Download Full Version ebookmass - Visit ebookmass.

com

ISE International Business: Competing in the

Global Marketplace 13th Edition Charles Hill

https://ebookmass.com/product/ise-international-business-
competing-in-the-global-marketplace-13th-edition-charles-
hill/

OR CLICK HERE

DOWLOAD NOW

Discover More Ebook - Explore Now at ebookmass.com

 Instant digital products (PDF, ePub, MOBI) ready for you
Download now and discover formats that fit your needs...

International Business - Competing in the Global

Marketplace (13th Edition) Charles W.L. Hill

https://ebookmass.com/product/international-business-competing-in-the-
global-marketplace-13th-edition-charles-w-l-hill/

ebookmass.com

International Business: Competing in the Global

Marketplace Charles W.L. Hill

https://ebookmass.com/product/international-business-competing-in-the-
global-marketplace-charles-w-l-hill/

ebookmass.com

International Business: Competing in the Global

Marketplace, 14e ISE 14th/ISE Edition Charles W. L. Hill

https://ebookmass.com/product/international-business-competing-in-the-
global-marketplace-14e-ise-14th-ise-edition-charles-w-l-hill/

ebookmass.com

Sight Unseen: The Greek Gift Book One Juniper Rose

https://ebookmass.com/product/sight-unseen-the-greek-gift-book-one-
juniper-rose/

ebookmass.com
Options and Derivatives Programming in C++23: Algorithms
and Programming Techniques for the Financial Industry, 3rd
Edition Carlos Oliveira
https://ebookmass.com/product/options-and-derivatives-programming-
in-c23-algorithms-and-programming-techniques-for-the-financial-
industry-3rd-edition-carlos-oliveira/
ebookmass.com

Essays in Economic History: Purchasing Power Parity,

Standard of Living, and Monetary Standards Lawrence H.
Officer
https://ebookmass.com/product/essays-in-economic-history-purchasing-
power-parity-standard-of-living-and-monetary-standards-lawrence-h-
officer/
ebookmass.com

Steam Plant Operation 10th Edition Herbert B. Lammers

https://ebookmass.com/product/steam-plant-operation-10th-edition-
herbert-b-lammers/

ebookmass.com

Tide and Punishment Bree Baker [Baker

https://ebookmass.com/product/tide-and-punishment-bree-baker-baker/

ebookmass.com

Drugs in Palliative Care 3rd Edition Andrew Dickman

https://ebookmass.com/product/drugs-in-palliative-care-3rd-edition-
andrew-dickman/

ebookmass.com
Oxford Assess and Progress: Situational Judgement Test 4th
Edition David Metcalfe

https://ebookmass.com/product/oxford-assess-and-progress-situational-
judgement-test-4th-edition-david-metcalfe/

ebookmass.com
International Page i

Business
Competing in the Global Marketplace

13e

Charles W.L. Hill

UNIVERSITY OF WASHINGTON
 Page ii

INTERNATIONAL BUSINESS

Published by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121. Copyright © 2021 by McGraw-Hill
Education. All rights reserved. Printed in the United States of America. No part of this publication may be reproduced or
distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of
McGraw-Hill Education, including, but not limited to, in any network or other electronic storage or transmission, or
broadcast for distance learning.

Some ancillaries, including electronic and print components, may not be available to customers outside the
United States.

This book is printed on acid-free paper.

1 2 3 4 5 6 7 8 9 LWI 21 20

ISBN 978-1-260-57586-6
MHID 1-260-57586-1

Cover Image: Buslik/Shutterstock

All credits appearing on page or at the end of the book are considered to be an extension of the copyright page.
The Internet addresses listed in the text were accurate at the time of publication. The inclusion of a website does not
indicate an endorsement by the authors or McGraw-Hill Education, and McGraw-Hill Education does not guarantee the
accuracy of the information presented at these sites.

mheducation.com/highered
 Page iii

For my children, Elizabeth,

Charlotte, and Michelle
—Charles W. L. Hill
 Page iv

about the AUTHOR

Charles W. L. Hill
University of Washington

Charles W. L. Hill is the Hughes M. and Katherine Blake Professor of Strategy and International Business in the Foster
School of Business at the University of Washington. Professor Hill has taught in the Management, MBA, Executive
MBA, Technology Management MBA, 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.
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 Business Today (McGraw-
Hill). His work is among the most widely cited in international business and strategic management.
Professor Hill works on a private basis with a number of organizations. His clients have included Microsoft, where
he taught 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, Philips Healthcare, Philips Medical
Systems, Seattle City Light, Swedish Health Services, Tacoma City Light, Thompson Financial Services, WRQ, and
Wizards of the Coast). Additionally, Dr. Hill has served on the advisory board of several start-up companies.
For recreation, Professor Hill enjoys skiing and competitive sailing!
 Page v

brief CONTENTS
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 92
Chapter 5 Ethics, Corporate Social Responsibility, and Sustainability 132

part three The Global Trade and Investment Environment

Chapter 6 International Trade Theory 164
Chapter 7 Government Policy and International Trade 200
Chapter 8 Foreign Direct Investment 230
Chapter 9 Regional Economic Integration 260

part four The Global Monetary System

Chapter 10 The Foreign Exchange Market 294
Chapter 11 The International Monetary System 320
Chapter 12 The Global Capital Market 348

part five The Strategy and Structure of International Business

Chapter 13 The Strategy of International Business 370
Chapter 14 The Organization of International Business 402
Chapter 15 Entering Developed and Emerging Markets 440

part six International Business Functions

Chapter 16 Exporting, Importing, and Countertrade 470
Chapter 17 Global Production and Supply Chain Management 498
Chapter 18 Global Marketing and Business Analytics 528
Chapter 19 Global Human Resource Management 566
Chapter 20 Accounting and Finance in International Business 596
Page vi
part seven Integrative Cases
Globalization of BMW, Rolls-Royce, and the MINI 625
The Decline of Zimbabwe 627
Economic Development in Bangladesh 629
The Swatch Group and Cultural Uniqueness 630
Woolworths’ Corporate Responsibility Strategy 632
The Trans Pacific Partnership (TPP) Is Dead: Long Live the CPTPP! 634
Boeing and Airbus Are in a Dogfight over Illegal Subsidies 636
FDI in the Indian Retail Sector 637
Free Trade in Africa 639
The Mexican Peso, the Japanese Yen, and Pokémon Go 641
Egypt and the IMF 642
Alibaba’s Record-Setting IPO 643
Sony Corporation: Still a Leader Globally? 644
Organizational Architecture at P&G 646
Cutco Corporation—Sharpening Your Market Entry 647
Tata Motors and Exporting 649
Alibaba and Global Supply Chains 650
Best Buy Doing a Turnaround Again 651
Sodexo: Building a Diverse Global Workforce 653
Tesla, Inc.—Subsidizing Tesla Automobiles Globally 654

Glossary 656
Indexes 666
 Page vii

THE PROVEN CHOICE FOR INTERNATIONAL

BUSINESS
RELEVANT. PRACTICAL. INTEGRATED.
It is now more than a quarter of a century since work began on the first edition of International Business: Competing in
the Global Marketplace. By the third edition the book was the most widely used international business text in the world.
Since then its market share has only increased. The success of the book can be attributed to a number of unique features.
Specifically, for the thirteenth edition we have developed a learning program that
• Is comprehensive, state of the art, and timely.
• Is theoretically sound and practically relevant.
• Focuses on applications of international business concepts.
• Tightly integrates the chapter topics throughout.
• Is fully integrated with results-driven technology.
• Takes full and integrative advantage of globalEDGE.
msu.edu—the Google-ranked #1 web resource for “international business resources.”
International Business, now in its thirteenth edition, authored by Charles W. L. Hill, is a comprehensive
and case-oriented version of our text that lends itself to the core course in international business for those courses that
want a deeper focus on the global monetary system, structure of international business, international accounting, and
international finance. We cover more and integrated cases in International Business 13e and we provide a deeper
treatment of the global capital market, the organization of an international business, international accounting, and
international finance–topics that are allocated chapters in International Business 13e but are not attended to in the shorter
treatment of IB in Global Business Today 11e.
Like our shorter text, Global Business Today 11e (2019), International Business 13e focuses on being current,
relevant, application rich, accessible, and student focused. Our goal has always been to cover macro and micro issues
equally and in a relevant, practical, accessible, and student focused approach. We believe that anything short of such a
breadth and depth of coverage is a serious deficiency. Many of the students in these international business courses will
soon be working in global businesses, and they will be expected to understand the implications of international business
for their organization’s strategy, structure, and functions in the context of the global marketplace. We are proud and
delighted to have put together this international business learning experience for the leaders of tomorrow.
Over the years, and through now 13 editions,
Dr. Charles Hill has worked hard to adhere to these goals. Since Global Business Today 9e (2015), and International
Business 11e (2017), Charles has been guided not only by his own reading, teaching, and research but also by the
invaluable feedback he receives from professors and students around the world, from reviewers, and from the editorial
staff at McGraw-Hill Education. His thanks goes out to all of them.

COMPREHENSIVE AND UP-TO-DATE

To be relevant and comprehensive, an international business package must
• Explain how and why the world’s cultures, countries, and regions differ.
• Cover economics and politics of international trade and investment.
• Tackle international issues related to ethics, corporate social responsibility, and sustainability.
• Explain the functions and form of the global monetary system.
• Examine the strategies and structures of international businesses.
• Assess the special roles of the various functions of an international business.
Relevance and comprehensiveness also require coverage of the major theories. It has always been a goal to incorporate
the insights gleaned from recent academic scholarship into the book. Consistent with this goal, insights from the
following research, as a sample of theoretical streams used in the book, have been incorporated: Page viii
• New trade theory and strategic trade policy.
• The work of Nobel Prize–winning economist Amartya Sen on economic development.
• Samuel Huntington’s influential thesis on the “clash of civilizations.”
• Growth theory of economic development championed by Paul Romer and Gene Grossman.
 • Empirical work by Jeffrey Sachs and others on the relationship between international trade and economic
growth.
• Michael Porter’s theory of the competitive advantage of nations.
• Robert Reich’s work on national competitive advantage.
• The work of Nobel Prize–winner Douglass North and others on national institutional structures and the
protection of property rights.
• The market imperfections approach to foreign direct investment that has grown out of Ronald Coase and Oliver
Williamson’s work on transaction cost economics.
• Bartlett and Ghoshal’s research on the transnational corporation.
• The writings of C. K. Prahalad and Gary Hamel on core competencies, global competition, and global strategic
alliances.
• Insights for international business strategy that can be derived from the resource-based view of the firm and
complementary theories.
• Paul Samuelson’s critique of free trade theory.
• Conceptual and empirical work on global supply chain management—logistics, purchasing (sourcing),
operations, and marketing channels.
In addition to including leading-edge theory, in light of the fast-changing nature of the international business
environment, we have made every effort to ensure that this product is as up-to-date as possible. A significant amount has
happened in the world since we began revisions of this book. By 2019, almost $4 trillion per day were flowing across
national borders. The size of such flows fueled concern about the ability of short-term speculative shifts in global capital
markets to destabilize the world economy.
The world continued to become more global. As you can see in Chapter 1 on Globalization, trade across country
borders has almost exponentially escalated in the last few years. Several Asian economies, most notably China and India,
continued to grow their economies at a rapid rate. New multinationals continued to emerge from developing nations in
addition to the world’s established industrial powers.
Increasingly, the globalization of the world economy affected a wide range of firms of all sizes, from the very large
to the very small. We take great pride in covering international business for small- and medium-sized enterprises
(SMEs), as well as larger multinational corporations. We also take great pride in covering firms from all around the
world. Some sixty SMEs and multinational corporations from all six core continents are covered in the chapters’ opening
cases, closing cases, and/or Management Focus boxes.
And unfortunately, global terrorism and the attendant geopolitical risks keep emerging in various places globally,
many new and inconceivable just a decade ago. These represent a threat to global economic integration and activity.
Plus, with the United Kingdom opting to leave the European Union (Brexit), which has implications past 2019, the
election of President Donald Trump in the United States (who espouses views on international trade that break with the
long established consensus), and several elections around the world, the globe—in many ways—has paid more attention
to nationalistic issues over trade. These topics and many more are integrated into this text for maximum learning
opportunities.

