Working Capital Essays

Working Capital Essays Working Capital Essay Working Capital Essay Tw elfth Edition INTERNATIONAL BUSINESS Environments and Operations John D. Daniels University of Miami Lee H. Radebaugh Brigham Young University Daniel P. Sullivan University of Delaware Pearson Education International Contents Preface 29 About the Authors PART ONE 39 BACKGROUND FOR INTERNATIONAL BUSINESS 44 1 Globalization and International Business 45 49 44 CASE: The Global Playground Introduction 48 W h a t Is International Business7. The Forces Driving Globalization 50 Factors in Increased Globalization 51 Whats Wrong with Globalization? 56 Threats to National Sovereignty 56 Financial Growth and Environmental Stress 57 Growing Income Inequality 57 s | Point ^J3ffi^S^^3 Offshoring Good Strategy? 58 Why Companies Engage in InternationaLBusiness Expanding Sales 60 , Acquiring Resources 60 Minimizing Risk 60 Modes of Operations in International Business Merchandise Exports and Imports 62 Service Exports and Imports 62 Investments 63 Types of International Organizations 63 Why International Business Differs from Domestic Business 64 Physical and Social Factors 65 The Competitive Environment 67 Looking to the Future: 61 Three Ways of Looking at Globalization 68 C A S E : Carnival Cruise Lines: Exploiting a Sea of Global Opportunity 69 74 Summary Key Terms 75 Endnotes 75 An Atlas 78 Map Index 86 Contents 2 PART TWO COMPARATIVE ENVIRONMENTAL FRAMEWORKS 90 91 90 The Cultural Environments Facing Business 94 95 C A S E : The Java Lounge-Adjusting to Saudi Arabian Culture Introduction The People Factor Cultural Awareness 96 97 A Little Learning Goes a Long Way The Nation as a Point of Reference How Cultures Form and Change The Idea of a Nation: Delineating Cultures 98 99 98 Language as Both a Diffuser and Stabilizer of Culture 100 103 Does Geography Matter? Where Birds of a Feather Flock Together Religion as a Cultural Stabilizer 104 Behavioral Practices Affecting Business 106 Issues in Social Stratification 106 Work Motivation 109 Relationship Preferences I II Risk-Taking Behavior I 12 Information and Task Processing I 13 Communications I 15 Dealing with Cultural Differences Accommodation I 18 118 Cultural Distance: Usefulness and Limitations I 19 Culture Shock 119 Company and Management Orientations 121 [ P o j n t B f l J H ^ f l Does International Business Lead to Cultural Imperialism? Procedures for Instituting Change 125 127 Looking to the Future: What Will Happen to National Cultures? C A S E : Charles Martin in Uganda: What to Do When a Manager Goes Native 128 123 Summary Key Terms Endnotes 132 133 3 The Political and Legal Environments Facing Business 137 136 C A S E : China-Legal Growing Pains in a Land of Opportunity Introduction 141 The Political Environment 142 143 Individualism Versus Collectivism Political Ideology 144 Trends in Political Systems 150 Contents Looking to the Future: What Might Become of Democracy? Political Risk 154 153 156 J | Point | g ^ | ^ j 3 Should Political Risk Management Be an Active Strategy? The Legal Environment 157 Legal Systems 158 Types of Legal Systems 158 The Diffusion of Legal Systems 159 Trends in Legal Systems 160 Understanding Bases of Rule 161 Implications for Managers 162 Legal Issues in International Business Operational Concerns 164 Strategic Concerns 166 Intellectual Property Rights 168 164 C A S E : Crime That Pays (and Pretty Well, Too) Summary Key Terms Endnotes 177 178 172 4 The Economic Environments Facing Businesses 184 186 180 181 C A S E : Economic Conundrums and the Comeback of Emerging Economies Introduction International Economic Analysis Components of the Economic Environment Gross National Income 187 Features of an Economy 196 Inflation 196 197 199 Unemployment Debt 198 Income Distribution Poverty 200 Labor Costs Productivity 201 202 187 The Balance of Payments | Point |[emailprotected]â §3^^fl Is a Trade Deficit an Advantage? Incorporating Economic Analysis 206 Types of Economic Systems 206 Economic Freedom and Market Transitions Making the Transition to a Market Economy Looking to the Future: C A S E : Meet the BRICs Summary 222 204 209 21 I Is There a Move to Push Back Economic Freedom? 216 218 Contents Key Terms Endnotes 223 5 Globalization and Society 230 231 232 226 227 C A S E : Ecomagination and the Global Greening of GE Introduction Evaluating the Impact of FDI Considering the Logic of FDI The Economic Impact of the M N E 234 Balance-of-Payments Effects 234 Growth and Employment Effects 236 The Foundations of Ethical Behavior 237 Why Do Companies Care About Ethical Behavior? 237 The Cultural Foundations of Ethical Behavior 238 The Legal Foundations of Ethical Behavior 240 Ethics and Corporate Bribery 241 Corruption and Bribery 241 | Point | j E B 5 E ^ f l Are Top Managers Responsible When Corruption Is Afoot? 