International Business Competing in the Global Marketplace
C h a r l e s W. L . H i l l U N I V E R S I T Y O F W A S H I N G T O N
G . To m a s M . H u l t M I C H I G A N S T A T E U N I V E R S I T Y
International Business Competing in the Global Marketplace
INTERNATIONAL BUSINESS: COMPETING IN THE GLOBAL MARKETPLACE, TWELFTH EDITION
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F o r m y m o t h e r J u n e H i l l , a n d t h e m e m o r y o f m y f a t h e r,
M i k e H i l l — C h a r l e s W. L . H i l l
F o r G e r t & M a r g a r e t a H u l t , my parents—G. To m as M. Hul t
about the AUTHORS C h a r l e s W. L . H i l l U n i v e r s i t y o f W a s h i n g t o n
Charles W. L. Hill is the Hughes M. and Katherine Blake Professor of Strategy and International Business at the Foster School of Business, University of Washington. The Foster School has a Center for International Business Education and Research (CIBER), one of only 17 funded by the U.S. Department of Education, and is con- sistently ranked as a Top-25 business school. Learn more about Professor Hill at foster.uw.edu/faculty-research/directory/charles-hill A native of the United Kingdom, Professor Hill received his PhD from the University of Manchester, UK. In addition to the University of Washington, he has served on the faculties of the University of Manchester, Texas A&M University, and Michigan State University. Professor Hill has published over 50 articles in top academic journals, including the Academy of Management Journal, Academy of Management Review, Strategic Management Journal, and Organization Science. Professor Hill has also published several textbooks including International Business (McGraw-Hill) and Global Busi- ness Today (McGraw-Hill). His work is among the most widely cited in the world in international business and strategic management. Beginning in 2014, Dr. Hill partnered with Dr. Tomas Hult in a formidable co-authorship of the IB franchise of textbooks (International Business, Global Business Today). This brought together two of the most cited international business scholars in history. Professor Hill has taught in the MBA, Executive MBA, Technology Management MBA, Management, and PhD programs at the University of Washington. During his time at the University of Washington he has received over 25 awards for teaching excellence, including the Charles E. Summer Outstanding Teaching Award. Professor Hill works on a private basis with a number of organizations. His clients have included Microsoft, where he has been teaching in-house executive education courses for two decades. He has also consulted for a variety of other large companies (e.g., AT&T Wireless, Boeing, BF Goodrich, Group Health, Hexcel, Microsoft, Philips Healthcare, Philips Medical Systems, Seattle City Light, Swedish Health Services, Tacoma City Light, Thompson Financial Services, WRQ, and Wizards of the Coast). Professor Hill has also served on the advisory board of several start-up companies. For recreation, Professor Hill enjoys skiing, and competitive sailing!
G . To m a s M . H u l t M i c h i g a n S t a t e U n i v e r s i t y
G. Tomas M. Hult is the John W. Byington Endowed Chair, professor of marketing and international business, and director of the International Business Center in the Eli Broad College of Business at Michigan State University. The Broad College has a Center for International Business Education and Research (CIBER), one of only 17 funded by the U.S. Department of Education, and is consistently ranked as a Top-25 business school. Learn more about Professor Hult at broad.msu.edu/ facultystaff/hult A native of Sweden, Professor Hult received a mechanical engineer degree in Sweden before obtaining a PhD at The University of Memphis. In addition to Michigan State University, he has served on the faculties of Florida State University
and the University of Arkansas at Little Rock. Dr. Hult holds visiting professorships in the International Business group of his native Uppsala University, Sweden (since 2013) and the International Business division of Leeds University, UK (since 2010). Michigan State, Uppsala, and Leeds are all ranked in the top 10 in the world in international business research. Several studies have ranked Professor Hult as one of the most cited scholars in the world in business and management. He served as editor of Journal of the Academy of Marketing Science, a Financial Times Top-50 business journal, and has published more than 70 articles in premier business journals, including Journal of International Business Studies, Academy of Management Journal, Strategic Management Journal, Journal of Management, Journal of Marketing, Journal of the Academy of Marketing Science, Journal of Retailing, Journal of Operations Management, Decision Sciences, and IEEE. He has also published several textbooks including International Business (McGraw-Hill) and Global Business Today (McGraw-Hill). Dr. Hult’s other books include Second Shift: The Inside Story of the Keep GM Movement, Global Supply Chain Management, Total Global Strategy, and Extending the Supply Chain. He is a regular contributor of op-ed and articles in the popular press (e.g., Time, Fortune, World Economic Forum, The Conversation). Professor Hult is a well-known keynote speaker on international business, interna- tional marketing, global supply chain management, global strategy, and marketing strat- egy. He teaches in doctoral, master’s, and undergraduate programs at Michigan State University. He also teaches frequently in executive development programs and has developed a large clientele of the world’s top multinational corporations (e.g., ABB, Albertsons, Avon, BG, Bechtel, Bosch, BP, Defense Logistics Agency, Domino’s, FedEx, Ford, FreshDirect, General Motors, GroceryGateway, HSBC, IBM, Michigan Economic Development Corporation, Masco, NASA, Raytheon, Shell, Siemens, State Farm, Steelcase, Tech Data, and Xerox). Tomas Hult is an elected Fellow of the Academy of International Business (AIB), one of only about 90 scholars worldwide receiving this honor, 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 on the International Trade Center of Mid-Michigan and the Sheth Foundation. Tomas enjoys tennis, golf, and traveling as his favorite recreational activities.
part one Introduction and Overview Chapter 1 Globalization 2
part two National Differences Chapter 2 National Differences in Political, Economic, and
Legal Systems 38
Chapter 3 National Differences in Economic Development 62
Chapter 4 Differences in Culture 90
Chapter 5 Ethics, Corporate Social Responsibility, and Sustainability 128
part three The Global Trade and Investment Environment Chapter 6 International Trade Theory 158
Chapter 7 Government Policy and International Trade 192
Chapter 8 Foreign Direct Investment 222
Chapter 9 Regional Economic Integration 252
part four The Global Monetary System Chapter 10 The Foreign Exchange Market 286
Chapter 11 The International Monetary System 312
Chapter 12 The Global Capital Market 340
part five The Strategy and Structure of International Business Chapter 13 The Strategy of International Business 362
Chapter 14 The Organization of International Business 392
Chapter 15 Entry Strategy and Strategic Alliances 430
part six International Business Functions Chapter 16 Exporting, Importing, and Countertrade 460
Chapter 17 Global Production and Supply Chain Management 486
Chapter 18 Global Marketing and R&D 516
Chapter 19 Global Human Resource Management 552
Chapter 20 Accounting and Finance in the International Business 582
part seven Integrative Cases Global Medical Tourism 609
Venezuela under Hugo Chávez and Beyond 611
Political and Economic Reform in Myanmar 612
Will China Continue to Be a Growth Marketplace? 613
Lead in Toys and Drinking Water 614
Creating the World’s Biggest Free Trade Zone 616
Sugar Subsidies Drive Candy Makers Abroad 617
Volkswagen in Russia 618
The NAFTA Tomato Wars 619
Subaru’s Sales Boom Thanks to the Weaker Yen 620
The IMF and Ukraine’s Economic Crisis 621
The Global Financial Crisis and Its Aftermath: Declining Cross-Border Capital Flows 622
Ford’s Global Platform Strategy 624
Philips’ Global Restructuring 625
General Motors and Chinese Joint Ventures 626
Exporting Desserts by a Hispanic Entrepreneur 627
Apple: The Best Supply Chains in the World? 628