International. Business. The New Realities. International Edition. Second Edition.
S. Tamer Cavusgil. Georgia State University. Gary Knight. Florida State ...
International Business The New Realities International Edition Second Edition
S. Tamer Cavusgil Georgia State University
Gary Knight Florida State University
John R. Riesenberger Thunderbird School of Global Management, Clinical Professor of Executive Development, Corporate Learning Group
Boston Columbus Indianapolis New York San Francisco Upper Saddle River Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto Delhi Mexico City Sao Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo
Contents Preface 25
Part 1 Foundation Concepts
38
1 Introduction: What Is International Business? 38 P A Typical Day in the Global Economy What Is International Business?
39
40
What Are the Key Concepts in International Trade and Investment? The Nature of International Trade
41
The Nature of International Investment Services as Well as Products
41
43
44
The International Financial Services Sector
45
How Does International Business Differ from Domestic Business? The Four Risks in Internationalization
46
Who Participates in International Business? Multinational Enterprise (MNE)
46
48
48
• Global Trend: DIESEL: A Smaller Firm's Smashing International Success Non-governmental Organizations (NGOs) Why Do Firms Internationalize?
51
52
Why Study International Business?
54
Facilitator of the Global Economy and Interconnectedness Contributor to National Economic Well-Being A Competitive Advantage for the Firm A Competitive Advantage for You
54
54
55
55
H Recent Grad in IB: Ashley Lumb
56
An Opportunity for Global Corporate Citizenship
57
• Closing Case: Whirlpool's Dramatic Turnaround Through Internationalization 57 • Chapter Essentials: Key Terms 59 Summary 60 Comprehension 61 Apply Your Understanding 61 O globalEDGE™ Internet Exercises
Test Your
62
2 Globalization of Markets and the Internationalization of the Firm 64 . Bangalore: IT's Global Destination
65
Why Globalization Is Not New 67 Phases of Globalization
67
Market Globalization: An Organizing Framework Dimensions of Market Globalization Drivers of Market Globalization Technological Advances
70
71
72
76
a %
51
10
Contents
Information Technology Communications 77 Manufacturing 78 Transportation 78
77
• Global Trend: Globalization and E-Business in the Online World Societal Consequences of Market Globalization 79 Contagion: Rapid Spread of Monetary or Financial Crises 80
79
Loss of National Sovereignty 81 Offshoring and the Flight of Jobs 82 Effect on the Poor 83 Effect on the Natural Environment 86 Effect on National Culture 86 Globalization and Africa 87 Firm-Level Consequences of Market Globalization: Internationalization of the Firm's Value Chain 88 • Closing Case: Debating the Merits of Globalization • Chapter Essentials: Key Terms 91 Summary 91 Comprehension 92 Apply Your Understanding 92 O globalEDGE™ Internet Exercises
89 Test Your
93
3 Organizational Participants That Make International Business Happen 94 'P The Emergence of Born Global Firms 95 Four Types of Participants in International Business
96
Participants Arranged by Value-Chain Activity 97 Illustrating the International Value Chain Using Dell Inc. 98 Focal Firms in International Business 99 The Multinational Enterprise (MNE) 100 Small and Medium-Sized Enterprises 101 Born Global Firms 102 International Entry Strategies of Focal Firms 103 A Framework for Classifying International Entry Strategies Other Types of International Entry Strategies 104
103
Distribution Channel Intermediaries in International Business Intermediaries Based in the Foreign Market 107 Intermediaries Based in the Home Country 108 Online Intermediaries
106
110
• Global Trend: Online Retailers: Contemporary Global Intermediaries Facilitators in International Business B Recent Grad in IB: Cynthia Asoka
111 113
Governments in International Business
115
• Closing Case: DHL, FedEx, and UPS: Shifting Fortunes in the Global Logistics Services Industry 116 H Chapter Essentials: Key Terms 118 Summary 118 Comprehension 119 Apply Your Understanding 119 O globalEDGE™ Internet Exercises
120
Test Your
111
Contents
Part 2 The Environment of International Business
122
4 The Cultural Environment of International Business 122 ; American Football . . . in Europe? Culture and Cross-Cultural Risk Key Concepts of Culture
123
124
126
