International Business

416 Pages·2015·163.8 MB·English

by  Minocha, Sonal, Rees, Bronwen, Wall, Stuart

Fourth edition I
Fourth edition
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INTERNATIONAL T
INTERNATIONAL
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BUSINESS N
BUSINESS
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T
I
O
N
A
Stuart Wall Sonal Minocha Bronwen Rees
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Stuart Wall Sonal Minocha Bronwen Rees
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We live in a global economy in which over one quarter of the world’s recorded output is exported, where a
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change in business practice in Beijing can have a direct impact on a workforce in Birmingham, and where
support to a customer in Detroit can be provided from Delhi. S
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International business is everywhere and affects us all on a daily basis. Individuals and organisations
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therefore need to understand that they operate in a global as well as a local business environment, in
which they must often manage and market across cultures, trade across national and legal boundaries, S
and plan for an ever-more competitive and unpredictable future. S
This book provides a clear and concise introduction to this most interdisciplinary of subjects, explaining
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in straightforward language the economic and fi nancial underpinnings of international business, and the
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more subtle organisational and cultural issues increasingly crucial to business success. The managerial itu
challenges which face organisations of all types and sizes, no matter where they are located, are reviewed iort
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and explored.
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Over 75 case studies enable you to learn from examples such as:
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(cid:127) developing management skills in China, Japan and the USA
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(cid:127) exploring new strategic directions for Apple, Microsoft, Amazon and conventional publishers as
‘smart’ technologies continue to develop in
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(cid:127) legal services and intellectual property rights in India
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(cid:127) Islamic culture and international human resource management h
(cid:127) reviewing the roles of the World Bank and other international organisations in the face of a

increased global economic uncertainty
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(cid:127) the experiences of multinationals including Toyota, Walmart, Dyson, Body Shop and many more
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International Business is written for students on a range of undergraduate
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and postgraduate programmes. ©ro
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International Business
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Contents
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Contents

Fourth edition
International Business
Stuart Wall
Sonal Minocha
Bronwen Rees
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Pearson Education Limited
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Harlow CM20 2JE
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Web: www.pearson.com/uk
First published in 2001 (print)
Second edition published 2004 (print)
Third edition published 2010 (print)
Fourth edition published 2015 (print and electronic)
© Pearson Education Limited 2001, 2010 (print)
© Pearson Education Limited 2015 (print and electronic)
The rights of Stuart Wall, Sonal Minocha and Bronwen Rees to be identified as authors of this work have been asserted by them in
accordance with the Copyright, Designs and Patents Act 1988.
The print publication is protected by copyright. Prior to any prohibited reproduction, storage in a retrieval system, distribution or transmis-
sion in any form or by any means, electronic, mechanical, recording or otherwise, permission should be obtained from the publisher or,
where applicable, a licence permitting restricted copying in the United Kingdom should be obtained from the Copyright Licensing Agency
Ltd, Saffron House, 6–10 Kirby Street, London EC1N 8TS.
The ePublication is protected by copyright and must not be copied, reproduced, transferred, distributed, leased, licensed or publicly
performed or used in any way except as specifically permitted in writing by the publishers, as allowed under the terms and conditions under
which it was purchased, or as strictly permitted by applicable copyright law. Any unauthorised distribution or use of this text may be a direct
infringement of the author’s and the publishers’ rights and those responsible may be liable in law accordingly.
All trademarks used herein are the property of their respective owners. The use of any trademark in this text does not vest in the author or
publisher any trademark ownership rights in such trademarks, nor does the use of such trademarks imply any affiliation with or endorsement
of this book by such owners.
Pearson Education is not responsible for the content of third-party internet sites.
The Financial Times. With a worldwide network of highly respected journalists, The Financial Times provides global business news,
insightful opinion and expert analysis of business, finance and politics. With over 500 journalists reporting from 50 countries worldwide,
our in-depth coverage of international news is objectively reported and analysed from an independent, global perspective. To find out more,
visit www.ft.com/pearsonoffer.
ISBN: 978–1-292–01668–9 (print)
978–1-292–01671–9 (PDF)
978–1-292–01673–3 (eText)
British Library Cataloguing-in-Publication Data
A catalogue record for the print edition is available from the British Library
Library of Congress Cataloging-in-Publication Data
Wall, Stuart, 1946-
International business / Stuart Wall, Sonal Minocha, Bronwen Rees. — Fourth edition.
pages cm
ISBN 978-1-292-01668-9
1. International business enterprises. 2. International economic relations. 3. Globalization. I. Minocha, Sonal. II. Rees, Bronwen. III. Title.
HD62.4.W343 2015
658’.049—dc23
2014048756
10 9 8 7 6 5 4 3 2 1
19 18 17 16 15
Print edition typeset in 9.5/12.5 pts Charter ITC Std by 71
Printed by Ashford Colour Press Ltd, Gosport
NOTE THAT ANY PAGE CROSS REFERENCES REFER TO THE PRINT EDITION
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Brief contents
Preface: using this book xv
Acknowledgements xvii
Abbreviations xxi
1 Introduction to international business 1
2 Internationalisation process 37
3 International business: theory and practice 73
4 The political, legal, economic and technological environment 1 21
5 International sociocultural environment 159
6 International ethical and ecological environment 189
7 International strategic issues 221
8 International human resource management 278
9 International marketing 303
10 International finance: theory and practice 340
References 370
Index 375

