international business international business alan m. rugman

699 Pages·2011·29.43 MB·English

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N ALAN M. RUGMAN AND SIMON COLLINSON
“This excellent text provides a focused,comprehensive and relevant coverage of
contemporary international business.Theory and practice are combined,making a highly T
readable text,and its wealth of case material makes it a text that students should find
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both stimulating and challenging.”
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Jean Barclay,Sheffield Hallam University
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A INTERNATIONAL
Outsourcing.Emerging economies.Environmental impacts.These are just three of the many key issues
currently facing international businesses,all of which are examined in the fourth edition of this well- T
respected textbook. I BUSINESS
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Taking a regional approach,the text challenges some of the underlying assumptions behind globalization and
focuses on both the dominant economies – the EU,the US and Japan – as well as emerging markets,such as
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Brazil,India and China,of world trade.The book also integrates analysis of the competitive environment and
the internal resources of the firm to provide a strategic view of international business.
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The text is an engaging and comprehensive account of the realities of international business today.It will be
invaluable for anyone studying international business as part of a degree programme and aiming to attain a L 4TH EDITION
confident and thorough understanding of the subject.
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“Professor Rugman brings his diverse and knowledgeable background to
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this highly successful textbook,making it the most practical,interesting
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and current international business management text available.”
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Marcel Kohler,University of KwaZulu-Natal
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“The book is well written,richly
Key features include: S
illustrated with real-life cases and
• 100 up-to-date cases on organizations such as gives an excellent overview of the
Amazon,Carrefour and Kodak
field.The fourth edition particularly
• Detailed exploration of culture,corporate addresses a number of topics that are 4TH
responsibility and the natural environment
often overlooked,or underestimated, EDITION
• Specific coverage of key geographical regions of in other international business
international business
publications.”
• Analysis of the environment and firm provides central C R
Dr Matthijs Wolters,Vrije Universiteit
strategic focus O U
Amsterdam
• Interactive teaching and learning resources including L G
animation and video at www.pearsoned.co.uk/rugman L M
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Alan M.Rugmanis Professor of International Business and L.Leslie Waters Chair in S N
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International Business,Indiana University and Associate Fellow at Templeton College,
University of Oxford. N
Simon Collinsonis Senior Lecturer in International Business at Warwick Business
School,the University of Warwick.
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INTERNATIONAL BUSINESS
Visit the International Business, fourth edition,Companion Website
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● Video clips that illustrate core international business issues
and stimulate discussion
● Multiple-choice questions to test understanding
● Extensive links to valuable resources on the web
● An online glossary to explain key terms
● Interactive online flashcards that allow the reader to check
definitions against the key terms during revision
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Fourth Edition
INTERNATIONAL BUSINESS
Alan M. Rugman
Kelley School of Business, Indiana University
Simon Collinson
Warwick Business School, The University of Warwick
Richard M. Hodgetts
(deceased)
INBU_A01.QXD 11/11/05 12:00 AM Page iv
Pearson Education Limited
Edinburgh Gate
Harlow
Essex CM20 2JE
England
and Associated Companies throughout the world
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First published by McGraw-Hill, Inc. 1995
Fourth edition 2006
© Pearson Education Limited 2000, 2006
The rights of Alan M. Rugman and Simon Collinson to be identified as authors of this work have been
asserted by them in accordance with the Copyright, Designs and Patents Act 1988.
All rights reserved; no part of this publication may be reproduced, stored in a retrieval
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ISBN 13: 978-0-273-70174-3
ISBN 10: 0-273-70174-6
British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library.
Library of Congress Cataloging-in-Publication Data
Rugman, Alan M.
International business / Alan M. Rugman, Simon Collinson, Richard M. Hodgetts.—4th ed.
p. cm.
Includes bibliographical references and index.
ISBN 0-273-70174-6 (paperback)
1. International business enterprises—Management. I. Collinson, Simon. II. Hodgetts,
Richard M. III. Title.