What Culture Is Not 127 Socialization and Acculturation 127 The Many Dimensions of Culture 127 National, Professional, and Corporate Culture 129 The Role of Culture in International Business 130 @ Recent Grad in IB: Zhibo (Lawrence) Yu 132 Cultural Metaphors, Stereotypes, and Idioms 133 Cultural Metaphors 133 Stereotypes 133 Idioms 134 Interpretations of Culture 134 High- and Low-Context Cultures 134 Hofstede's Research on National Culture 135 Subjective versus Objective Dimensions of Culture 137 Values and Attitudes 137 Deal versus Relationship Orientation 137 Manners and Customs 138 Perceptions of Time 138 Perceptions of Space 139 Religion 139 Symbolic Productions 142 Material Productions and Creative Expressions of Culture 142 Language as a Key Dimension of Culture 142 Contemporary Issues in Culture 144 Culture and the Services Sector 144 Technology, the Internet, and Culture 144 Globalization's Effect on Culture: Are Cultures Converging? 145 Overcoming Cross-Cultural Risk: Managerial Guidelines 145 • Global Trend: Minimizing Cross-Cultural Bias with Critical Incident Analysis' 147 • Closing Case: Hollywood's Influence on Global Culture
148
• Chapter Essentials: Key Terms 150 Summary 150 Test Your Comprehension 151 Apply Your Understanding 152 O globalEDGE™ Internet Exercises
153
5 Ethics and International Business
154
'. The Challenge of Corruption Around the World 155 Ethics in International Business 157 The Value of Ethical Behavior 160 Variation in Ethical Standards among Countries 160
11
12
Contents
An Ethical Dilemma 162 Linking Ethics, Corruption, and Responsible Behavior Corporate Social Responsibility The Value of CSR 164
162
163
• Global Trend: Global Corporate Social Responsibility Rises to the Top of the MNE Agenda 165 The Role of Sustainability in International Operations 165 Corporate Governance and Its Implications for Managers 167 A Framework for Making Ethical Decisions 168 Embracing CSR and Sustainability 169 A Global Consensus 169 Ethics, CSR, and Sustainability in Practice 170 H Closing Case: Corruption at Siemens 171 • Chapter Essentials: Key Terms 173 Summary 173 Comprehension 174 Apply Your Understanding 174 O globalEDGE™ Internet Exercises
Test Your
175
Theories of International Trade and Investment
176
"P Dubai: The Path to Creating a Knowledge-Based Economy Theories of International Trade and Investment Why Do Nations Trade? Classical Theories 180
177
178
180
How Can Nations Enhance Their Competitive Advantage? Contemporary Theories 187
187
• Global Trend: Moving from Comparative to National Competitive Advantages 193 Why and How Do Firms Internationalize? Firm Internationalization 193
193
How Can Internationalizing Firms Gain and Sustain Competitive Advantage? 195 FDI-Based Explanations 195 Non-FDI-Based Explanations 200 • Closing Case: Hyundai: Leading the Way in the Global Auto Industry • Chapter Essentials: Key Terms 204 Summary 204 Comprehension 205 Apply Your Understanding 206 O globalEDGE™ Internet Exercises
201
Test Your
207
Political and Legal Systems in National Environments : The Political and Legal Realities of Doing Business in Russia The Nature of Country Risk 210 How Prevalent Is Country Risk? 211 Political and Legal Environments in International Business Political Systems 213 Totalitarianism 213 Socialism 214
212
209
208
Contents Democracy
215
Democracy's Link to Economic Freedom and Openness
215
The Relationship between Political Systems and Economic Systems
216
Legal Systems 217 Common Law -218 Civil Law 218 Religious Law 219 Mixed Systems 220 Participants in Political and Legal Systems 220 Government 220 International Organizations 221 Regional Economic Blocs 221 Special Interest Groups 221 Competing Firms 222 Types of Country Risk Produced by Political Systems 222 Government Takeover of Corporate Assets 222 Embargoes and Sanctions 223 Boycotts against Firms or Nations 223 War, Insurrection, and Violence 224 Terrorism 224 Types of Country Risk Produced by Legal Systems 224 Country Risk Arising from the Host Country Legal Environment 224 Country Risk Arising from the Home Country Legal Environment 227 • Global Trend: Evolving Legal Aspects of E-Commerce Managing Country Risk 229 Proactive Environmental Scanning 229 Strict Adherence to Ethical Standards 230 Alliances with Qualified Local Partners 230 Protection through Legal Contracts 230
228
• Closing Case: Political, Legal, and Ethical Dilemmas in the Global Pharmaceutical Industry 2 3 0 • Chapter Essentials: Key Terms 233 Summary 233 Comprehension 234 Apply Your Understanding 234 O globalEDGE™ Internet Exercises