What’s New in the 13th Edition

The success of the first twelve editions of International Business was based in part on the incorporation of leading-edge
research into the text, the use of the up-to-date examples and statistics to illustrate global trends and enterprise strategy,
and the discussion of current events within the context of the appropriate theory. Building on these strengths, our goals
for the twelfth edition have focused on the following:
1. Incorporate new insights from scholarly research.
2. Make sure the content covers all appropriate issues.
3. Make sure the text is up-to-date with current events, statistics, and examples.
4. Add new and insightful opening and closing cases in most chapters.
5. Incorporate value-added globalEDGETM features in every chapter.
6. Connect every chapter to a focus on managerial implications.
7. Provide 20 new integrated cases that can be used as additional cases for specific chapters but, more importantly,
as learning vehicles across multiple chapters.
As part of the overall revision process, changes have been made to every chapter in the book. All statistics have Page ix
been updated to incorporate the most recently available data. As before, we are the only text in International
Business that ensures that all material is up-to-date on virtually a daily basis. The copyright for the book is 2021 but you
are likely using the text in 2020, 2021, or 2022–we keep it updated to each semester you use the text in your course! We
are able to do this by integrating globalEDGE features in every chapter. Specifically, the Google number-one-ranked
globaledge.msu.edu site (for “international business resources”) is used in each chapter to add value to the chapter
material and provide up-to-date data and information. This keeps chapter material constantly and dynamically updated
for teachers who want to infuse globalEDGE material into the chapter topics, and it keeps students abreast of current
developments in international business.
In addition to updating all statistics, figures, and maps to incorporate most recently published data, a chapter-by-
chapter selection of changes for the 13th edition include the following:

Chapter 1: Globalization
• New opening case: How the iPhone is made: Apple’s Global Production System
• Updated statistics and figures to incorporate the most recent data on global trade flows and foreign direct
investment
• Discussion of the implications of recent political trends (Brexit and the Trump Presidency) and what this might
mean for cross border trade and investment
• New closing case: General Motors in China

Chapter 2: National Differences In Political, Economic, and Legal Systems

• New opening case: Kenya: An African Lion
• Updated data on corruption
• New closing case: Transformation in Saudi Arabia

Chapter 3: National Differences In Economic Development

• New opening case: Poland: Eastern Europe’s Economic Miracle
• Updated maps, figures, and in-text statistics to reflect most recently available data
• Addition of demographic trends to the discussion of Political Economy and Economic Progress
• Updated discussion of the spread of democracy to reflect recent countertrends toward greater authoritarianism in
several nations (e.g., Turkey)
• New closing case: Brazil’s Struggling Economy

Chapter 4: Differences In Culture

• New opening case: Singapore: One of the World’s Most Multicultural Places
• Inclusion of a discussion of patience across cultures
• Revised the foundation that most religions are now pro-business
• New Country Focus: Determining Your Social Class by Birth
• New Country Focus: Turkey, Its Religion, and Politics
• New closing case: China, Hong Kong, Macau, and Taiwan

Chapter 5: Ethics, Corporate Social Responsibility, and Sustainability

• New opening case: Ericsson, Sweden, and Sustainability
• Deepened focus related to United Nations’ Sustainable Development Goals
• Core focus on ethics as a lead-in to corporate social responsibility and sustainability issues (e.g., UN’s
Sustainable Development Goals).
• New closing case: Sustainability Initiatives at Natura, the Bodyshop, and Aesop

Chapter 6: International Trade Theory

• New opening case: A Tale of Two Nations: Ghana and South Korea
• Updated Country Focus on China and currency manipulation
• Reference to Donal Trump’s trade policies under section on mercantilism
• New closing case: Trade Wars are Good and Easy to Win
• Updated balance of payments data in the Appendix to reflect 2018 data
Chapter 7: Government Policy and International Trade
• New opening case: American Steel Tariffs
• Updated discussion of the world trading system to reflect recent developments, including Brexit and the trade
policies of President Trump Page x
• New closing case: The United States and South Korea Strike a Revised Trade Deal

Chapter 8: Foreign Direct Investment

• New opening case: Starbuck’s Foreign Direct Investment
• Updated statistics and figures on foreign direct investment in the world economy to incorporate the most recently
available data
• New Management Focus: Burberry Shifts its Entry Strategy in Japan
• New closing case: Geely Goes Global

Chapter 9: Regional Economic Integration

• New opening case: The Cost of Brexit
• Updated discussion of Brexit
• Added discussion of the renegotiation of NAFTA by the Trump administration and the details of the United
States–Canada–Mexico Agreement (USCMA)
• Additional discussion of new free trade deals in Africa
• Closing case: NAFTA 2.0: The USCMA

Chapter 10: The Foreign Exchange Market

• New opening case: Managing Foreign Currency Exposure at 3M
• Updated data throughout the chapter to reflect currency exchange rates in 2019.
• New closing case: The Fluctuating Value of the Yuan Gives Chinese Business a Lesson in Foreign Exchange
Risk

Chapter 11: The International Monetary System

• New opening case: Pakistan Takes Another IMF Loan
• Updated data and discussion of the floating exchange rate regime through till 2019
• New Country Focus: China’s Exchange Rate Regime
• New closing case: Can Dollarization Save Venezuela?

Chapter 12: The Global Capital Market

• New opening case: Chinese IPOs in the United States
• Updated statistics and discussion to reflect most recently available data
• New closing case: Saudi Aramco

Chapter 13: The Strategy of International Business

• New opening case: International Strategy in the Sharing Economy
• Inclusion of materials on the “sharing economy” related to strategy, including a discussion of Airbnb, Uber,
Lyft, and Turo
• New Management Focus: IKEA’s Global Strategy
• New Management Focus: Unilever’s Global Organization
• New closing case: Red Bull, A Leader in International Strategy

Chapter 14: The Organization of International Business

• New opening case: Bird, Lime, and Organizing Globally
• Integration of new materials on the “sharing economy” related to organizations, including a discussion of Bird
and Lime
 • Deeper focus on small, medium, and sharing economy organizations
• New closing case: Walmart International

Chapter 15: Entering Developed and Emerging Markets

• New opening case: Volkswagen, Toyota, and GM in China
• New scope of the chapter to include entering developed and emerging markets
• Inclusion of a discussion of less developed markets and base-of-the-pyramid
• New closing case: IKEA Entering India, Finally!

Chapter 16: Exporting, Importing, and Countertrade

• New opening case: Higher Education in the U.S. Is about Exporting and International Competitiveness
• Revised material on globalEDGETM Diagnostic Tools
• New Management Focus: Embraer and Brazilian Importing
• New Management Focus: Exporting Desserts by a Hispanic Entrepreneur Page xi
• New Management Focus: Two Men and a Truck
• New closing case: Spotify and SoundCloud

Chapter 17: Global Production and Supply Chain Management

• New opening case: Blockchain Technology and Global Supply Chains
• New material on blockchain technology
• New Management Focus: IKEA Production in China
• New Management Focus: Amazon’s Global Supply Chains
• New closing case: Procter & Gamble Remakes Its Global Supply Chains

Chapter 18: Global Marketing and Business Analytics

• New chapter title to signal significant new material on Business Analytics
• New opening case: Marketing Sneakers
• New section on Business Analytics
• Revised section: International Marketing Research
• Inclusion of more social media topics throughout
• New Management Focus: Global Branding, Marvel Studios, and Walt Disney Company
• New Management Focus: Burberry’s Social Media Marketing
• New closing case: Fake News and Alternative Facts

Chapter 19: Global Human Resource Management

• New opening case: Evolution of the Kraft Heinz Company
• New section: Building a Diverse Global Workforce
• New Management Focus: AstraZeneca and Global Staffing Policy
• New closing case: Global Mobility at Shell

Chapter 20: Accounting and Finance in the International Business

• New opening case: Pfizer, Novartis, Bayer, and GlaxoSmithKline
• New material on the U.S. corporate tax rate and implications
• New Management Focus: Microsoft and Its Foreign Cash Holdings
• New closing case: Shoprite—Financial Success of a Food Retailer in Africa

Integrated Cases
All of the 20 integrated cases are new for International Business 13e. Many of these cases build on previous opening and
closing chapter cases that have been revised, updated, and oftentimes adopted a new angle or focus. A unique feature of
the opening and closing cases for the chapters as well as the integrated cases at the back-end of the text is that we cover
all continents of the world and we do so with regional or country issues and large, medium, and small company
scenarios. This makes the 60 total cases we have included in International Business 13e remarkably wealthy as a
learning program.
• Globalization of BMW, Rolls-Royce, and the MINI
• The Decline of Zimbabwe
• Economic Development in Bangladesh
• The Swatch Group and Cultural Uniqueness
• Woolworths’ Corporate Responsibility Strategy
• The Trans Pacific Partnership (TPP) is Dead: Long Live the CTPP!
• Boeing and Airbus Are in a Dogfight over Illegal Subsidies
• FDI in the Indian Retail Sector
• Free Trade in Africa
• The Mexican Peso, the Japanese Yen, and Pokemon Go
• Egypt and the IMF
• Alibaba’s Record-Setting IPO
• Sony Corporation: Still a Leader Globally?
• Organizational Architecture at P&G
• Cutco Corporation--Sharpening Your Market Entry
• Tata Motors and Exporting
• Alibaba and Global Supply Chains
• Best Buy Doing a Turnaround Again
• Sodexo: Building a Diverse Global Workforce
• Tesla, Inc.--Subsidizing Tesla Automobiles Globally

BEYOND UNCRITICAL PRESENTATION AND SHALLOW EXPLANATION

Many issues in international business are complex and thus necessitate considerations of pros and cons. To demonstrate
this to students, we have adopted a critical approach that presents the arguments for and against economic Page xii
theories, government policies, business strategies, organizational structures, and so on.
Related to this, we have attempted to explain the complexities of the many theories and phenomena unique to
international business so the student might fully comprehend the statements of a theory or the reasons a phenomenon is
the way it is. We believe that these theories and phenomena are explained in more depth in this work than they are in the
competition, which seem to use the rationale that a shallow explanation is little better than no explanation. In
international business, a little knowledge is indeed a dangerous thing.

PRACTICAL AND RICH APPLICATIONS

We have always believed that it is important to show students how the material covered in the text is relevant to the
actual practice of international business. This is explicit in the later chapters of the book, which focus on the practice of
international business, but it is not always obvious in the first half of the book, which considers macro topics.
Accordingly, at the end of each chapter in Parts Two, Three, and Four—where the focus is on the environment of
international business, as opposed to particular firms—there is a section titled Focus on Managerial Implications. In
this section, the managerial implications of the material discussed in the chapter are clearly explained. Additionally, most
chapters have at least one Management Focus box. The purpose of these boxes is to illustrate the relevance of chapter
material for the practice of international business.
A Did You Know? feature challenges students to view the world around them through the lens of international
business (e.g., Did you know that sugar prices in the United States are much higher than sugar prices in the rest of the
world?). The author recorded short videos explaining the phenomenon.
In addition, each chapter begins with an opening case that sets the stage for the chapter and ends with a closing
case that illustrates the relevance of chapter material for the practice of international business.
To help students go a step further in expanding their application-level understanding of international business, each
chapter incorporates two globalEDGETM research tasks. The exercises dovetail with the content just covered.

INTEGRATED PROGRESSION OF TOPICS

A weakness of many texts is that they lack a tight, integrated flow of topics from chapter to chapter. This book explains
to students in Chapter 1 how the book’s topics are related to each other. Integration has been achieved by organizing the
material so that each chapter builds on the material of the previous ones in a logical fashion.
Part One

Chapter 1 provides an overview of the key issues to be addressed and explains the plan of the book. Globalization of
markets and globalization of production is the core focus.

Part Two
Chapters 2 through 4 focus on country differences in political economy and culture, and Chapter 5 on ethics, corporate
social responsibility, and sustainability issues in international business. Most international business textbooks place this
material at a later point, but we believe it is vital to discuss national differences first. After all, many of the central issues
in international trade and investment, the global monetary system, international business strategy and structure, and
international business functions arise out of national differences in political economy and culture.

Part Three
Chapters 6 through 9 investigate the political economy of global trade and investment. The purpose of this part is to
describe and explain the trade and investment environment in which international business occurs.

Part Four
Chapters 10 and 11 describe and explain the global monetary system, laying out in detail the monetary framework in
which international business transactions are conducted.

Part Five
In Chapters 12 and 13, attention shifts from the environment to the firm. In other words, we move from a macro focus to
a micro focus at this stage of the book. We examine strategies that firms adopt to compete effectively in the international
business environment.

Part Six
In Chapters 14 through 17, the focus narrows further to investigate business functions and related operations. These
chap t er s expl ain how f ir ms can per f ormthei r key f uncti ons —expor ti ng, importing, and counter tr ade; gl obal produ ct i on;
global supply chain management; global marketing; global research and development (R&D); human resource
management—to compete and succeed in the international business environment.
Throughout the book, the relationship of new material to topics discussed in earlier chapters is pointed out to the
students to reinforce their understanding of how the material comprises an integrated whole. We deliberately Page xiii
bring a management focus to the macro chapters (Chapters 1 through 12). We also integrate macro themes in
covering the micro chapters (Chapters 13 through 20).

ACCESSIBLE AND INTERESTING

The international business arena is fascinating and exciting, and we have tried to communicate our enthusiasm for it to
the student. Learning is easier and better if the subject matter is communicated in an interesting, informative, and
accessible manner. One technique we have used to achieve this is weaving interesting anecdotes into the narrative of the
text, that is, stories that illustrate theory.
Most chapters also have a Country Focus box that provides background on the political, economic, social, or
cultural aspects of countries grappling with an international business issue.