44 Ethics and the Environment What Is Sustainability? Looking to the Future: 246 248 249 Global Warming and the Kyoto Protocol Ethical Dilemmas and Business Practices How to See the Trees in the Rain Forest Ethical Dilemmas and the Pharmaceutical Industry 249 Ethical Dimensions of Labor Conditions 251 Corporate Codes of Ethics: How Should a Company Behave? 254 C A S E : Anglo American PLC in Sou th Africa: What Do You Do When Costs Reach Epidemic Proportions? 256 Summary Key Terms Endnotes 260 261 THEORIES AND INSTITUTIONS: TRADE AND INVESTMENT 264 PART THREE International Trade and Factor-Mobility Theory 268 264 265 C A S E : Costa Rica: Using Foreign Trade to Trade-Up Economically Introduction Laissez-Faire Versus Interventionist Approaches to Exports and Imports 269 Theories of Trade Patterns 269 Contents Interventionist Theories Mercantilism 270 Free Trade Theories 271 270 Theory of Absolute Advantage 272 Theory of Comparative Advantage 274 Theories of Specialization: Some Assumptions and Limitations 276 Trade Patterns Theories 278 279 284 How Much Does a Country Trade? 278 What Types of Products Does a Country Trade? With Whom Do Countries Trade? Does Geography Make a difference? The Statics and Dynamics of Trade Product Life Cycle (PLC) Theory The Porter Diamond 287 282 285 Variety Is the Spice of Life | Point |g^^^J35flfl Should Nations Use Strategic Trade Policies? 289 Factor-Mobility Theory 291 292 293 295 298 299 Why Production Factors Move Effects of Factor Movements Looking to the Future: Summary Key Terms Endnotes 302 304 The Relationship Between Trade and Factor Mobility C A S E : LUKOIL: Trade Strategy atja Privatized Exporter J In What Direction Will Trade Winds Blow? 7 Governmental Influence on Trade 06 C A S E : Making the Emperors (and Everyone Elses) New Clothes: Textile and Clothing Trade 307 Introduction 310 Conflicting Results of Trade Policies 311 The Role of Stakeholders 31 I Economic Rationales for Governmental Intervention Fighting Unemployment 312 Protecting Infant Industries 313 Developing an Industrial Base 314 Economic Relationships with Other Countries 316 Noneconomic R ationales for Government Intervention Maintaining Essential Industries 319 Preventing Shipments to Unfriendly Countries 319 ^ Â § j t ^ 3 Should Governments Forgo Trade Sanctions? Keeping up or Extending Spheres of Influence Preserving National Identity 321 311 319 320 10 Contents Instruments of Trade Control Tariffs 322 321 Nontariff Barriers: Direct Price Influences 323 Nontariff Barriers: Quantity Controls 325 Dealing with Governmental Trade Influences Tactics for Dealing with Import Competition Looking to the Future: 328 329 330 Dynamics and Complexity C A S E : U. S. - Cuban Trade: When Does a Cold War Strategy Become a Cold War Relic? 330 Summary Key Terms Endnotes 333 334 8 Cross-National Cooperation and Agreements 337 340 339 336 C A S E : Toyotas European Drive Introduction The World Trade Organization (WTO) GATT: The Predecessor to the W T O What Does the W T O Do? 341 The Rise of Bilateral Agreements 342 Regional Economic Integration 343 The Effects of Integration 344 Major Regional Trading Groups 345 The European Union 346 351 356 The NorthAmerican Free Trade Agreement (NAFTA) Regional Economic Integration in the Americas | Point U B I H B I Is CAFTA-DR a Good Idea? 359 Regional Economic Integration in Asia 360 Regional Economic Integration in Africa Looking to the Future: 362 Will the WTO Overcome Bilateral and Regional Integration Efforts? 63 Other Forms of International Cooperation 364 Commodity Agreements Consumers and Producers C A S E : Wal-Mart Goes South Summary 370 365 366 367 Commodities and the World Economy The Organization of Petroleum Exporting Countries (OPEC) Key Terms Endnotes 371 Contents 11 9 PART FOUR WORLD FINANCIAL ENVIRONMENT 374 Global Foreign-Exchange Markets CASE: Going Down to the Wire in the Money-Transfer Market Introduct ion 377 W h a t Is Foreign Exchange? 377 375 Players on the Foreign-Exchange Market Does Geography Matter? 378 382 A few Aspects of the Foreign-Exchange Market Major Foreign-Exchange Markets The Spot Market 383 The Forward Market 387 Options 388 Futures 388 383 Foreign-Exchange Trades The Foreign-Exchange Trading Process Banks and Exchanges Looking to the Future: 390 388 392 Where Are Foreign-Exchange Markets Headed? 394 How Companies Use Foreign Exchange 393 Business Purposes (I): Cash Flow Aspects of Imports and Exports Business Purposes (II): Other Financial Flows C A S E : Banking on Argentina Summary Key Terms Endnotes 402 403 404 398 395 396 | Point | { | j f l j ^ ; g f I 3 Is It Ok to Speculate on Currency? 0 The Determination of Exchange Rates C A S E : El Salvador Adopts the U. S. Dollar Introduction 409 407 406 The International Monetary Fund 410 Origin and Objectives 410 The IMF Today 410 Evolution to Floating Exchange Rates 41 I Exchange-Rate Arrangements Fixed Versus Flexible Currencies 412 414 416 Exchange Arrangements with No Separate Legal Tender Currency Board Arrangements 416 C onventional F