Test Your
235
8 Government Intervention in International Business ,• India's Transition to a Liberal Economy 237 The Nature of Government Intervention
238
Rationale for Government Intervention 240 Defensive Rationale 240 Offensive Rationale 241 Instruments of Government Intervention 242 Tariffs 243 Nontariff Trade Barriers 244 Investment Barriers 246 Subsidies and Other Government Support Programs
247
236
13
14
Contents
Consequences of Government Intervention 249 Evolution of Government Intervention 252 • Global Trend: The World Trade Organization and Collapse of the Doha Round 253 Intervention and the Global Financial Crisis 254 How Firms Can Respond to Government Intervention Strategies for Managers 255
255
• Closing Case: Government Intervention at Airbus and Boeing • Chapter Essentials: Key Terms 259 Summary 259 Comprehension 260 Apply Your Understanding 260 O globalEDGE™ Internet Exercises
257
Test Your
261
9 Regional Economic Integration
262
P Evolution of the European Union 263 Regional Integration and Economic Blocs 264 Levels of Regional Integration 265 The Leading Economic Blocs 267 The European Union (EU) 267 European Free Trade Association, (EFTA) 272 North American Free Trade Agreement (NAFTA) 272 H Global Trend: Integrating Eastern Europe and Turkey into the EU 273 El Mercado Comun del Sur (MERCOSUR) 274 The Caribbean Community (CARICOM) 275 Comunidad Andina de Naciones (CAN) 275 Association of Southeast Asian Nations (ASEAN) 275 Asia Pacific Economic Cooperation (APEC) 276 Australia and New Zealand Closer Economic Relations Agreement (CER) 276 Economic Integration in the Middle East and Africa 277 Advantages of Regional Integration 277 Success Factors for Regional Integration 278 Ethical Dilemmas and Drawbacks of Regional Integration 279 Management Implications of Regional Integration 281 • Closing Case: Russell Corporation: Choosing between Global and Regional Free Trade 283 • Chapter Essentials: Key Terms 285 Summary 285 Test Your Comprehension 286 Apply Your Understanding 286 O globalEDGE™ Internet Exercises
287
10 Emerging Markets, Developing Economies, and Advanced Economies 288 > The New Global Challengers: MNEs from Emerging Markets Advanced Economies, Developing Economies, and Emerging Markets 290 Advanced Economies 291 Developing Economies 291
289
Contents
Emerging Market Economies
294
• Global Trend: China's Evolving Challenges and Opportunities
298
What Makes Emerging Markets Attractive for International Business 298 Emerging Markets as Target Markets 299 Emerging Markets as Manufacturing Bases 299 Emerging Markets as Sourcing Destinations 300 Assessing the True Potential of Emerging Markets 300 Per-Capita Income as an Indicator of Market Potential 300 Middle Class as an Indicator of Market Potential 302 Risks and Challenges of Emerging Markets 303 Political Instability 303 Weak Intellectual Property Protection 304 Bureaucracy, Red Tape, and Lack of Transparency 304 s. Poor Physical Infrastructure 304 Partner Availability and Qualifications 304 Dominance of Family Conglomerates 305 Strategies for Emerging Markets 306 Customize Offerings to Unique Emerging Market Needs 306 Partner with Family Conglomerates 307 Target Governments in Emerging Markets 307 a Recent Grads in IB: Andrew & Jamie Waskey 308 Skillfully Challenge Emerging Market Competitors 309 Corporate Social Responsibility in Emerging Markets and Developing Economies 310 Foster Economic Development with Profitable Projects Microfinance to Facilitate Entrepreneurship 311 The Special Case of Africa 311
310
• Closing Case: Tata Group: India's New Global Challenger
313
• Chapter Essentials: Key Terms 315 Summary 315 Comprehension 316 Apply Your Understanding 316
Test Your
O globalEDGE™ Internet Exercises
317
11 The International Monetary and Financial Environment
318
' The Complex Monetary and Financial Relationship between China and the United States 319 Exchange Rates and Currencies in International Business 320 Convertible and Nonconvertible Currencies 321 Foreign Exchange Markets 322 Exchange Rates Fluctuate Constantly 322 How Exchange Rates Are Determined 324 Economic Growth 324 Inflation and Interest Rates 325 Market Psychology 325 Government Action 326 Emergence of the Modern Exchange Rate System 326 The Bretton Woods Agreement 327
15
16
Contents