ACKNOWLEDGMENTS
Numerous people deserve to be thanked for their assistance in preparing this book. First, thank you to all the people at
McGraw-Hill Education who have worked with us on this project:

Peter Jurmu, Portfolio Manager

Haley Burmeister, Product Developer
Nicole Young, Senior Marketing Manager
Julia Blankenship, Marketing Coordinator
Harvey Yep, Content Project Manager (Core)
Keri Johnson, Content Project Manager (Assessment)
Sandy Ludovissy, Senior Buyer
Egzon Shaqiri, Designer
Carrie Burger, Content Licensing Specialist

Second, our thanks go to the reviewers who provided good feedback that helped shape this book:

Yimai Lewis, Georgia State University

Long S. Le, Santa Clara University
Clare R. Greenlaw, Jr., Southern New Hampshire University – COCE
Richard Ajayi, University of Central Florida
Hussain Ahmad, Hofstra University
Erica Kovacs, Indiana University
Marta Szabo White, Georgia State University
C. Jayachandran, Montclair State University, NJ
T.S. Gardner, UNC Wilmington
Marcel Zondag, Western Michigan University
Mamoun Benmamoun, Saint Louis University
Manveer Mann, Montclair State University
Jose Luis Daniel, Saint Xavier University
Walter C. van Hoof, San Jose State University,
San Jose, CA
Riikka M. Sarala, UNC Greensboro
Samuel Okoroafo, University of Toledo, Toledo, Ohio
Pamela S. Evers, University of North Carolina Wilmington

A special thanks to David Closs and David Frayer for allowing us to borrow elements of the sections on Strategic Roles
for Production Facilities; Make-or-Buy Decisions; Global Supply Chain Functions; Coordination in Global Supply
Chains; and Interorganizational Relationships for Chapter 15 of this text from Tomas Hult, David Closs, and David
Frayer (2014), Global Supply Chain Management, New York: McGraw-Hill.
Page ivx
Page xv
 Page xvi

CONTENTS

part one
Introduction and Overview
CHAPTER 1
Globalization 2
Opening Case
How the iPhone Is Made: Apple’s Global Production System 3
Introduction 4
What Is Globalization? 6
The Globalization of Markets 6
The Globalization of Production 7
Management Focus
Boeing’s Global Production System 8
The Emergence of Global Institutions 9
Drivers of Globalization 11
Declining Trade and Investment Barriers 11
Role of Technological Change 13
The Changing Demographics of the Global Economy 15
The Changing World Output and World Trade Picture 15
Country Focus
India’s Software Sector 17
The Changing Foreign Direct Investment Picture 17
The Changing Nature of the Multinational Enterprise 19
Management Focus
The Dalian Wanda Group 20
The Changing World Order 21
Global Economy of the Twenty-First Century 22
The Globalization Debate 22
Antiglobalization Protests 23
Country Focus
Protesting Globalization in France 24
Globalization, Jobs, and Income 24
Globalization, Labor Policies, and the Environment 26
Globalization and National Sovereignty 28
Globalization and the World’s Poor 29
Managing in the Global Marketplace 31
Key Terms 33
Summary 33
Critical Thinking and Discussion Questions 34
Research Task 34
Closing Case
General Motors in China 35
Endnotes 36
 part two
National Differences
CHAPTER 2
National Differences in Political, Economic, and Legal Systems 38
Opening Case
Kenya: An African Lion 39
Introduction 40
Political Systems 41
Collectivism and Individualism 41
Democracy and Totalitarianism 43
Country Focus
Putin’s Russia 44
Economic Systems 46
Market Economy 46
Command Economy 47
Mixed Economy 48
Legal Systems 49
Different Legal Systems 49
Differences in Contract Law 50
Property Rights and Corruption 51
Country Focus
Corruption in Brazil 53
Management Focus
Did Walmart Violate the Foreign Corrupt Practices Act? 54
The Protection of Intellectual Property 55
Management Focus
Starbucks Wins Key Trademark Case in China 56
Product Safety and Product Liability 57
Focus on Managerial Implications: The Macro Environment Influences Market Attractiveness 57
Key Terms 58 Page xvii

Summary 58
Critical Thinking and Discussion Questions 59
Research Task 59
Closing Case
Transformation in Saudi Arabia 59
Endnotes 61

CHAPTER 3
National Differences in Economic Development 62
Opening Case
Poland: Eastern Europe’s Economic Miracle 63
Introduction 64
Differences in Economic Development 64
Map 3.1 GNI per Capita, 2018 65
Map 3.2 GNI PPP per Capita, 2018 66
Map 3.3 Average Annual Growth Rate in GDP (%), 2009–2018 67
Broader Conceptions of Development: Amartya Sen 68
Map 3.4 Human Development Index, 2017 69
Political Economy and Economic Progress 69
Innovation and Entrepreneurship Are the Engines of Growth 69
Innovation and Entrepreneurship Require a Market Economy 70
Innovation and Entrepreneurship Require Strong Property Rights 70
The Required Political System 71
Economic Progress Begets Democracy 71
Country Focus
Property Rights in China 72
Geography, Education, and Economic Development 72
States in Transition 74
The Spread of Democracy 74
Map 3.5 Freedom in the World, 2019 74
The New World Order and Global Terrorism 76
The Spread of Market-Based Systems 77
Map 3.6 Index of Economic Freedom, 2019 79
The Nature of Economic Transformation 79
Deregulation 79
Country Focus
India’s Economic Transformation 80
Privatization 81
Legal Systems 81
Implications of Changing Political Economy 82
Focus on Managerial Implications: Benefits, Costs, Risks, and Overall Attractiveness of Doing Business Internationally 83
Key Terms 87
Summary 87
Critical Thinking and Discussion Questions 87
Research Task 88
Closing Case
Brazil’s Struggling Economy 88
Endnotes 90

CHAPTER 4
Differences in Culture 92
Opening Case
Singapore: One of the World’ Most Multicultural Places 93
Introduction 94
What Is Culture? 95
Values and Norms 96
Culture, Society, and the Nation-State 98
Determinants of Culture 99
Social Structure 99
Individuals and Groups 100
Social Stratification 102
Country Focus
Determining Your Social Class by Birth 103
Religious and Ethical Systems 105
Map 4.1 World Religions 106
Christianity 106
Islam 107
Country Focus
Turkey: Its Religion and Politics 110
 Hinduism 111
Buddhism 112
Confucianism 113
Management Focus
China and Its Guanxi 114
Language 115
Spoken Language 115
Unspoken Language 116
Education 116
Culture and Business 117
Cultural Change 120
Focus on Managerial Implications: Cultural Literacy and Competitive Advantage 122 Page xviii

Key Terms 124

Summary 124
Critical Thinking and Discussion Questions 125
Research Task 126
Closing Case
China, Hong Kong, Macau, and Taiwan 126
Endnotes 128

CHAPTER 5
Ethics, Corporate Social Responsibility, and Sustainability 132
Opening Case
Ericsson, Sweden, and Sustainability 133
Introduction 134
Ethics and International Business 135
Employment Practices 136
Human Rights 137
Management Focus
“Emissionsgate” at Volkswagen 138
Environmental Pollution 139
Corruption 140
Ethical Dilemmas 142
The Roots of Unethical Behavior 143
Personal Ethics 143
Decision-Making Processes 144
Organizational Culture 144
Unrealistic Performance Goals 145
Leadership 145
Societal Culture 145
Philosophical Approaches to Ethics 146
Straw Men 146
Utilitarian and Kantian Ethics 148
Rights Theories 149
Justice Theories 150
Focus on Managerial Implications: Making Ethical Decisions Internationally 151
Management Focus
Corporate Social Responsibility at Stora Enso 156
Key Terms 157
Summary 158
Critical Thinking and Discussion Questions 159
Research Task 159
Closing Case
Sustainability Initiatives at Natura, The Body Shop, and Aesop 160
Endnotes 161

part three
The Global Trade and Investment Environment
CHAPTER 6
International Trade Theory 164
Opening Case
A Tale of Two Nations: Ghana and South Korea 165
Introduction 166
An Overview of Trade Theory 166
The Benefits of Trade 167
The Pattern of International Trade 168
Trade Theory and Government Policy 169
Mercantilism 169
Country Focus
Is China Manipulating Its Currency in Pursuit of a Neo-Mercantilist Policy? 170
Absolute Advantage 170
Comparative Advantage 172
The Gains from Trade 173
Qualifications and Assumptions 175
Extensions of the Ricardian Model 175
Country Focus
Moving U.S. White-Collar Jobs Offshore 179
Heckscher–Ohlin Theory 180
The Leontief Paradox 181
The Product Life-Cycle Theory 182
Product Life-Cycle Theory in the Twenty-First Century 183
New Trade Theory 183
Increasing Product Variety and Reducing Costs 184
Economies of Scale, First-Mover Advantages, and the Pattern of Trade 184
Implications of New Trade Theory 185
National Competitive Advantage: Porter’s Diamond 186
Factor Endowments 187
Demand Conditions 188
Related and Supporting Industries 188 Page xix
Firm Strategy, Structure, and Rivalry 188
Evaluating Porter’s Theory 189
Focus on Managerial Implications: Location, First-Mover Advantages, and Government Policy 189
Key Terms 191
Summary 191
Critical Thinking and Discussion Questions 192
Research Task 193
Closing Case
“Trade Wars Are Good and Easy to Win” 193
Appendix: International Trade and the Balance of Payments 195
Endnotes 197

CHAPTER 7
Government Policy and International Trade 200
Opening Case
American Steel Tariffs 201
Introduction 202
Instruments of Trade Policy 202
Tariffs 202
Subsidies 203
Country Focus
Are the Chinese Illegally Subsidizing Auto Exports? 204
Import Quotas and Voluntary Export Restraints 205
Export Tariffs and Bans 206
Local Content Requirements 206
Administrative Policies 207
Antidumping Policies 207
The Case for Government Intervention 207
Management Focus
Protecting U.S. Magnesium 208
Political Arguments for Intervention 209
Economic Arguments for Intervention 211
The Revised Case for Free Trade 213
Retaliation and Trade War 213
Domestic Policies 214
Development of the World Trading System 214
From Smith to the Great Depression 215
1947–1979: GATT, Trade Liberalization, and Economic Growth 215
1980–1993: Protectionist Trends 215
The Uruguay Round and the World Trade Organization 216
WTO: Experience to Date 217
The Future of the WTO: Unresolved Issues and the Doha Round 218
Country Focus
Estimating the Gains from Trade for the United States 221
Multilateral and Bilateral Trade Agreements 222
The World Trading System under Threat 222
Focus on Managerial Implications: Trade Barriers, Firm Strategy, and Policy Implications 223
Key Terms 225
Summary 225
Critical Thinking and Discussion Questions 226
Research Task 226
Closing Case
The United States and South Korea Strike a Revised Trade Deal 227
Endnotes 228

CHAPTER 8
Foreign Direct Investment 230
Opening Case
Starbucks’ Foreign Direct Investment 231
Introduction 232
Foreign Direct Investment in the World Economy 232
Trends in FDI 232
The Direction of FDI 233
The Source of FDI 234
Country Focus
Foreign Direct Investment in China 235
The Form of FDI: Acquisitions versus Greenfield Investments 236
Theories of Foreign Direct Investment 236
Why Foreign Direct Investment? 236
Management Focus
Burberry Shifts Its Entry Strategy in Japan 237
The Pattern of Foreign Direct Investment 240
The Eclectic Paradigm 241
Political Ideology and Foreign Direct Investment 242
The Radical View 242
The Free Market View 243
Pragmatic Nationalism 243
Shifting Ideology 244
Benefits and Costs of FDI 244
Host-Country Benefits 245
Host-Country Costs 247
Home-Country Benefits 248 Page xx
Home-Country Costs 249
International Trade Theory and FDI 249
Government Policy Instruments and FDI 249
Home-Country Policies 249
Host-Country Policies 250
International Institutions and the Liberalization of FDI 251
Focus on Managerial Implications: FDI and Government Policy 252
Key Terms 254
Summary 254
Critical Thinking and Discussion Questions 255
Research Task 256
Closing Case
Geely Goes Global 256
Endnotes 257

CHAPTER 9
Regional Economic Integration 260
Opening Case
The Cost of Brexit 261
Introduction 262
Levels of Economic Integration 263
The Case for Regional Integration 265
The Economic Case for Integration 265
The Political Case for Integration 265
Impediments to Integration 266
The Case against Regional Integration 267
Regional Economic Integration in Europe 267
Evolution of the European Union 267
 Map 9.1 Member States of the European Union in 2019 268
Political Structure of the European Union 269
Management Focus
The European Commission and Google 270
The Single European Act 271
The Establishment of the Euro 272
Enlargement of the European Union 275
Country Focus
The Greek Sovereign Debt Crisis 276
British Exit from the European Union (BREXIT) 277
Regional Economic Integration in the Americas 278
The North American Free Trade Agreement 278
Map 9.2 Economic Integration in the Americas 279
The United States–Canada–Mexico Agreement (USCMA) 281
The Andean Community 282
Mercosur 282
Central American Common Market, CAFTA, and CARICOM 283
Regional Economic Integration Elsewhere 284
Association of Southeast Asian Nations 284
Regional Trade Blocs in Africa 284
Map 9.3 ASEAN countries 285
Other Trade Agreements 286
Focus on Managerial Implications: Regional Economic Integration Threats 286
Key Terms 288
Summary 288
Critical Thinking and Discussion Questions 289
Research Task 290
Closing Case
NAFTA 2.0: The USCMA 290
Endnotes 291

part four
The Global Monetary System
CHAPTER 10
The Foreign Exchange Market 294
Opening Case
Managing Foreign Currency Exposure at 3M 295
Introduction 296
The Functions of the Foreign Exchange Market 297
Currency Conversion 297
Insuring against Foreign Exchange Risk 299
Management Focus
Embraer and the Gyrations of the Brazilian Real 301
The Nature of the Foreign Exchange Market 301
Economic Theories of Exchange Rate Determination 302
Prices and Exchange Rates 303
Country Focus
Quantitative Easing, Inflation, and the Value of the U.S. Dollar 307
Interest Rates and Exchange Rates 308
 Investor Psychology and Bandwagon Effects 309
Summary of Exchange Rate Theories 309 Page xxi
Exchange Rate Forecasting 310
The Efficient Market School 310
The Inefficient Market School 310
Approaches to Forecasting 310
Currency Convertibility 311
Focus on Managerial Implications: Foreign Exchange Rate Risk 312
Key Terms 315
Summary 315
Critical Thinking and Discussion Questions 316
Research Task 317
Closing Case
The Fluctuating Value of the Yuan Gives Chinese Businesses a Lesson in Foreign Exchange Risk 317
Endnotes 318