HD62.4.R843 2005
658'.049—dc22 2005054646
10 9 8 7 6 5 4 3 2 1
09 08 07 06
Typeset by 72 in 10/12.5 Minion
Printed by Mateu Cromo Artes Graficas, Spain
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Contents in Brief
List of Figures, Tables, and Maps xv
Preface xix
About the Authors xx
Guide to the Case Studies xxiii
Guided Tour of the Book xxviii
Guided Tour of the Companion Website xxx
Acknowledgments xxxii
Part One THE WORLD OF INTERNATIONAL BUSINESS
Chapter 1 Regional and Global Strategy 3
Chapter 2 The Multinational Enterprise 36
Chapter 3 The Triad and International Business 67
Part Two THE ENVIRONMENT OF INTERNATIONAL BUSINESS
Chapter 4 International Politics 99
Chapter 5 International Culture 127
Chapter 6 International Trade 157
Chapter 7 International Financial Markets and Institutions 191
Part Three INTERNATIONAL BUSINESS STRATEGIES
Chapter 8 Multinational Strategy 225
Chapter 9 Organizing Strategy 252
Chapter 10 Production Strategy 278
Chapter 11 Marketing Strategy 310
Chapter 12 Human Resource Management Strategy 339
Chapter 13 Political Risk and Negotiation Strategies 370

Chapter 14 International Financial Management 404
Part Four INTERNATIONAL BUSINESS STRATEGIES IN ACTION
Chapter 15 Corporate Strategy and National Competitiveness 441
Chapter 16 European Union 470
Chapter 17 Japan 501
Chapter 18 North America 539
Chapter 19 Emerging Economies 568
Chapter 20 Ethics and the Natural Environment 606
Glossary 631
Subject Index 643
Company Index 654
Name Index 657
v
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Contents
List of Figures, Tables, and Maps xv Key terms 25
Preface xix Review and discussion questions 25
About the Authors xx ■ REAL CASES
Guide to the Case Studies xxiii Big oil gets bigger 26
Guided Tour of the Book xxviii Wal-Mart 27
Guided Tour of the Companion Website xxx
Endnotes 29
Acknowledgments xxxii
Additional bibliography 29
Appendixes to Chapter 1 31
Part One
THE WORLD OF
INTERNATIONAL BUSINESS Chapter 2
The Multinational Enterprise 36
Chapter 1
Objectives ofthe chapter 36
Regional and Global Strategy 3 ■ ACTIVE LEARNING CASE
Disneyland in Europe 37
Objectives ofthe chapter 3
Introduction 38
■ ACTIVE LEARNING CASE
The nature ofmultinational enterprises 39
Coke goes worldwide with a local
Characteristics ofmultinational
strategy 4
enterprises 39
Introduction 5
The internationalization process 41
World business:a briefoverview 6 Why firms become multinational
Exports and imports 6 enterprises 43
Foreign direct investment 7
■ INTERNATIONAL BUSINESS STRATEGY IN ACTION
The triad 10
Italian family firms 44
Today’s international environment 12
The strategic philosophy ofmultinational
International trade regulation 12
enterprises 45
Technology 13
Strategic management and multinational
Small and medium-sized enterprises (SMEs) 13
enterprises 46
■ INTERNATIONAL BUSINESS STRATEGY IN ACTION Strategic management ofMNEs:an
Amazon.com 14 introduction 46
Globalization and strategic management 15 ■ INTERNATIONAL BUSINESS STRATEGY IN ACTION
Regional triad strategies 15 Nestlé 48
Maintaining economic competitiveness 16 A framework for global strategies:
Multinationals in action 19 the CSA-FSA matrix 49
■ INTERNATIONAL BUSINESS STRATEGY IN ACTION The competitive advantage matrix 50
The Italian tile industry 20 Multinationals in action 52
Solectron 52
The study ofinternational business 22
BMW 52
From general to strategic emphasis 22
Levi Strauss 53
Framework for this book 23 Canon 54
Key points 25 Zara 54
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CONTENTS
Key points 57 Part Two
Key terms 57
THE ENVIRONMENT OF
Review and discussion questions 58
INTERNATIONAL BUSINESS
■ REAL CASES
Starbucks 58
Sony 59
Chapter 4