IMF and the World Bank 327 The Modern Exchange Rate System 327 The Monetary and Financial Systems 328 International Monetary System 328 Global Financial System 329 • Global Trend: Global Financial Crisis
330
Key Players in the Monetary and Financial Systems 331 The Firm 331 National Stock Exchanges and Bond Markets 332 Commercial Banks 332 • Recent Grad in IB: Chip Besse 333 Central Banks 335 The Bank for International Settlements 335 International Monetary Fund 335 The World Bank 336 • Closing Case: AIG and Global Financial Contagion
337
• Chapter Essentials: Key Terms 339 Summary 339 Comprehension 340 Apply Your Understanding 341 O globalEDGE™ Internet Exercises
Test Your
341
Part 3 Strategy and Opportunity Assessment
342
12 Strategy and Organization in the International Firm ? IKEA's Global Strategy 343 Strategy in International Business 345 Building the Global Firm 346 Visionary Leadership 346 Organizational Culture 348 Organizational Processes 348 The Distinction between Multidomestic and Global Industries
342
349
The Integration-Responsiveness Framework 350 Pressures for Global Integration 351 Pressures for Local Responsiveness 351 Strategies Based on the Integration-Responsiveness Framework 352 Organizational Structure 355 Centralized or Decentralized Structure? 356 Organizational Structures for International Operations 357 Export Department 357 International Division Structure 357 Geographic Area Structure (Decentralized Structure) 359 Product Structure (Centralized Structure) 360 Functional Structure (Centralized Structure) 361 Global Matrix Structure 361 • Closing Case: Carlos Ghosn: Leading for Global Success at Renault-Nissan 3 6 3
Contents
B Chapter Essentials: Key Terms 366 Summary 366 Comprehension 367 Apply Your Understanding 367 O globalEDGE™ Internet Exercises
Test Your
368
13 Global Market Opportunity Assessment
370
"?• Estimating Demand in Emerging Markets 371 Assessing Global Market Opportunities 372 Task One: Analyze Organizational Readiness to Internationalize 374 Task Two: Assess the Suitability of Products and Services for Foreign Markets 376 Factors Contributing to Product Suitability for International Markets 376 Key Issues to Resolve in Measuring Product Potential 377 Task Three: Screen Countries to Identify Target Markets 377 „ Screening Countries for Exporting 377 • Global Trend: Global Macro Trends That Affect International Business Country Screening for Foreign Direct Investment 383 Country Screening for Sourcing 384 Task Four: Assess Industry Market Potential 385 Practical Methods for Managers to Assess Industry Market Potential 386 Data Sources for Estimating Industry Market Potential 386 H Recent Grad in IB: Javier Estrada 3 8 8 Task Five: Choosing Foreign Business Partners 389 Criteria for Choosing a Partner 389 Searching for Prospective Partners 390 Task Six: Estimate Company Sales Potential 390 Determinants of Company Sales Potential 390 Practical Approaches to Estimating Company Sales Potential 391 In Conclusion 393 • Closing Case: Advanced Biomedical Devices: Assessing Readiness to Export 3 9 4 • Chapter Essentials: Key Terms 396 Summary 396 Comprehension 397 Apply Your Understanding 397 O globalEDGE™ Internet Exercises
399
Part 4 Entering and Operating in International Markets 14 Exporting and Countertrade
Test Your
400
400
Exporter's Dogged Pursuit of International Customers An Overview of Foreign Market Entry Strategies 402 Internationalization of the Firm 404 Diverse Motives for Pursuing Internationalization 404 Characteristics of Firm Internationalization 405 Exporting as a Foreign Market Entry Strategy 406 Exporting and the Global Economy 407
401
379
17
18
Contents
Exporting: A Popular Entry Strategy Service Sector Exports 408 Advantages of Exporting 409 Limitations of Exporting 409
407
• Global Trend: The Emergence of SME Exporters A Systematic Approach to Exporting 410 Importing 413
410
Managing Export-Import Transactions 414 Documentation 414 Shipping and Incoterms 415 Payment Methods in Exporting and Importing 416 Cash in Advance 416 Letter of Credit 417 Open Account 418 Export-Import Financing 418 Commercial Banks 419 Factoring, Forfaiting, and Confirming 419 Distribution Channel Intermediaries 419 Buyers and Suppliers 419 Intracorporate Financing 419 Government Assistance Programs 420 Multilateral Development Banks (MDBs) 420 Identifying and Working with Foreign Intermediaries 420 Working with Foreign Intermediaries 421 When Intermediary Relations Go Bad 422 Countertrade: A Popular Approach for Emerging Markets and Developing Economies 423 Magnitude and Drivers of Countertrade 424 Types of Countertrade 424 Risks of Countertrade 425 Why Consider Countertrade? 425 H Closing Case: Barrett Farm Foods: A Small Firm's International Launch 426 • Chapter Essentials: Key Terms 428 Summary 428 Comprehension 429 Apply Your Understanding 4 3 0 O globalEDGE™ Internet Exercises