CHAPTER 11
The International Monetary System 320
Opening Case
Pakistan Takes Another IMF Loan 321
Introduction 322
The Gold Standard 323
Mechanics of the Gold Standard 323
Strength of the Gold Standard 324
The Period between the Wars: 1918–1939 324
The Bretton Woods System 325
The Role of the IMF 325
The Role of the World Bank 326
The Collapse of the Fixed Exchange Rate System 327
The Floating Exchange Rate Regime 328
The Jamaica Agreement 328
Exchange Rates since 1973 328
Fixed versus Floating Exchange Rates 331
The Case for Floating Exchange Rates 331
The Case for Fixed Exchange Rates 332
Who Is Right? 333
Exchange Rate Regimes in Practice 333
Country Focus
China’s Exchange Rate Regime 334
Pegged Exchange Rates 335
Currency Boards 335
Crisis Management by the IMF 336
Financial Crises in the Post–Bretton Woods Era 337
Country Focus
The IMF and Iceland’s Economic Recovery 337
Evaluating the IMF’s Policy Prescriptions 338
Focus on Managerial Implications: Currency Management, Business Strategy, and Government Relations 341
Management Focus
Airbus and the Euro 342
Key Terms 344
Summary 344
Critical Thinking and Discussion Questions 345
Research Task 345
Closing Case
Can Dollarization Save Venezuela? 346
Endnotes 347

CHAPTER 12
The Global Capital Market 348
Opening Case
Chinese IPOs in the United States 349
Introduction 350
Benefits of the Global Capital Market 350
The Functions of a Generic Capital Market 350
Attractions of the Global Capital Market 351
Management Focus
The Industrial and Commercial Bank of China Taps the Global Capital Market 353
Growth of the Global Capital Market 355
Global Capital Market Risks 357
Country Focus
Did the Global Capital Markets Fail Mexico? 358
The Eurocurrency Market 359
Genesis and Growth of the Market 359
Attractions of the Eurocurrency Market 359
Drawbacks of the Eurocurrency Market 361
The Global Bond Market 361
Attractions of the Global Bond Market 362
The Global Equity Market 362
Foreign Exchange Risk and the Cost of Capital 363
Focus on Managerial Implications: Growth of the Global Capital Market 364
Key Terms 364
Summary 365
Critical Thinking and Discussion Questions 365
Research Task 366
Closing Case Page xxii
Saudi Aramco 366
Endnotes 368

part five
The Strategy and Structure of International Business
CHAPTER 13
The Strategy of International Business 370
Opening Case
International Strategy in the Sharing Economy 371
Introduction 372
Strategy and the Firm 373
Value Creation 374
Strategic Positioning 375
Management Focus
AB InBev, Beer Globally, and Creating Value 377
The Firm as a Value Chain 378
Global Expansion, Profitability, and Profit Growth 380
Expanding the Market 381
Location Economies 382
Experience Effects 384
Leveraging Subsidiary Skills 386
Profitability and Profit Growth Summary 386
Cost Pressures and Pressures for Local Responsiveness 387
Pressures for Cost Reductions 387
Management Focus
IKEA’s Global Strategy 388
Pressures for Local Responsiveness 388
Choosing a Strategy 392
Global Standardization Strategy 393
Localization Strategy 393
Management Focus
Unilever’s Responsiveness to Its Dutch–British Roots 394
Transnational Strategy 395
International Strategy 396
The Evolution of Strategy 396
Key Terms 397
Summary 397
Critical Thinking and Discussion Questions 398
Research Task 398
Closing Case
Red Bull: A Leader in International Strategy 399
Endnotes 400

CHAPTER 14
The Organization of International Business 402
Opening Case
Bird, Lime, and Organizing Globally 403
Introduction 404
Organizational Architecture 405
Organizational Structure 406
Vertical Differentiation 406
Horizontal Differentiation 408
Management Focus
Dow—(Failed) Early Global Matrix Adopter 414
Integrating Mechanisms 415
Control Systems and Incentives 420
Types of Control Systems 420
Incentive Systems 421
Control Systems and Incentives 422
Processes 424
Organizational Culture 425
 Creating and Maintaining Organizational Culture 425
Organizational Culture and Performance 427
Management Focus
Lincoln Electric and Culture 428
Synthesis: Strategy and Architecture 429
Localization Strategy 429
International Strategy 430
Global Standardization Strategy 430
Transnational Strategy 431
Environment, Strategy, Architecture, and Performance 431
Organizational Change 432
Organizational Inertia 432
Implementing Organizational Change 433
Key Terms 434
Summary 435
Critical Thinking and Discussion Questions 435
Research Task 436
Closing Case Page xxiii
Walmart International 436
Endnotes 438

CHAPTER 15
Entering Developed and Emerging Markets 440
Opening Case
Volkswagen, Toyota, and GM in China 441
Introduction 442
Basic Entry Decisions 443
Which Foreign Markets? 443
Management Focus
Tesco’s International Growth Strategy 444
Timing of Entry 445
Scale of Entry and Strategic Commitments 446
Market Entry Summary 447
Entry Modes 448
Exporting 448
Turnkey Projects 449
Licensing 450
Franchising 451
Joint Ventures 452
Wholly Owned Subsidiaries 453
Selecting an Entry Mode 454
Core Competencies and Entry Mode 454
Pressures for Cost Reductions and Entry Mode 456
Greenfield Venture or Acquisition? 456
Pros and Cons of Acquisitions 456
Pros and Cons of Greenfield Ventures 458
Which Choice? 459
Strategic Alliances 459
Advantages of Strategic Alliances 460
Disadvantages of Strategic Alliances 460
Management Focus
Gazprom and Global Strategic Alliances 461
 Making Alliances Work 461
Key Terms 464
Summary 464
Critical Thinking and Discussion Questions 465
Research Task 465
Closing Case
IKEA Entering India, Finally! 466
Endnotes 467

part six
International Business Functions
CHAPTER 16
Exporting, Importing, and Countertrade 470
Opening Case
Higher-Education Exporting and International Competitiveness 471
Introduction 472
The Promise and Pitfalls of Exporting 473
Management Focus
Embraer and Brazilian Importing 476
Improving Export Performance 476
International Comparisons 477
Information Sources 477
Management Focus
Exporting Desserts by a Hispanic Entrepreneur 478
Service Providers 479
Export Strategy 480
Management Focus
Two Men and a Truck 481
The globalEDGETM Exporting Tool 482
Export and Import Financing 483
Lack of Trust 483
Letter of Credit 485
Draft 485
Bill of Lading 486
A Typical International Trade Transaction 486
Export Assistance 488
The Export-Import Bank 488
Export Credit Insurance 489
Countertrade 489
The Popularity of Countertrade 490
Types of Countertrade 490
Pros and Cons of Countertrade 491
Key Terms 492
Summary 492
Critical Thinking and Discussion Questions 493
Research Task 493
Closing Case
Spotify and SoundCloud 494
Endnotes 495
Page xxiv
CHAPTER 17
Global Production and Supply Chain Management 498
Opening Case
Blockchain Technology and Global Supply Chains 499
Introduction 500
Strategy, Production, and Supply Chain Management 501
Where to Produce 504
Country Factors 504
Management Focus
IKEA Production in China 505
Technological Factors 505
Production Factors 508
The Hidden Costs of Foreign Locations 511
Management Focus
Amazon’s Global Supply Chains 512
Make-or-Buy Decisions 513
Global Supply Chain Functions 516
Global Logistics 516
Global Purchasing 518
Managing a Global Supply Chain 519
Role of Just-in-Time Inventory 519
Role of Information Technology 520
Coordination in Global Supply Chains 521
Interorganizational Relationships 522
Key Terms 523
Summary 523
Critical Thinking and Discussion Questions 524
Research Task 525
Closing Case
Procter & Gamble Remakes Its Global Supply Chains 525
Endnotes 526

CHAPTER 18
Global Marketing and Business Analytics 528
Opening Case
Marketing Sneakers 529
Introduction 530
Globalization of Markets and Brands 531
Market Segmentation 533
Management Focus
Global Branding, Marvel Studios, and the Walt Disney Company 534
Business Analytics 535
International Marketing Research 536
Product Attributes 540
Cultural Differences 540
Economic Development 541
 Product and Technical Standards 541
Distribution Strategy 542
Differences between Countries 542
Choosing a Distribution Strategy 544
Communication Strategy 545
Management Focus
Burberry’s Social Media Marketing 546
Barriers to International Communication 547
Push versus Pull Strategies 548
Global Advertising 549
Pricing Strategy 550
Price Discrimination 550
Strategic Pricing 552
Regulatory Influences on Prices 553
Configuring the Marketing Mix 554
Product Development and R&D 554
The Location of R&D 555
Integrating R&D, Marketing, and Production 556
Cross-Functional Teams 557
Building Global R&D Capabilities 558
Key Terms 559
Summary 560
Critical Thinking and Discussion Questions 561
Research Task 561
Closing Case
Fake News and Alternative Facts 562
Endnotes 563

CHAPTER 19
Global Human Resource Management 566
Opening Case
Evolution of the Kraft Heinz Company 567
Introduction 568
Strategic Role of Global HRM: Managing a Global Workforce 569
Staffing Policy 570 Page xxv
Types of Staffing Policies 571
Expatriate Managers 574
Management Focus
AstraZeneca and Global Staffing Policy 577
Global Mindset 578
Training and Management Development 579
Training for Expatriate Managers 580
Repatriation of Expatriates 580
Management Development and Strategy 581
Management Focus
Monsanto’s Repatriation Program 582
Performance Appraisal 582
Performance Appraisal Problems 583
Guidelines for Performance Appraisal 583
Compensation 583
National Differences in Compensation 583
 Expatriate Pay 584
Management Focus
McDonald’s Global Compensation Practices 585
Building a Diverse Global Workforce 586
International Labor Relations 588
The Concerns of Organized Labor 588
The Strategy of Organized Labor 589
Approaches to Labor Relations 589
Key Terms 590
Summary 590
Critical Thinking and Discussion Questions 591
Research Task 591
Closing Case
Global Mobility at Shell 592
Endnotes 593

CHAPTER 20
Accounting and Finance in International Business 596
Opening Case
Pfizer, Novartis, Bayer, and GlaxoSmithKline 597
Introduction 598
National Differences in Accounting Standards 599
International Accounting Standards 600
Country Focus
Chinese Accounting 601
Accounting Aspects of Control Systems 602
Exchange Rate Changes and Control Systems 603
Transfer Pricing and Control Systems 604
Separation of Subsidiary and Manager Performance 605
Financial Management: The Investment Decision 605
Capital Budgeting 606
Project and Parent Cash Flows 606
Management Focus
Black Sea Oil and Gas Ltd. 607
Adjusting for Political and Economic Risk 607
Risk and Capital Budgeting 608
Financial Management: The Financing Decision 609
Financial Management: Global Money Management 610
Minimizing Cash Balances 610
Reducing Transaction Costs 611
Managing the Tax Burden 612
Management Focus
Microsoft and Its Foreign Cash Holdings 614
Moving Money across Borders 614
Key Terms 618
Summary 619
Critical Thinking and Discussion Questions 620
Research Task 620
Closing Case
Shoprite: The Financial Success of a Food Retailer in Africa 621
Endnotes 622

part seven
Integrative Cases
Globalization of BMW, Rolls-Royce, and the MINI 625
The Decline of Zimbabwe 627
Economic Development in Bangladesh 629
The Swatch Group and Cultural Uniqueness 630
Woolworths’ Corporate Responsibility Strategy 632
The Trans Pacific Partnership (TPP) Is Dead: Long Live the CPTPP! 634
Boeing and Airbus Are in a Dogfight over Illegal Subsidies 636
FDI in the Indian Retail Sector 637
Free Trade in Africa 639
The Mexican Peso, the Japanese Yen, and Pokémon Go 641
Egypt and the IMF 642
Alibaba’s Record-Setting IPO 643
Sony Corporation: Still a Leader Globally? 644
Organizational Architecture at P&G 646 Page xxvi
Cutco Corporation—Sharpening Your Market Entry 647
Tata Motors and Exporting 649
Alibaba and Global Supply Chains 650
Best Buy Doing a Turnaround Again 651
Sodexo: Building a Diverse Global Workforce 653
Tesla, Inc.—Subsidizing Tesla Automobiles Globally 654

Glossary 656
Indexes 666
International Page 1

Business
Competing in the Global Marketplace

13e
part one Introduction and Overview Page 2

Globalization
1
LEARNING OBJECTIVES
After reading this chapter, you will be able to:
LO1-1 Understand what is meant by the term globalization.
LO1-2 Recognize the main drivers of globalization.
LO1-3 Describe the changing nature of the global economy.
LO1-4 Explain the main arguments in the debate over the impact of globalization.
LO1-5 Understand how the process of globalization is creating opportunities and challenges for management practice.

