Unilever among India’s Poor
    Global Advertising
    Pricing Strategy
    Price Discrimination
    Strategic Pricing
    Regulatory Influences on Prices
    Configuring the Marketing Mix
    International Market Research
    Product Development
    The Location of R&D
    Integrating R&D, Marketing, and Production
    Cross-Functional Teams
    Building Global R&D Capabilities
    Chapter Summary
    Critical Thinking and Discussion Questions
    Research Task
    Closing Case Global Branding, Marvel Studios, and Walt Disney Company
    Endnotes
    CHAPTER 19 Global Human Resource Management
    Opening Case Building a Global Diverse Workforce at Sodexo
    Introduction
    Strategic Role of Global HRM: Managing a Global Workforce
    Staffing Policy
    Types of Staffing Policies
    Expatriate Managers
    Management Focus Expatriates at Royal Dutch Shell
    Global Mindset
    Training and Management Development
    Training for Expatriate Managers
    Repatriation of Expatriates
    Management Focus Monsanto’s Repatriation Program
    Management Development and Strategy
    Performance Appraisal
    Performance Appraisal Problems
    Guidelines for Performance Appraisal
    Compensation
    National Differences in Compensation
    Management Focus McDonald’s Global Compensation Practices
    Expatriate Pay
    Building a Diverse Global Workforce
    International Labor Relations
    The Concerns of Organized Labor
    The Strategy of Organized Labor
    Approaches to Labor Relations
    Chapter Summary
    Critical Thinking and Discussion Questions
    Research Task
    Closing Case AstraZeneca
    Endnotes
    CHAPTER 20 Accounting and Finance in the International Business
    Opening Case Shoprite—Financial Success of a Food Retailer in Africa
    Introduction
    National Differences in Accounting Standards
    International Accounting Standards
    Management Focus Chinese Accounting
    Accounting Aspects of Control Systems
    Exchange Rate Changes and Control Systems
    Transfer Pricing and Control Systems
    Separation of Subsidiary and Manager Performance
    Financial Management: The Investment Decision
    Capital Budgeting
    Project and Parent Cash Flows
    Management Focus Black Sea Oil and Gas Ltd
    Adjusting for Political and Economic Risk
    Risk and Capital Budgeting
    Financial Management: The Financing Decision
    Financial Management: Global Money Management
    Minimizing Cash Balances
    Reducing Transaction Costs
    Managing the Tax Burden
    Moving Money across Borders
    Chapter Summary
    Critical Thinking and Discussion Questions
    Research Task
    Closing Case Tesla, Inc.—Subsidizing Tesla Automobiles Globally
    Endnotes

  • part seven Integrative Cases
  • Global Medical Tourism
    Venezuela under Hugo Chávez and Beyond
    Political and Economic Reform in Myanmar
    Will China Continue to Be a Growth Marketplace?
    Lead in Toys and Drinking Water
    Creating the World’s Biggest Free Trade Zone
    Sugar Subsidies Drive Candy Makers Abroad
    Volkswagen in Russia
    The NAFTA Tomato Wars
    Subaru’s Sales Boom Thanks to the Weaker Yen
    The IMF and Ukraine’s Economic Crisis
    The Global Financial Crisis and Its Aftermath: Declining Cross-Border Capital Flows
    Ford’s Global Platform Strategy
    Philips’ Global Restructuring
    General Motors and Chinese Joint Ventures
    Exporting Desserts by a Hispanic Entrepreneur
    Apple: The Best Supply Chains in the World?
    Domino’s Global Marketing
    Siemens and Global Competitiveness
    Microsoft and Its Foreign Cash Holdings

  • Glossary
  • Organization Index
  • Name Index
  • Subject Index

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