Test Your
431
15 Foreign Direct Investment and Collaborative Ventures > Deutsche Post DHL's Rapid International Expansion International Investment and Collaboration 434 Trends in Foreign Direct Investment and Collaborative Ventures 435 Motives for FDI and Collaborative Ventures 436 Market-Seeking Motives 436 Resource- or Asset-Seeking Motives 437 Efficiency-Seeking Motives 437 Characteristics of Foreign Direct Investment 438
433
432
Contents • Recent Grad in IB: Jennifer Knippen
439
Key Features of Foreign Direct Investment Corporate Social Responsibility and FDI Most Active Firms in FDI Service Firms and FDI
439 441
441
441
Leading Destinations for FDI
443
Factors to Consider in Choosing FDI Locations Types of Foreign Direct Investment
443
444
Greenfield Investment versus Mergers and Acquisitions The Nature of Ownership in FDI
445
Vertical versus Horizontal Integration
445
• Global Trend: FDI in the Global Financial Crisis International Collaborative Ventures Equity Joint Ventures
444
447
447
448
Project-Based, Nonequity Ventures
448
Differences between Equity and Project-Based, Nonequity Ventures Consortium
448
449
Cross-Licensing Agreements
449
Managing Collaborative Ventures
.450
Understand Potential Risks in Collaboration
450
Pursue a Systematic Process for Partnering
450
Ensure Success with Collaborative Ventures
451
The Experience of Retailers in Foreign Markets Challenges of International Retailing
452
453
International Retailing Success Factors
454
• Closing Case: AUTOLATINA: A Failed International Partnership • Chapter Essentials: Key Terms 4 5 7 Summary 4 5 7 Comprehension 4 5 9 Apply Your Understanding 4 6 0 O globalEDGE™ Internet Exercises
455
Test Your
461
16 Licensing, Franchising, and Other Contractual Strategies 462 P Harry Potter: The Magic of Licensing Contractual Entry Strategies
463
464
Unique Aspects of Contractual Relationships Types of Intellectual Property
465
Licensing as an Entry Strategy
466
Trademark and Copyright Licensing Know-How Licensing
465
467
468
The World's Top Licensing Firms
469
Advantages and Disadvantages of Licensing Advantages of Licensing Disadvantages of Licensing
469
470 470
Franchising as an Entry Strategy
471
Who Are the Top Global Franchisors?
473
• Global Trend: Internationalization of Franchising: Emerging Markets Advantages and Disadvantages of Franchising
475
473
19
20
Contents
The Franchisor Perspective 475 The Franchisee Perspective 476 Managerial Guidelines for Licensing and Franchising 476 Other Contractual Entry Strategies 477 Turnkey Contracting 477 Build-Operate-Transfer Arrangements (BOT) 478 Management Contracts 478 Leasing 478 The Special Case of Internationalization by Professional Service Firms 479 Guidelines for Protecting Intellectual Property 479 • Closing Case: Subway and the Challenges of Franchising in China • Chapter Essentials: Key Terms 484 Summary 485 Comprehension 486 Apply Your Understanding 486 O globalEDGE™ Internet Exercises
17 Global Sourcing
482
Test Your
487
488
> Global Sourcing of Pharmaceutical Drug Trials 489 Outsourcing, Global Sourcing, and Offshoring 490 Decision 1: Outsource or Not? 491 Decision 2: Where in the World Should Value-Adding Activities Be Located? 491 Global Sourcing 492 Offshoring 494 Scope of Global Sourcing 495 Diversity of Countries That Initiate and Receive Outsourced Work 495 • Global Trend: China and India: Chief Rivals in the Global Sourcing Game 4 9 6 Strategic Choices in Global Sourcing 497 Benefits of Global Sourcing 498 Cost Efficiency 498 Ability to Achieve Strategic Goals 498 Risks of Global Sourcing 501 Strategies for Minimizing the Risks of Global Sourcing 502 Implementing Global Sourcing Through Supply-Chain Management Information and Communications Technology 505 Logistics and Transportation 506 , Transportation Modes 506 Global Sourcing and Corporate Social Responsibility 507 Potential Harm to Local and National Economy from Global Sourcing Public Policy on Global Sourcing 508 • Closing Case: Good Hopes for Global Outsourcing
513
507
509