Qilai Shen/In Pictures Ltd./Corbis/Getty Images

How the iPhone Is Made: Apple’s Global Production System

OPENING CASE
In its early days, Apple usually didn’t look beyond its own backyard to manufacture its devices. A few years after Apple Page 3
started making its Macintosh computer back in 1983, Steve Jobs bragged that it was “a machine that was made in America.”
As late as the early 2000s, Apple still manufactured many of its computers at the company’s iMac plant in Elk Grove, California.
Jobs often said that he was as proud of the Apple’s manufacturing plants as he was of the devices themselves.
By 2004, however, Apple had largely turned to foreign manufacturing. The shift to offshore production and assembly reached its
peak with the iconic iPhone, which Apple first introduced in 2007. The iPhone contains hundreds of parts, an estimated 90 percent of
which are manufactured abroad. Advanced semiconductors come from Germany and Taiwan, memory from Korea and Japan, display
panels and circuitry from Korea and Taiwan, rare metals from Africa and Asia, and the gyroscope used for tracking the iPhone’s
 orientation comes from Switzerland. Apple’s major subcontractor, the Taiwanese multinational firm, Foxconn, assembles half of all
the iPhones sold in the world today at a huge factory in China. Foxconn also has factories devoted to iPhone assembly at several other
locations, including Brazil and India. Another Taiwanese-based company, Pegatron, also assembles iPhones for Apple at a factory in
China.
Apple still employs some 80,000 people in the United States, and it has kept important activities at home, including product
design, software engineering, and marketing. Furthermore, Apple claims that its business supports another 450,000 jobs at U.S.-based
suppliers. For example, the glass for the iPhone is manufactured at Corning’s U.S. plants in Kentucky, Analog Devices in
Massachusetts produces chips that enable the iPhone’s touch display, and a Texas Instruments plant in Maine makes electronic
components that go in the iPhone. However, over 1.5 million people are involved in the engineering, building, and final assembly of
its products outside of the United States, many of them working at subcontractors like Foxconn.
When explaining its decision to assemble the iPhone in China, Apple cites a number of factors. While it is true that labor costs
are lower in China, Apple executives point out that labor costs only account for a small portion of the total value of its products and
are not the main driver of location decisions. Far more important, according to Apple, is the ability of its Chinese subcontractors to
respond very quickly to requests from Apple to scale production up and down. In a famous illustration of this capability, back in 2007
Steve Jobs demanded that a glass screen replace the plastic screen on his prototype iPhone. Jobs didn’t like the look and feel of plastic
screens, which at the time were standard in the industry, nor did he like the way they scratched easily. This last-minute change in the
design of the iPhone put Apple’s market introduction date at risk. Apple had selected Corning to manufacture large panes of
strengthened glass, but finding a manufacturer that could cut those panes into millions of iPhone screens wasn’t easy. Then, a bid
arrived from a Chinese factory. When the Apple team visited the factory, they found that the plant’s owners were already constructing
a new wing to cut the glass and were installing equipment. “This is in case you give us the contract,” the manager said. The plant also
had a warehouse full of glass samples for Apple, and a team of engineers available to work with Apple. They had built onsite
dormitories so the factory could run three shifts seven days a week to meet Apple’s demanding production schedule. The Chinese
company got the bid.
Another critical advantage of China for Apple was that it was much easier to hire engineers there. Apple calculated that about
8,700 industrial engineers were needed to oversee and guide the 200,000 assembly-line workers involved in manufacturing the
original iPhone. The company had estimated it would take as long as nine months to find that many engineers in the United States. In
China, it took 15 days.
Also important is the clustering together of factories in China. Many of the factories providing components for the iPhone are
located close to Foxconn’s assembly plant. As one executive noted, “The entire supply chain is in China. You need a thousand rubber
gaskets? That’s the factory next door. You need a million screws? That factory is a block away. You need a screw made a little bit
different? That will take three hours.”*
All this being said, there are drawbacks to outsourcing to China. Several of Apple’s subcontractors have been targeted for their
poor working conditions. Criticisms include low pay of line workers, long hours, mandatory overtime for little or no additional pay,
and poor safety records. Some former Apple executives say there is an unresolved tension within the company: Executives want to
improve working conditions within the factories of subcontractors, such as Foxconn, but that dedication falters when it conflicts with
crucial supplier relationships or the fast delivery of new products. In addition, Apple’s outsourcing decisions have been criticized by
President Trump, who argues that the company is guilty of moving U.S. jobs overseas. While Apple disagrees with this assessment, it
has responded by increasing its investment in U.S. facilities. In 2018, for example, the company announced it would invest $30
billion over five years to create 20,000 new Apple jobs in the United States. Most of these jobs, however, are expected to be in
software development and data center operations, not manufacturing and assembly.
*C. Duhigg and K. Bradsher, “How U.S. Lost Out on iPhone Work.” The New York Times, January 22, 2012.

Sources: Sam Costello, “Where Is the iPhone Made?" Lifewire, July 14, 2018; David Barboza, “How China Built iPhone City with Billions in Perks for Apple’s Partner,” The
New York Times, December 29, 2016; Gu Huini, “Human Costs Are Built into iPad in China,” The New York Times, January 26, 2012; Chuck Jones, “Apple’s $350 Billion US
Contribution Was Already on the Cards,” Forbes, January 19, 2018. Page 4

Introduction
Over the past five decades, a fundamental shift has been occurring in the world economy. We have been moving away
from a world in which national economies were relatively self-contained entities, isolated from each other by barriers to
cross-border trade and investment; by distance, time zones, and language; and by national differences in government
regulation, culture, and business systems. We have moved toward a world in which barriers to cross-border trade and
investment have declined; perceived distance is shrinking due to advances in transportation and telecommunications
technology; material culture is starting to look similar the world over; and national economies are merging into an
interdependent, integrated global economic system. The process by which this transformation is occurring is commonly
referred to as globalization.
At the same time, recent political events have raised some questions about the inevitability of the globalization
process. The exit of the United Kingdom from the European Union (Brexit), the renegotiation of the North American
Free Trade Agreement (NAFTA) by the Trump Administration, and trade disputes between the United States and many
of its trading partners, including most notably China, have all contributed to uncertainty about the future of globalization.
While the world seems unlikely to pull back significantly from globalization, there is no doubt that the benefits of
globalization are more in dispute now than at any time in the last half century. This is a new reality, albeit perhaps a
temporary one, but it is one the international business community will have to adjust to.
The opening case illustrates how one company, Apple, has taken advantage of globalization. Apple has created a
global supply chain to efficiently produce its icon iPhone. While product design and software development are
undertaken in California, component parts are manufactured all over the world, and the final product is assembled for
Apple by Foxconn in factories in China, Brazil, India, and elsewhere. In configuring the production system of the iPhone
in this manner, Apple is trying to partner with the most efficient subcontractors, wherever in the world they might reside.
Apple could not have configured its production system in this manner had it not been for the systematic reductions in
barriers to cross-border trade and investment that have occurred over the last half century.
At the same time, Apple has been criticized by President Trump for placing too much productive activity outside of
the United States. Moreover, trade disputes between the United States and China have raised the possibility that China
may at some point not be the optimal location for assembling the iPhone. Apple has started to adjust its strategy to
account for the potential risks here, establishing assembly operations outside of China (in India, for example), increasing
its investment in the United States (in 2018, Apple announced it would invest $30 billion over five years in U.S.
facilities, creating 20,000 new jobs in the process), and working with U.S.-based suppliers to help them become efficient
Apple partners (Apple has established a $5 billion fund to help those suppliers upgrade their capabilities). Thus, Apple is
taking advantage of globalization, and simultaneously hedging against any possible pullback from the level of
globalization that existed in 2016, which for now at least may have been a high-water mark, albeit a temporary one.
Proponents of increased global trade argue that cross-cultural engagement and trade across country borders is the
future and that returning back to a nationalistic perspective is the past. On the other hand, the nationalistic argument rests
in citizens wanting their country to be sovereign, self-sufficient as much as possible, and basically in charge of their own
economy and country environment. We will touch on many aspects of this debate throughout this text’s 20 integrated
chapters.
Globalization now has an impact on almost everything we do. For example, an American medical doctor—let’s call
her Laurie—might drive to work at her pediatric office in a sports utility vehicle (SUV) that was designed in Stuttgart,
Germany, and assembled in Leipzig, Germany, and Bratislava, Slovakia, by Porsche from components from parts
suppliers worldwide, which in turn were fabricated from Korean steel and Malaysian rubber. Laurie may have filled her
car with gasoline at a Shell service station owned by a British-Dutch multinational company. The gasoline could Page 5
have been made from oil pumped out of a well off the coast of Africa by a French oil company that transported it
to the United States in a ship owned by a Greek shipping line. While driving to work, Laurie might talk to her
stockbroker (using a hands-free, in-car speaker) on an Apple iPhone that was designed in California and assembled in
China using chip sets produced in Japan and Europe, glass made by Corning in Kentucky, and memory chips from South
Korea. Perhaps on her way, Laurie might tell the stockbroker to purchase shares in Lenovo, a multinational Chinese PC
manufacturer whose operational headquarters is in North Carolina and whose shares are listed on the New York Stock
Exchange.
This is the world in which we live. In many cases, we simply do not know, or perhaps even care, where a product
was designed and where it was made. Just a couple of decades ago, “Made in the USA” or “Made in Germany” had
strong meaning and referred to something. The U.S. often stood for quality, and Germany often stood for sophisticated
engineering. Now the country of origin for a product has given way to, for example, “Made by BMW,” and the company
is the quality assurance platform, not the country. In many cases, it goes even beyond the company to the personal
relationship a customer has developed with a representative of the company, and so we focus on what has become known
as CRM (Customer Relationship Management).
Whether it is still the quality associated with the country of origin of a product, or the assurance given by a specific
company regardless of where they manufacture their product, we live in a world where the volume of goods, services,
and investments crossing national borders has expanded faster than world output for more than half a century. It is a
world in which international institutions such as the World Trade Organization and gatherings of leaders from the
world’s most powerful economies continue to work for even lower barriers to cross-border trade and investment. The
symbols of material culture and popular culture are increasingly global, from Coca-Cola and Starbucks, to Sony
PlayStation, Facebook, Netflix video streaming service, IKEA stores, and Apple iPads and iPhones. Vigorous and vocal
groups protest against globalization, which they blame for a list of ills from unemployment in developed nations to
environmental degradation and the Westernization or Americanization of local cultures. These protesters come from
environmental groups, which have been around for some time, but more recently also from nationalistic groups focused
on their countries being more sovereign.
For businesses, the globalization process has many opportunities. Firms can expand their revenues by selling
around the world and/or reduce their costs by producing in nations where key inputs, including labor, are cheap. The
global expansion of enterprises has been facilitated by generally favorable political and economic trends. This has
allowed businesses both large and small, from both advanced nations and developing nations, to expand internationally.
Exploring the Variety of Random
Documents with Different Content
were not by any means satisfactory, but when slower burning
powders were introduced, the strain upon the gun was less sudden
and more cumulative, so that the pressure upon the projectile was
exerted to the full as long as it was within the gun and it was then
expelled at the muzzle with the greatest force obtainable. A great
advance in naval gunnery was made with the appearance of the
Armstrong breech-loader. The first breech-loader from this famous
firm was a tube gun which was formed to admit of a breech block
being dropped in to close the bore and a screw attachment held it
fast. From about 1860 the principal guns in use in the Navy of the
Armstrong screw type were the 9-pounder weighing 6 cwt., the 12-
pounder weighing 8 cwt., the 20-pounder of 16 cwt., the 40-pounder
of 35 cwt., and the 7-inch gun, 99½ cwt. The last-named was of 7.2
inches diameter, and fired projectiles weighing 109 lb. All these guns
were on the polygroove system. About this time iron or steel gun
carriages were introduced for use on shipboard. The Admiralty, for
some reason best known to themselves, fancied muzzle-loaders, and
obstinately remained faithful to them long after all other naval
powers had discarded them as cumbersome and comparatively
useless compared with the newer types of breech-loading guns. The
newer muzzle-loaders, however, were improvements on the old
smooth-bores, and were built on what is known as the Fraser
system, and they were far larger than any which had been
constructed before.
The inner barrels of the Armstrong 12-inch, 9-inch, and 7-inch
muzzle-loading guns were of tempered steel, with solid ends; these
were strengthened with wrought-iron coils shrunk on; the trunnion
ring, breech-piece and cascable, which was screwed into the latter,
were solid wrought-iron forgings. The different parts were hooked
together with shoulders and corresponding recesses, to prevent their
separation.
The muzzle-loader of 64 lb. on Fraser’s cheap construction plan
consisted simply of a coiled iron tube, having the muzzle part
double, but with a triple coil over the breech.
The Armstrong big muzzle-loading guns were formed with the
Woolwich system of rifling or grooving, the projectiles being fitted
with studs to correspond to the grooves. The muzzle-loading guns
varied from the 7-inch 7-ton gun to the 16-inch 80-ton gun. The 8-
inch was 118 inches in length, the 9-inch 125 inches, and so on, up
to the 16-inch gun, which was 288 inches in length; the last-named
took a charge of 450 lb., and fired a projectile weighing 1,684 lb.
with a muzzle velocity of 1,590 foot seconds and a muzzle energy of
29,530 foot tons, capable of penetrating at the muzzle between 24
and 25 inches of wrought iron.
By 1877 the initial velocity of rifled projectiles had been increased
from 1,600 to 2,100 foot seconds, and the energies by nearly 75 per
cent., so that a further reconstruction of artillery became
compulsory. It was not until after 1881 that the Admiralty definitely
adopted heavy breech-loading guns for its armed cruisers. Even as
late as 1885 the squadron sent to sea when it was feared that
trouble with Russia was brewing, included thirteen battleships, not
one of which had a breech-loading gun of more than 6 inches
diameter. As a contrast to this, all the heavy guns of the Russian
ships were breech-loaders. What would have happened to the
English ships had hostilities occurred, and had the Russian gunners
been able to use their weapons properly, is best left to conjecture,
but it might have proved a sorry day in the naval history of England.
Even by 1894 muzzle-loaders were still in use in the Navy.
The Woolwich Armstrong breech-loading guns varied from 12-
pounders of 3 inches to the 16.25-inch 111-ton gun, the length of
which was equal to 30 calibres. The last-named gun took a charge of
960 lb. of powder, and fired a projectile weighing 1,800 lb. with a
muzzle velocity of 2,087 foot seconds, and a muzzle energy of
54,390 foot tons, calculated to penetrate over 36 inches of wrought
iron at the muzzle. Gunpowder not being powerful enough for these
great weapons, other explosives were introduced, which had, among
other advantages, that of being much more powerful. The principal
of these explosives at present in use is cordite.
In the early ’sixties the guns chiefly in use on this side of the Atlantic
were the 9-inch gun, weighing 12 tons, and discharging a 250-lb.
shot with 43 lb. of powder, the initial velocity being 1,730 feet per
second. The largest gun was the 23½ tons, with a 12-inch diameter,
its shot weighing 600 lb. and the charge of powder 70 lb., and the
muzzle velocity being 1,240 feet per second. The larger guns could
not be worked without considerable improvements being made in
the ships themselves. Greater height had to be given between the
decks, and the distances between the guns had also to be increased,
there being 25 feet between the centre lines of the ports for the 12-
ton guns, while the 23-ton guns required about 30 feet between the
ports and between 8 and 9 feet between the deck and the underside
of the beams supporting the deck above. To keep the portholes as
small as possible an arrangement was made whereby the gun should
be pivoted near the muzzle.
The later developments in naval artillery began with the 12-inch 46-
ton wire gun, which was the chief weapon of the battleships
between 1894 and 1897. This gun was 37 feet 1 inch in length, or
35.43 calibres, and threw an armour-piercing shell of 850 lb. with a
charge of 167½ lb. of cordite. It had a muzzle penetration of 36.8
inches of wrought iron, and was in every respect as powerful as the
13½-inch 67-ton gun, which it replaced. During 1898, the 12-inch
wire gun, weighing about 50 tons, was introduced.
The adoption of breech-loading made possible a very rapid rate of
firing, even with the heaviest guns. In 1881, the Government, in
reply to an invitation it issued for guns to meet certain requirements,
received a number of replies from gun-making firms, as did also the
French Government at about the same time in reply to a similar
invitation. These guns, which became known as quick-firing or rapid-
firing guns, were comparatively small weapons, and the Armstrong
Company at Elswick, having improved upon them with quick-firers of
4.7 inches and 6 inches calibre, they were adopted throughout the
Navy as the secondary armament. Their superiority over those they
displaced was such that a battery’s firing power was increased
sixfold. An important trial took place on board the Hardy in 1887,
when a 4.7 gun was mounted on a centre pivot recoil mounting, the
whole weighing 4 tons 12 cwt.; this gun fired ten rounds in less than
48 seconds. Compare this with the firing of the ordinary 5-inch
breech-loading gun on the gunboat Mastiff, when ten rounds took 6
minutes 16 seconds.
In rifling some of the guns an increasing twist was given, while in
others the twist was uniform throughout the bore. The object of the
increasing twist was to lessen the strain upon the gun, as the rotary
motion was not started when the projectile was first put into motion,
but developed as it moved down the bore. The projectiles were
provided with studs which fitted into the grooves. The breech-
loading guns on the polygonal system of rifling fired projectiles
which were coated with lead fixed on with zinc, so that the bore of
the gun was not injured by the rush of gas past the projectile as was
the case in the rifled guns in which there was windage. Two systems
of breech-loading were designed by Sir W. Armstrong, one being the
screw system and the other known as the wedge.
The projectiles invented by Major Palliser were specially designed to
penetrate iron armour. Cast iron was found to be smashed against
armour, wrought iron was too soft to do any damage, and steel in
those days was too expensive to be of use. Major Palliser solved the
difficulty by making his projectiles of chilled iron, and giving them a
cylindrical shape with the pointed or ogival head.
 PROJECTILES AND CHARGES USED IN THE BRITISH NAVY.
Photograph by Stephen Cribb, Southsea.
1. Projectile, 16·25 B.L., 9. Projectile, 7·5 B.L., 200 17. Projectile, 4-in., 25
1,800 lbs. lbs. lbs.
2. Charge for ” ” 960 lbs. 10. Charge for ” ” 77½ lbs.
18. 4-in. Cylinder.
powder. cordite.
3. Projectile, 13·5 B.L., 1,250 11. Projectile, 6-in. B.L., 100 19. Projectile, 12-
lbs. lbs. pounder.
4. Charge for ” ” 187½ lbs. 20. 12-pounder
12. Charge for ” ” 29 lbs.
cordite. Charge.
5. Projectile, 12-in. B.L., 850 13. Projectile, 5-in. B.L., 50 21. 12-pounder Case
lbs. lbs. Shot.
6. Charge for ” ” 211 lbs. 22. 12- ” 8 cwt.
14. Charge for ” ”
cordite. Charge.
7. Projectile, 9·2 B.L., 380
15. Projectile, 4·7, 45 lbs. 23. 6- ” Cartridge.
lbs.
8. Charge for ” ” 103 lbs. 16. 4·7 Cylinder for
24. 3- ” ”
cordite. Cartridge.
25. 1¼-lb. Cartridge.