Endnotes 61
International Politics 99
Additional bibliography 61
Appendixes to Chapter 2 63
Objectives ofthe chapter 99
■ ACTIVE LEARNING CASE
How risky is investment in Russia? 100
Chapter 3
Introduction 101
The Triad and International Business 67 Political ideologies and economics 102
Political systems 102
Objectives ofthe chapter 67 Economic systems 103
■ ACTIVE LEARNING CASE ■ INTERNATIONAL BUSINESS STRATEGY IN ACTION
Boeing versus Airbus 68 Softwood lumber: not-so-free trade 104
Introduction 69 Government control ofassets 105
Government–business cooperation 106
Reasons for foreign direct investment 70
Increase sales and profits 71 Economic integration 108
Enter rapidly growing markets 72 Trade creation and trade diversion 108
Reduce costs 72 Levels ofeconomic integration 109
■ INTERNATIONAL BUSINESS STRATEGY IN ACTION Economic integration:an overall perspective 110
Ethics,environment,MNEs,and the civil society 111
Aflac 73
■ INTERNATIONAL BUSINESS STRATEGY IN ACTION
■ INTERNATIONAL BUSINESS STRATEGY IN ACTION
Non-governmental organizations and
Lafarge and Cemex: concrete multinationals 74
political power 112
Gain a foothold in economic blocs 75
The European Union (EU) 114
Protect domestic markets 76
Other examples ofeconomic integration 116
Protect foreign markets 76
Economic integration and strategic management 118
Acquire technological and managerial
Strategic alliances and acquisitions 118
know-how 76
Localization ofbusiness operations 119
Foreign direct investment and trade
by triad members 77 Key points 121
The triad’s domination ofFDI a nd trade 77 Key terms 122
Triad FDI clusters 78 Review and discussion questions 122
Multinationals in action:regional ■ REAL CASES
business strategy 79 How environmental regulations can be
The world’s regional automotive used as trade barriers 123
industry 80 Embracer vs. Bombardier 124
Mergers and acquisitions 86
Endnotes 125
Key points 87 Additional bibliography 125
Key terms 87
Review and discussion questions 88
■ REAL CASES Chapter 5
Matsushita and Philips 88 International Culture 127
Toys ”R“ Us in Europe and Japan 89
Endnotes 90 Objectives ofthe chapter 127
Additional bibliography 91 ■ ACTIVE LEARNING CASE
Appendix to Chapter 3 93 Culture clash at Pharmacia and Upjohn 128
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CONTENTS
Introduction 129 Introduction 160
What is culture? 129 International trade theory 160
The importance ofculture in different Theory ofabsolute advantage 161
business contexts 131 Theory ofcomparative advantage 162
Culture has always been important 132 Factor endowment theory 163
■ INTERNATIONAL BUSINESS STRATEGY IN ACTION International product life cycle theory 164
McDonald’s 133 Other important considerations 165
■ INTERNATIONAL BUSINESS STRATEGY IN ACTION
National stereotypes and key dimensions
China’s organic food exports 166
ofculture 134
Culture at two levels 134 Barriers to trade 167
Hofstede’s four dimensions ofculture 134 Reasons for trade barriers 167
Trompenaars’seven dimensions ofculture 135 Commonly used barriers 168
The GLOBEproject’s nine dimensions Tariffs 169
ofculture 137
■ INTERNATIONAL BUSINESS STRATEGY IN ACTION
Applying the national culture frameworks 138
The EU–US courier wars 171
“The way we do things here:”The
US trade policy 172
implicationsofcultural differences for
organizations and managers 139 Non-tariffbarriers to trade 172
Quotas 173
Cross-cultural management 141
“Buy national”restrictions 173
Organization 141
Customs valuation 174
Leadership 142
Technical barriers 174
Communication 142
Antidumping legislation,subsidies,and
The corporate response 143
countervailing duties 174
Multinational organization structures:
Agricultural products 175