• Chapter Essentials: Key Terms 511 Summary 511 Comprehension 512 Apply Your Understanding 512 O globalEDGE™ Internet Exercises
503
Test Your
Contents
Part5 Functional Area Excellence
514
18 Marketing in the Global Firm 514 * Zara's Unique Model for International Marketing Success 515 Global Marketing Strategy 516 Targeting Customer Segments and Positioning 517 Standardization and Adaptation of International Marketing 518 Standardization 518 Adaptation 520 0 Recent Grad in IB: John Dykhouse: Trade Development Manager Standardization and Adaptation: A Balancing Act 522 Global Branding and Product Development 523 Global Branding 523 Global Product Development 525
521
• Global Trend: Growing Role for Marketing in Developing Economies 526 International Pricing 527 Factors That Affect International Pricing 527 A Framework for Setting International Prices 528 Managing International Price Escalation 530 Managing Pricing under Varying Currency Conditions 530 Transfer Pricing 531 Gray Market Activity (Parallel Imports) 532 International Marketing Communications 534 International Advertising 534/' International Promotional Activities 536 International Distribution 537 Global Account Management 537 • Closing Case: H&M: International Marketing Success Story 538 • Chapter Essentials: Key Terms 540 Summary 540 Test Your Comprehension 541 Apply Your Understanding 541 O globalEDGE™ Internet Exercises 542
19 Human Resource Management in the Global Firm 544 3; Johnson & Johnson: A Leader in International Human Resource Management 545 The Strategic Role of Human Resources in International Business 546 Three Employee Categories 546 Differences between Domestic and International HRM 547 Key Tasks in International Human Resource Management 549 International Staffing Policy 549 Recruiting, Selecting, and Developing Talent 550 Cultivating Global Mind-sets 550 Cultural Intelligence 551
21
22
Contents
Expatriate Assignment Failure and Culture Shock 552 Preparation and Training of International Employees 552 Preparing Employees for Repatriation 553 Charting Global Careers for Employees 553 International Performance Appraisal
554
Compensation of Employees 554 International Labor Relations 556 Distinctive Features of Labor around the World 557 Cost, Quality, and Productivity of Labor 558 Workforce Reduction 558 Trends in International Labor 559 Firm Strategy in International Labor Relations 560 Diversity in the International Workforce ,560 Women in International Business 560 • Global Trend: Global Corporate Social Responsibility and the Role of International Human Resource Management 561 Success Strategies for Women Managers in International Business 563 • Closing Case: Evolving Human Resource Challenges at Sony B Chapter Essentials: Key Terms 566 Summary 566 Comprehension 567 Apply Your Understanding 567 O globalEDGE™ Internet Exercises
564
Test Your
569
20 Financial Management and Accounting in the Global Firm 570 S A Small Firm Rides the Waves of Foreign Exchange 571 Key Tasks in International Financial Management 572 Task One: Decide on the Capital Structure 573 Task Two: Raise Funds for the Firm's International Activities Financial Centers 574 Sources of Funds for International Operations 575 Debt Financing 577
574
• Global Trend: Emerging Markets as International Investment Destinations 577 Intracorporate Financing 579 Task Three: Manage Working Capital and Cash Flow 579 Methods for Transferring Funds within the MNE 579 Multilateral Netting 580 Task Four: Perform Capital Budgeting 581 Net Present Value Analysis of Capital Investment Projects 581 Task Five: Manage Currency Risk 582 Three Types of Currency Exposure 582 S Recent Grad in IB: Maria Keeley 583 Foreign Exchange Trading 584 Types of Currency Traders 585 Exchange Rate Forecasting 586
Contents Managing Exposure to Currency Risk through Hedging Best Practice in Minimizing Currency Exposure
587
588
Task Six: Manage the Diversity of International Accounting and Tax Practices
589
Transparency in Financial Reporting Trends toward Harmonization
589
590
Consolidating the Financial Statements of Subsidiaries International Taxation
591
591
B Closing Case: International Financial Operations at Tektronix • Chapter Essentials: Key Terms 5 9 6 Summary 5 9 6 Comprehension 5 9 7 Apply Your Understanding 5 9 8 O
globalEDGE™ Internet Exercises
594
Test Your
599 >.
Glossary Notes
601
608
Photo Credits Author Index
628 630
Company Index Subject Index
635 639
23