Experiments are often carried out to ascertain the resisting qualities

of various combinations of armour offered to projectiles of varying
weights and penetrative powers according to the distances at which
they are fired. When iron was used for armour-plating, targets were
built in duplication of those provided for the armoured ships. Both
the Armstrong and Whitworth 70-pounders fired in the competition
trials over 3,000 rounds, or three times the number assigned as the
limit to the life of the old cast-iron smooth-bore guns. Of course, the
bigger the gun the shorter the life, as a rule.
The French adopted for naval service four different patterns of heavy
breech-loading rifled guns, all made of cast iron, and strengthened
behind the trunnions with steel rings which were shrunk on. Their
weight varied from 21 tons 13 cwt., with a calibre of 10.82 inches, to
the gun of 4 tons 18.5 cwt., with a calibre of 6.48 inches, firing
projectiles respectively of 476 lb. and 99 lb. The weight of the
charge was rather more than one-sixth of that of the projectile. The
guns were mounted on wrought-iron carriages and slides
constructed on the box girder system.
As the powers possessed a great number of old smooth-bore guns
and rifled guns were expensive, several attempts at a compromise
were made by lining the smooth-bore guns and converting them into
rifled guns, the lining being rifled according to whichever system the
power owning the gun happened to prefer at the moment. The
Dutch Government is said to have set the example of national
frugality in this respect.
How slow the Admiralty was, is shown by the statement of the
Secretary to the Admiralty in the House of Commons in March, 1881,
to the effect that “at this moment there is not a single heavy breech-
loading gun mounted on any of our ships, but by the end of next
year a very substantial beginning would have been made towards
arming our fleet with breech-loaders.... The Admiralty was driven to
the step by the fact that a high velocity was now required for the
projectile, that high velocity was only obtainable by a great length of
gun, and that to load a gun over a certain length at the muzzle
became impracticable under the ordinary conditions of mounting
guns afloat.” The Government, it was contended, was now able to
profit by the experience which foreign nations had gained, and
intended to improve upon the guns which were in use abroad. But
whatever may have been the official view, the fact remains that the
Admiralty was years behind other nations, that Woolwich, in spite of
official claims, discovered nothing that had not been known to be
possible a decade earlier at least, and that the Navy was armed with
out-of-date muzzle-loaders. Fortunate it no doubt was for this
country that it had no wars in which its Navy could be tested against
a navy armed with breech-loaders.
In the matter of armour this country owes a debt of gratitude to Sir
John Brown, who made the Atlas Works at Sheffield famous
throughout the world for the excellence of the armour-plates
produced there. Indeed, the records of what he has accomplished
seem to indicate that his rule was to surpass whatever his rivals
produced, and never to forget that he might be able to learn
something from others. His company took up the manufacture of
chrome steel, which was patented in America about 1871. When the
Italian experiments at Spezzia resulted in the 100-ton gun smashing,
in 1876, 22 inches of iron armour and its backing, the French turned
their attention to steel plates, as did also Sir Joseph Whitworth, but
Sir John Brown thought that better results would be secured with
iron plates with steel faces. These compound plates had half their
thickness of steel. By 1888 the firm was producing compound plates
each 32 tons in weight.
An interesting comparison between French and English methods was
made a few years ago[55] by M. Canet, of the well-known French
firm of gun manufacturers, in a paper on the heavy naval guns and
warships of the two countries. Referring to the latest type of the
large weapons then employed at sea, viz., the English 12-inch gun,
known officially as Mark IX., he described its method of construction,
which has already been alluded to, and pointed out that the
corresponding gun in the French navy was of 305-mm. bore (or
12.008-inch) and of 45 calibres in length. The barbette system of
gun-mounting, as already explained, owed its origin to French
inventiveness, and is preferred in the British Navy; but the French,
curiously enough, seem to have preferred the English system of
mounting turrets for the guns. The turrets themselves, however,
differed from those of the English pattern, the French idea being to
make them oval and smaller, so as to offer the narrowest possible
target, and this theory was carried into practice even at the expense
of the interior roominess. The limited dimensions, however, made it
no easy task for artillerists to arrange conveniently inside the turrets
all the machinery required, and M. Canet avowed a preference for
the English practice of allowing the designer plenty of weight and
room inside the turrets or barbettes. There were also structural
differences in the methods of the two countries of arranging the
armour, and it was claimed that the French oval form, with the other
characteristics, had, among other advantages, that of distributing
the blows of the projectiles over a greater weight of armour. Another
important difference lay also in the method of working the guns. It
has been the custom for many years in the British Navy to take up
the recoil of the guns by hydraulic buffers, and to use hydraulic
pressure to run out the guns again. The French introduced springs,
which were compressed by the force of the recoil. Again, hydraulic
appliances are preferred in the British Navy for training and elevating
the guns, but our neighbours across the Channel prefer electricity.
The latter has been tried in the British Navy, the most notable
example being one of the super-Dreadnoughts, but the experiment
has by no means given satisfaction.
Even more striking differences appeared in the matter of the
ammunition hoists, etc. The French battleships, M. Canet said, were
equipped with hoists leading direct from the magazines to the guns,
and there was the drawback that the guns had to be returned to a
certain position to be reloaded, and the muzzle had to be depressed
a few degrees below the horizontal to facilitate the loading, the
projectile being pushed home with a rammer by the gun crew,
whose strength was assisted by a compressed spring. The
ammunition hoists on the English battleships, on the contrary, were
made in two sections. The lower section raised the ammunition to a
relay chamber, and the upper section carried it thence to the gun.
This method is held to allow of more rapid firing, as a large supply of
ammunition can be placed, prior to an action, in the relay chamber,
and the store there, as fast as it is drawn upon, can be replenished
from the magazines. It has also been held that in case of a shell
bursting in the turret the danger to the magazine would be less, and
in M. Canet’s opinion the English method is superior to that of the
French. Another matter in which he considered the English to have
an advantage was in the manner of loading the guns. How this was
done on the French battleships has just been explained. The English
gun crews could load the guns at any elevation. The ammunition
was carried up in a curved hoist, so that it could be delivered at any
point desired, and was pushed home by a hydraulic rammer moving
with the gun.
By permission of Messrs. Vickers, Sons & Maxim, Ltd.