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Contents
Preface: using this book xv
Acknowledgements xvii
Abbreviations xxi
1 Introduction to international business 1
Introduction 1
Patterns and trends in international business 1
Globalisation 16
The multinational enterprise (MNE) 30
How important are the multinationals? 32
Boxes
1.1 Relative unit labour costs (RULC) 10
1.2 Definitions of globalisation 16
Case studies
1.1 Dyson revisits its international location 13
1.2 A local hero’s fight for American jobs 18
1.3 Manufacturing futures and markets 21
1.4 JCB adapts to the Indian market 23
1.5 Outsourcing in Action: China outsources clothes 24
1.6 Reshoring creates new jobs 25
1.7 Competing in a globalised economy 27
2 Internationalisation process 37
Introduction 37
Export-based methods for internationalisation 38
Non-equity-based methods for internationalisation 42
Equity-based methods for internationalisation 48
Why invest abroad? 57
Theoretical explanations 66
Case studies
2.1 Producers pin hope on Agoa Trade Pact to drive exports 40
2.2 Patents and the EU pharmaceuticals market 43
2.3 Asda sees gap in Malta market for George shop 46
2.4 Legal process outsourcing in India 47
2.5 Market entry into China 51
2.6 Renault and Nissan seek €4.3bn in synergies 53
2.7 The Japanese keiretsu 54
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Contents
2.8 High energy costs drive EU industry abroad 59
2.9 China’s thirst for dairy 62
2.10 Toyota wins support for its US operations 63
2.11 Nokia offers a taxing tale 65
2.12 Internationalisation may not always deliver! 72
3 International business: theory and practice 73
Introduction 73
Gains from trade 74
Sources of comparative and competitive advantage 81
Trade and the world economy 88
Barriers to trade 92
Protectionist policies 97
Regional trading arrangements 100
Government policies and international business 103
International institutions and world trade 108
The International Monetary Fund (IMF) 114
World Bank 119
Boxes
3.1 Comparative advantage and opportunity cost 77
3.2 Gains from trade 80
3.3 Impacts of a tariff 93
3.4 Impacts of a subsidy 95
3.5 Customs Union: trade creation and trade diversion 102
3.6 Impacts of EU policies on farms and agri-businesses 105
3.7 IMF stabilisation programmes 118
3.8 World Bank structural adjustment and stabilisation 120
Case studies
3.1 Free trade and its impacts: NAFTA 87
3.2 Intra-industry trade: Honda 90
3.3 Indian subsidies to cereal farmers 96
3.4 Luxembourg tax regime: Under siege 107
3.5 WTO doubts grow over global role 113
4 The political, legal, economic and technological
environment 121
Introduction 121
Political environment 122
Political risk 123
The international legal and regulatory environment 132
Intellectual property rights 139
Economic systems 145
Economic variables and the business environment 148
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Contents
Technological environment 153
Technology transfer 156
Boxes
4.1 EU directives and state aid 137
4.2 Strategic patenting 140
4.3 Elasticity of demand 149
4.4 Creating or destroying jobs 154
Case studies
4.1 Chinese government and EU milk products 123
4.2 Sugar and onions in India 125
4.3 BMW after Rover 131
4.4 Stricter US roles drive fuel efficiency 134
4.5 Light bulbs reduce energy costs 135
4.6 Engineering the future – smartphone patents 141
4.7 Redskins lose trademark protection 143
4.8 Market influences on Wellcome share price 146
4.9 Transport and elasticities of demand 151
4.10 Eyeball scans are a fresh weapon against fraud 156
5 International sociocultural environment 159
Introduction 159
National cultural characteristics 160
Cultural impacts on international business 170
National, organisational and occupational cultures 178
Strategies for developing intercultural competence 184
Boxes
5.1 A clash of cultures 171
5.2 National and organisational cultural dimensions 179
Case studies
5.1 Brazilian, Russian, Indian and Chinese cultural characteristics 168
5.2 National culture and Japanese competitiveness 172
5.3 East meets West 176
5.4 Apple 181
5.5 Corporate culture and Japanese competitiveness 181
5.6 Challenges to cross-cultural team management 185
6 International ethical and ecological environment 189
Introduction 189
Business ethics 190
Ethics and the corporate culture 192
Ethical responsibilities and codes of conduct 195
Ethics and profits 200
International business ethics 203
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