imperialist or independent? 144
Export restraints 175
Culture-clash in cross-border M&A and JVs 145
Other economic developments 175
■ INTERNATIONAL BUSINESS STRATEGY IN ACTION
Countertrade 175
Danone and Parmalat—going international,
Trade in services 176
staying local 146
Free trade zones 177
Culture embodied in national Key points 178
institutions 148 Key terms 179
France:cultural and social characteristics Review and discussion questions 179
that create a national distinctiveness 149
■ REAL CASES
Key points 150 Outsourcing to China 180
Key terms 151 Dumping on trade complaints 181
Review and discussion questions 151
Endnotes 182
■ REAL CASES Additional bibliography 182
Do not throw your “meishi”! 152 Appendix to Chapter 6 184
Cultural differences in international sports 153
Endnotes 154
Additional bibliography 155
Chapter 7
International Financial Markets
and Institutions 191
Chapter 6
Objectives ofthe chapter 191
International Trade 157
■ ACTIVE LEARNING CASE
Objectives ofthe chapter 157 Barclays Bank international financial
dealings 192
■ ACTIVE LEARNING CASE
Trade of the triad and China 158 Introduction 193
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CONTENTS
Foreign exchange markets 194 ■ INTERNATIONAL BUSINESS STRATEGY IN ACTION
Foreign exchange markets in the United States 195 Arthur Andersen, Accenture, and McKinsey 229
Determination ofthe exchange rate 200 Strategy formulation 230
Purchasing power parity 200 External environmental assessment 231
International Fisher effect 201 Internal environmental assessment 234
Combined equilibrium relationships 201 Goal setting 238
■ INTERNATIONAL BUSINESS STRATEGY IN ACTION Strategy implementation 239
The Wall Street crash of 2001 203 Location 239
Protecting against exchange risk 203 ■ INTERNATIONAL BUSINESS STRATEGY IN ACTION
Alternatives to minimize exchange risk 204 Fuji Xerox and Xerox 240
Foreign money and capital markets 205 Ownership 240
MNEs and national money markets 206 Functional strategies 242
MNEs and national capital markets 206 Control and evaluation 243
Regional money and capital markets 207 Common methods ofmeasurement 244
The eurocurrency market 207 Key points 245
Eurocurrency interest rates 209 Key terms 246
Other market characteristics 209 Review and discussion questions 246
Criticisms ofthe euromarkets 210
■ REAL CASES
Eurobonds and euroequities 211
Mountain Equipment Co-op: a small business 247
■ INTERNATIONAL BUSINESS STRATEGY IN ACTION Benetton 248
AngloGold Ashanti 212
Endnotes 249
The IMF system 213 Additional bibliography 250
Unresolved problems with the IMF system 215
MNEs and international financial markets
and institutions Chapter 9
Key points 216 Organizing Strategy 252
Key terms 217
Review and discussion questions 217 Objectives ofthe chapter 252
■ REAL CASES ■ ACTIVE LEARNING CASE
HSBC 218 Procter & Gamble 253
World financial crises 219 Introduction 254
Endnotes 220 Organizational structures 254
Additional Bibliography 221 Early organizational structures 255
The international division 256
Global organizational structures 256
Part Three ■ INTERNATIONAL BUSINESS STRATEGY IN ACTION
Aventis 257
INTERNATIONAL BUSINESS
STRATEGIES ■ INTERNATIONAL BUSINESS STRATEGY IN ACTION
Making matrix work 263
Strategic management and organizing strategy 266
Chapter 8
Analysis ofkey structural variables 266
Multinational Strategy 225 Coordination 267
Key points 272
Objectives ofthe chapter 225
Key terms 272
■ ACTIVE LEARNING CASE Review and discussion questions 273
Vodafone and the triad telecom market 226
■ REAL CASES
Introduction 227
LVMH: organizing luxury products in
Strategic orientations 228 the international arena 273
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