12-INCH BREECH MECHANISM

(CLOSED).
12-INCH BREECH MECHANISM
(OPEN).
 INTERIOR OF A BARBETTE, SHOWING 12-INCH GUN, H.M.S. “CÆSAR.”
Photograph by Gale & Polden, Aldershot.
Time brings strange revenges. At one period the French were the
leading nation in the world in the matter of naval construction, and
the English were content to copy the French designs. But in later
years England has taken the lead, and not only France but the other
maritime powers of the world have been glad to sit at the feet of
Britannia and accept the instruction she has been able to impart.
Some of these pupils, if pupils they be, have proved themselves
exceedingly apt copyists and improvers, and are inclined to think
that their own creations are every whit as good as anything this
country can produce.
The superiority of the British methods alluded to by the famous
French gun-maker were not lost upon French naval architects, and in
some of the latest French battleships these methods have been
copied. The rapidity of the fire of the big guns would thus, it was
expected, be raised to two rounds a minute. Electricity, however, has
been retained, as the French consider it to be better than hydraulic
machinery for the loading of the guns and movement of the turrets,
and more easy of repair in case of damage under hostile fire.
The size and weight of the pieces forming the breech mechanism of
the modern guns of large calibre made compulsory the adoption of
mechanical means for loading them. There was also the further
advantage that machinery was less likely to make mistakes, or to
suffer from the accidents which are bound to disable some of the
crew in a naval engagement. In some of the earlier battleships, in
which the large muzzle-loading guns were fitted, the charge was
raised to the gun-mouth by machinery worked by hand-power, and
after it had been rammed home by the crew the projectile was
inserted and rammed home also, obviously an impossible
arrangement when it was sought to introduce rifled explosive shells.
When guns were made too large to be withdrawn into the turrets to
be loaded, they were loaded by being depressed so that their
muzzles just entered a specially cut orifice in the deck in front of the
turret, and the loading crew were able to do their work in safety.
The drawback to this system was that the gun had to be brought
back to the same position for loading, then revolved with its turret
once more to the direction in which it was to be discharged, and
aimed afresh before its missile could be sent at its mark. The chief
advantage of this system was that the gun required a smaller, and
consequently less weighty, turret for the protection of its crew. The
introduction of the breech-loader enabled the guns to be loaded in
greater security, with greater speed, and without interfering with the
aim or training of the gun, thereby rendering a more rapid fire
possible. Ammunition hoists brought the charge and projectiles right
into the turret or barbette more expeditiously and with greater
precision than the best-drilled crew, and the men had simply to load
the weapon and fire it. The human element came in here, however,
in all its uncertainty, and, in spite of the greatest possible care,
accidents occurred. A charge or a shell was dropped or caused to
explode in some way, and disastrous were the results. Again the
necessity for the mechanical appliances caused them to be
forthcoming. The projectiles and charges for fighting purposes,
which naval strategists declared to be necessary in ever-increasing
size and weight, and the greater rapidity of fire which was
demanded, made it impossible for dependence on hand power to be
retained. After various experiments, both steam power and
electricity being tried, hydraulic power was introduced, and has
proved more suitable for the purpose than any other method. Now
the heaviest projectiles, weighing half a ton or more, are lifted with
the greatest ease and exactness to the required position by hydraulic
power, are pushed into their places by the same power which does a
like office for the charge of explosive, closes and fixes the breech,
and does not desist until its task is finished. In the latest appliances,
the machinery is made interlocking, so that, at least in the system
introduced lately by Messrs. Vickers, no one operation connected
with loading the gun can be performed until its immediate
predecessor has been accomplished. With a view to securing more
rapid and accurate fire this firm has introduced a modification of the
breech mechanism by what is known as a “pure couple.” The
hydraulic breech mechanisms just alluded to are used for the largest
guns, such as the 12-inch weapons, and have also been installed on
the Japanese ships for the 10-inch guns. The guns can be loaded at
the required angle of elevation, the advantage claimed for this being
that the sight can be kept on the target all the time.
The pressure to which guns are subjected when the charge explodes
is enormous. One reason why they do not burst is that they have not
time to do so. How rapidly the pressure arises against the sides of
the gun and then against the projectile to expel it from the bore,
was shown by experiments which Sir Andrew Noble conducted some
time ago with a 6-inch gun of 100 calibres length of bore. Practically
instantaneously with the ignition of the charge, that is to say in
about the four-hundredth part of a second, a maximum pressure
against the interior of the gun of 22 tons per square inch was
reached, but this declined to about 13 tons per square inch in about
the twelve-hundredth part of a second more. But by that time the
projectile had left the gun, and was rushing, faster than the eye
could follow it, towards its mark.
The English 12-inch (Mark IX.) gun consists of a steel tube, wound
practically from end to end with layer after layer of steel ribbon or
wire of very great tensile strength. This tube is known as the A tube,
and may be called the hollow heart of the gun. As much as a
hundred miles of wire will be used for one of these guns, and, of
course, for the newest guns, the 13-inch weapons, such as have
been placed in the latest super-Dreadnoughts, or the 15-inch guns
which it is said will be placed in the Dreadnoughts of 1912 or the
year after, the amount is a great deal more. The greatest thickness
of layers is placed round the breech of the gun, where the strain is
most severe, and each succeeding layer is wound on with increasing
tension, though to the ordinary observer the first layer seems to fit
so tightly that nothing could be tighter; but the gun makers know
better. All along the chase or fore part of the tube another tube,
called the B tube, is shrunk on to ensure that it shall be the tightest
fit possible. Then, over a portion of the B tube, and also over a
portion of the winding, that part of the gun known as the breech
jacket is shrunk. Apparently everything is so strongly fixed together
that nothing can cause the parts to separate, but the gun makers
know this is not so, for into this jacket a bush is screwed to prevent
any movement of the A tube, so far as the jacket is concerned. The
A tube itself contains a thin steel inner tube inserted from the breech
and fixed in position by the breech bush. It is this inmost tube which
has to bear the wear and tear caused by the firing, and suffers from
erosion, due to the gases generated by the explosion of the charges,
and has to be replaced by a new tube when it is no longer fit for
service.
THE 12-INCH GUNS OF H.M.S. “NEPTUNE.”
Photograph by Stephen Cribb, Southsea.
Gun makers have always responded cheerfully to the challenge to
penetrate the hardest armour of the time, and have succeeded in
producing weapons which are able to penetrate any armour now
carried. The problem at present is to increase the range at which the
penetrative power may be exercised. This can only be attained by
the increase in the length of the gun and the use of explosives
developing higher pressures in order to obtain higher velocities. The
British gun of 45 calibres and 9.2 inches diameter is about to be
superseded by one of 50 calibres, and the 40-calibre gun carried in
some of the latest ships is being superseded by the 12-inch gun of
45 calibres.
Twelve-inch guns of 45 calibres and 10-inch guns of 50 calibres have
been installed in the new ships, built at Elswick recently, for the
navies of Japan and one of the South American States.
Greater length means a greater muzzle energy, higher velocity, and
increased power of penetration. The latest guns, too, have shown
that the manufacturers have been considering the advisability of
effecting a certain amount of redistribution in the thicknesses of the
different parts of which the gun is built, notably the tubes, wires,
and jackets, and the adoption of a uniform type of rifling. The theory
was that the rifling should be increased as the grooves passed down
the tube, so that a gradually increasing twist should be given to the
projectile, but it is now held that no advantage is obtained by this
method, whatever may have been the case in the past, and that the
uniform rifling will give better results as to accuracy, muzzle energy
and velocity, and inflict no greater strain upon the gun or shorten
the “life” of its tube. The trials already made have shown that
uniform rifling for modern high velocity guns has resulted in giving
greater range and greater accuracy in shooting.
The war between France and Germany in 1871 brought machine
guns into notice. Great things were expected by the French of the
mitrailleuse, and some of the patriotic Paris newspapers at the time
published glowing prophecies of the number of Germans each gun
could be depended upon to kill in a few minutes, with the result
that, according to their calculations, there would be no Germans left
after a few days to continue the war. But events turned out
otherwise; the mitrailleuse failed, and the Germans were victorious.
This machine gun was very defective, and served to advertise by
contrast the Gatling, Nordenfeldt, Gardner, and Maxim automatic
guns, named after their respective inventors. Of these the Maxim
has been so improved that it is considered to be superior to any of
the others. The machine guns fire, according to the number of their
barrels and their calibre, from four hundred to six hundred or more
shots per minute, at a range equal to that of the best infantry rifle,
and can be sighted with deadly accuracy.
 CHAPTER X
WARSHIPS OF THE TWENTIETH CENTURY

Two classes of vessels stand forward prominently as the products of

the twentieth century. One is the Dreadnought, or all-big-gun one-
calibre type of battleship, the other is the submarine. The fact that
both are the result of the slow developments of centuries does not
render them the less the products of the last few years. Both are
untried in battle, and they are regarded as preparing the way for the
introduction respectively of surface and under-water warships, the
power of which is conjecturable only. Associated with both is the
torpedo. The dream of a submarine which shall travel faster than a
surface vessel of the same size is never likely to be realised,
provided that the surface vessel is built for speed also, for the simple
reason that the vessel travelling on the surface has only about a
third of its surface in connection with the water, whereas the
submarine has its whole surface submerged, and has three times as
much friction against the water to overcome. Hence, a lightly armed,
very fast vessel is regarded as likely to play an important role in the
navy of the not distant future, and finds its representative in the
destroyer of to-day.
The submarine and the destroyer owe their existence to the
battleship’s greatest enemy, the torpedo. All three vessels carry that
weapon, and any two of them may combine against the third. The
spar-torpedo was such an unsatisfactory weapon at best that it had
either to be abandoned, save under most unusual circumstances, or
improved out of all recognition. The possibilities of the torpedo itself
were so great as to compel its retention, and the startling
proposition was made that torpedoes should be fired by under-water
guns at a distant ship. The blowing up of the Albemarle in the
American Civil War showed what could be accomplished by a small
fast steam launch. If this could be done with a spar-torpedo, how
much more destructive would a torpedo be which could be directed
against a hostile vessel from a small fast launch which could
approach to within an effective range, and then turn and make a
rush for safety from the gun-fire which might be brought to bear in
her direction. Several torpedoes of one kind and another have been
designed, but they have all had to give way to the Whitehead
torpedo. The inventor is stated to have derived his idea in 1864 from
a fire-boat designed by an Austrian officer, who thought of loading a
small boat with explosives, to be fired by a pistol connected with
protruding spars which should strike the vessel attacked, while the
fire-boat itself was to be propelled by a screw driven by clockwork.
Whitehead improved on this by making his boat of iron, and able to
travel under water for a short distance at a speed of six knots. Its
explosive was a few pounds of dynamite. By 1870 he had improved
this to a torpedo having a speed of eight knots, a range of 400
yards, and a charge of 76 lb. of gun-cotton. The modern Whitehead
torpedo is a wonderful piece of mechanism, so wonderful that to the
ordinary spectator it seems almost endowed with intelligence. To see
it lying in its cradle ashore it is simply a beautifully polished smooth
steel cylinder. The fore end is blunt and with an innocent-looking
steel spike projecting from the centre of its rounded front, but it is
this spike which strikes the object aimed at and causes the ignition
of the explosive an inch or two behind it in the head of the cylinder.
The torpedo has a fine run aft for about a third of its length, and at
the after end are two vertical and two horizontal rudders, and two
screws revolving in opposite directions. It is some time since
compressed air was adopted as the motive power. The efficacy of
the compressed cold air has been increased to an extraordinary
degree by the introduction of an apparatus for heating the air. A
torpedo fitted with a heater can travel over double the distance at a
given speed and the same expenditure of air that a torpedo without
a heater can. “If a torpedo be run for the same distance with a
heater as a similar torpedo without a heater, a 100 per cent. gain of
power would be realised by increasing the speed, and at a range of
2,000 yards this increase is from 26 knots to 33.5 knots, the highest
which has ever been realised with a torpedo over a range of 2,000
yards.”[56] The newest form of torpedo is that in which hot air
instead of cold air is used.

A TORPEDO. DISCHARGED FROM A DESTROYER, TRAVELLING BY ITS OWN

ENGINES TOWARDS AN ARMOURED BATTLESHIP.
In the case of the latest pattern 18-inch Whitehead torpedo, a speed
of 28 knots for 2,000 yards, or 34½ knots for 1,000 yards when
using the ordinary cold air, has been obtained. For longer distances,
such as 3,000 and 4,000 yards, the speed is proportionately less,
falling to about 20 knots for the 4,000 yards range. When using the
heater, “the same torpedo maintains a speed of over 40 knots for
1,000 yards, 37 knots for 2,000 yards, 30 knots for 3,000 yards, and
27 knots for 4,000 yards. The speeds are quite extraordinary, as they
represent exactly 100 per cent. more power from the engines, and it
is further pointed out that the heater is extremely small, simple, and
burns any ordinary lamp oil, and is capable of being fitted to
practically any existing type of torpedo. The Admiralty has never
been slow to adopt improvements in the torpedo armament of the
fleet, and for years Great Britain has led in the matter of submarine
tubes for firing torpedoes.”[57]
The explosive carried, usually gun-cotton, weighs 200 lb. An
ingenious arrangement of gyroscope, valve and pendulum causes
the torpedo to remain at the required depth, and to return to it if it
should be diverted from it.
There have been several attempts to solve the problem of directing
torpedoes by means of wireless telegraphy. The great drawback,
however, has been that the receiving apparatus which the torpedo
had to carry was outside it and must appear above the surface of
the water, and was, therefore, liable to be sighted and shot away.
The same objection has been raised to the equipment of
submersible torpedo boats with “wireless.” Of recent years a torpedo
has been contrived which the inventors claim can be directed by
wireless telegraphy, and as there seems no reason why the principle
applied cannot be improved and extended to submarines and
submersibles, the utility of these under-water craft may be
augmented to an inconceivable degree. The “Actinaut” is the name
of the torpedo, and the jet of salt water which it ejects serves not
only to indicate the position of the torpedo, but is an “indestructible
receiver for the electric waves.”[58]
SUBMARINES
Submarine warfare and exploration are no new ideas, but in the past
as in the present, the great difficulties have been to ensure the
provision of sufficient power for rapid propulsion, and to keep the air
pure enough for the crew to breathe for a long journey under water.
Efforts at submarine warfare seemed to have been made many
centuries ago, but none of the contrivances then used had any
fighting value, and were more interesting as freaks than in any other
capacity. It is unnecessary to attempt even to summarise all the
schemes which early and late inventors evolved to render possible
under-water attacks upon an enemy’s fleet. The problem was as
fascinating seven or eight hundred years ago as at the present time.
Most of the alleged mediæval inventions probably never got beyond
the imaginative or paper stage, and however wonderful the
inventors’ theories or written descriptions may have been, even
when embellished with weird illustrations showing the contrivance at
the bottom of the sea, it is not recorded that any of the submarines
achieved any actual success whatever. One of the earliest submarine
descents which is supposed to have been made was that of
Alexander the Great, who is mendaciously represented to have been
lowered to the bottom of the sea in a glass barrel, too small for him
to stand up in, with a smoky oil lamp or two, and an animal which
might have been a dog or a cat (it is difficult to say which the artist
intended) for company, the circumstances being such that he could
not have failed to be asphyxiated in a very short space of time. It
appears, too, that he wore a crown and his royal robes on that
occasion, so that he evidently visited Neptune in state.
As early as the year 1190 a man is said to have constructed a diving
boat of leather. Numerous suggestions were made to enable men to
go under water in order to bore holes through the sides of an
enemy’s ships, which, considering the thickness of the planks, must
have been a somewhat laborious undertaking. The Barbary corsairs
are stated to have used some sort of submarine explosive against
the ships of their opponents, but this explosive or combustible was
most likely Greek fire.
William Bourne, who served in Queen Elizabeth’s navy, is said to
have had a submarine boat which could have been made useful, but
there are no records in existence to show that the experiment ever
took place. An interesting feature of the suggestion was that he
proposed to sink or raise the vessel by admitting and expelling
water. About the middle of the seventeenth century, a Dutchman is
said to have invented a boat which travelled under water from
Westminster to Greenwich, and it is even asserted that it carried
passengers, in addition to twelve men at the oars, and that the air in
the interior of this vessel was purified by a “chymicall liquor.” A Royal
Warrant, dated June 29th, 1626, ordered the delivery of “360
fforged iron cases with fireworkes, 50 water mynes, 290 water
petards, and two boats to conduct them under water, for H.M.
special service to goe with the fleete.”
Two worthy friars of the Order of Minims turned from their spiritual
contemplations to devise a submarine, and they appear to have
been the first to suggest that it should be built with both ends alike,
and pointed so that it could move either end foremost; it was to be
given wheels to move along the sea floor, and to be propelled by
oars. It was even to carry guns, to be fired through holes in the side.
Another inventor in the seventeenth century waxed so enthusiastic
over his submarine, that, besides pointing out its advantages in all
manner of possible and impossible circumstances in time of war, he
represented that it should be used for submarine hunting parties,
who might have great sport shooting the fish as the boat went
along. A Frenchman named De Son, built in 1663, at Rotterdam, a
vessel about 72 feet in length, circular, and running to a cone at
each end, by which he promised, but did not perform, great things.
A few years later a boat was designed by the Abbé Borelli to travel
under water, his idea being that the boat should rise or sink
according to the amount of water admitted through holes in the hull
to skins provided for the purpose. Bushnell, an American inventor,
had a vessel he called the Turtle, which seems to have been shaped
more like an egg. It floated at the surface of the water with the
pointed end downward, and had a small screw propeller, jutting out
at one side. On the opposite side of the body of the vessel was a
magazine containing about 150 lb. of powder. This magazine was
detachable from the inside of the ship, and was fastened by a rope
to a powerful screw which the inventor intended to drive into the
hold of the opposing warship, and then make the best of his way to
safety, leaving the magazine attached to the screw. He was more
anxious to find someone to make the attack on the British ships than
to do it himself.
THE “HOLLAND” SUBMARINE.
 THE “GOUBET” SUBMARINE.
Probably the first really successfully designed submarine was that of
Robert Fulton, the American, who submitted his plans of the Nautilus
to the French Directory in 1797. His first boat was tried
experimentally on the Seine in 1800. His next boat had iron ribs, and
was copper-sheathed, and was shaped like a very long egg; it was
fitted with a small hinged mast and a bat-wing sail, so that it could
be used for surface navigation if necessary. He made a few descents
in the Seine with success, but at no time stayed under water more
than twenty minutes. Still, the experiment was held to be sufficiently
promising for the boat to be tried at Brest, where he failed in his
attempts to do any damage to the English ships of war. A preliminary
experiment, before that against the English, was successful. On the
British side, a so-called catamaran was contrived, by which it was
intended to blow up the French ships at Boulogne. The catamaran
consisted of a framework in which one man should sit immersed up
to his arm-pits, and should paddle himself along under cover of
darkness, and tow a floating box of powder to be exploded by
clockwork in so many minutes, this affording him time to paddle
away in safety. This floating mine or torpedo was to be fastened
under the counter of the wooden man-of-war. Fulton is supposed to
have had a hand in this, but the attack when it was made ended in
an absolute failure, the catamarans making the attack being mostly
blown up, while those vessels against which it was directed suffered
no harm whatever. Upon his return to America, Fulton constructed a
submersible called the Mute, which was to fire “Colombiads,” or
under-water guns. Her inventor died during the course of her trials,
which, however, did not reveal anything to show that the boat would
have been other than an absolute failure as a warship. Though the
British and the French naval authorities were strongly opposed to
submarine warfare for a variety of reasons, American inventors
continued their experiments. A diving boat passed under the British
74-gun ship Ramilies three times, and at last got close under the
vessel, and tried to fasten a clockwork mine to it by means of a
screw after the plan Bushnell adopted, but the screw broke. Other
attempts were made, and as there were then no means of
discovering when a submarine attack was intended, the British
officer in command placed a number of American prisoners on board
his ships and notified the American Government that if any of the
ships were blown up, the American prisoners as well as the crew
would go with it. What was known as an American torpedo-pilot was
really a large boat covered from end to end with a curved iron deck,
above which was a small pilot-house or look-out chamber, which also
served as a ventilator; the boat was propelled by paddle-wheels, and
travelled so low in the water as to be practically awash, and towed a
mine behind her. Some of these mines or torpedoes contained as
much as six barrels of gunpowder. An Englishman named Johnson
designed a submarine or diving boat in which he was to have
rescued the ex-Emperor Napoleon from Saint Helena, but Napoleon’s
death intervened.
Various inventions were tried at one time and another, and the
misfortune is that in many cases the first experiment proved to be
the last, for the contrivances were the inventors’ coffins. Some of
these fatalities were unquestionably due to the submarines being
made to descend too low, when they gave way under the enormous
pressure of the water.
The first effective submarine designed for war purposes was a cigar-
shaped boat constructed by an American shoemaker named Phillips.
The boat was built of iron and carried a colombiad, which could be
fired through a port in the iron plating, and also a couple of
torpedoes or mines. Numerous experiments with this boat were
successful, but Phillips descended once too often.
A German named Bauer invented a diving boat, which scared the
Danes badly in the war between Denmark and Prussia in 1848-50. At
its second voyage it descended too far, but Bauer and his two
companions escaped through the scuttle. Thirty-six years later the
boat was fished up, and is now in the Naval Museum at Berlin.
Failing to get any more money in Germany, and being suddenly
dropped in Austria after the Court and Government had given him
much encouragement, he came to England, where the Prince
Consort became his patron. He designed a submarine, but his plans
were altered by some of the leading engineers, ship-builders, and
statesmen, who, whatever their skill in surface navigation and
diplomacy may have been, knew next to nothing of submarine
navigation. The consequence was that his boat as altered to suit
their views was a failure, and the discredit was cast upon Bauer. Still
believing that he was right, he betook himself to the United States,
but the American Government, probably finding that the local supply
of inventors and submarines was a long way in excess of the
demand, turned a deaf ear to all his suggestions. He went back to
Europe, and the Russian authorities authorised him to construct his
Sea Devil which, after numerous experiments, was sunk under
circumstances never fully explained. He managed, however, in one
of his trips with her, to enter Sebastopol harbour, to the great dismay
of a Russian sentry who, seeing him gliding by night in a standing
position along the surface of the water, took him for a ghost,
dropped his rifle, and ran. The loss of his boat has been attributed to
an order of the Russian Government that it should be deliberately
sunk to get it out of the way.
The French boat Plongeur, launched at Rochefort in 1863, was cigar-
shaped with the upper side flattened, and was driven by an engine
deriving its power from compressed air. She was too long for her
width to be of much use, and had no stability.
The first Confederate David has already been alluded to, and the
Southerners were so pleased with the success that they ordered
another. In five experiments the second boat sank five times, and
drowned altogether thirty-five men. Before she went down the next
time it was determined that she should attack one of the Federal
warships. She was directed against the Housatonic, then one of the
fleet blockading Charleston. The David was being navigated along
the surface of the water instead of beneath, and her scuttles were
open. The little vessel’s spar-torpedo struck the warship in line with
the magazine. Nothing was ever seen of the David afterwards, nor of
her crew. The Housatonic went down, but nearly all on board were
saved.
Though the Davids proved as destructive to themselves as to the
enemy, they demonstrated as nothing else could have done that a
small boat approaching noiselessly under cover of darkness could
destroy by means of mines or torpedoes a hostile ship.
The most inappropriately named submarine was the Resurgam,
invented by an English clergyman named Garrett, for during an
experiment off the Welsh coast, in 1879, it never returned to the
surface after diving.
The first submarine as a locomotive engine of warfare was invented
by John P. Holland, and it is to his boat, known as the Holland the
First, that all the modern submarines and submersibles owe their
parentage. It was a one-man affair, just big enough to allow him to
sit down in it and work with his feet the paddle arrangement that
turned the propeller shaft. It carried five small torpedoes, which
could be placed outside through a chamber in the dome or conning
tower, and were discharged by electricity. This marked the
introduction of one of the means which made modern submarine
vessels possible, for until it was discovered how to use electricity in
this way, a clockwork arrangement was the only reliable method by
which a torpedo could be exploded. The application of electricity
rendered it possible to eject the torpedo a considerable distance
from the ship, comparatively speaking, and by means of connecting
wires discharge it when thought advisable. This vessel was only 16
feet in length. The second Holland, built in 1877, was only 10 feet
long. A small gas or oil engine was introduced to drive the screw
propeller of a third submarine built by Holland two years later. This
boat was 31 feet long, 6 feet in diameter, and cigar-shaped. The
experiments he conducted with it showed that it was impossible to
depend on ordinary vision when travelling in any depth of water on
account of the darkness. She carried a pneumatic gun discharging a
9-inch projectile, the range of the weapon being 130 feet. It was not
until 1884 that Holland’s fourth boat appeared. In the following year
he tried again with a rather larger vessel, 40 feet long and 7 feet in
diameter, often called the Zalinski, because it was fitted with
pneumatic guns of the type invented by an American army
lieutenant of that name. Again there was a long silence in regard to
Holland, until he submitted the designs of his seventh boat—the
sixth was planned but never built—to the American Government,
which had decided to adopt the under-water torpedo boat as a
definite part of the navy. The Holland the Seventh, as designed and
launched, was to be 85 feet long, of 100 tons displacement, and to
carry three torpedo tubes and two steel armoured gun turrets. The
Holland Company had meanwhile designed a vessel they considered
much superior, and the Government consented to adopt it in place of
No. 7. She was something like a porpoise, and above a semi-
cylindrical hull carried a flat-sided superstructure, which has been
one of the distinguishing features of the Holland type of submarines
from that day to this. Her aerial torpedo was to carry 100 lb. of gun-
cotton. After discharging it she was to dive, approach the vessel she
sought to destroy, and fire her Whitehead torpedo. If this missed,
she was to go under the vessel and discharge her after submarine
gun immediately after passing underneath. The Holland was altered
and improved, and when the French announced that they had
become possessed of types of submarines and submersibles upon
which dependence could be placed in time of war for destroying an
enemy’s vessels, the British Admiralty abandoned the attitude of
scepticism and watchfulness combined it had maintained for so long,
and ordered five boats from the Holland Company for experimental
purposes. The experiments which were made with these boats
resulted in the Government becoming possessors of what were
known as the A class of submarine.

BRITISH SUBMARINE A13.

Photograph by E. Sankey, Barrow.
 BRITISH SUBMARINE C22.
Photograph by E. Sankey, Barrow.
Very little has been revealed of the details of modern submarines,
for if there is one subject more than another upon which the
admiralties of the world are agreed, it is that they should not let one
another know the secrets of the mechanism of these under-water
craft. That, at least, is the theory, but it is very questionable if all the
governments are not quite well informed as to the constructional
details of each other’s submarines, and probably know almost as
much about them as they do about their own. The experiments at
Barrow and elsewhere with the Holland boats and their successors
have been responsible for the introduction of several classes of
submarines, every one of which embodies improvements upon its
predecessor. The five boats built for Great Britain at Barrow, in 1902,
were 63 feet 4 inches in length by 11 feet 9 inches breadth, by 12
Welcome to our website – the ideal destination for book lovers and
knowledge seekers. With a mission to inspire endlessly, we offer a
vast collection of books, ranging from classic literary works to
specialized publications, self-development books, and children's
literature. Each book is a new journey of discovery, expanding
knowledge and enriching the soul of the reade

Our website is not just a platform for buying books, but a bridge
connecting readers to the timeless values of culture and wisdom. With
an elegant, user-friendly interface and an intelligent search system,
we are committed to providing a quick and convenient shopping
experience. Additionally, our special promotions and home delivery
services ensure that you save time and fully enjoy the joy of reading.

Let us accompany you on the journey of exploring knowledge and

personal growth!

ebookmass.com