International Business (The Challenges of Globalization) (10th Edition) Wild

GLOBAL
EDITION
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INTERNATIONAL BUSINESS
The Challenges of Globalization
TENTH EDITION

John J. Wild • Kenneth L. Wild

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 International Business (The Challenges of Globalization) (10th Edition) Wild

International
TENTH EDITION
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GLOBAL EDITION

Business The Challenges

of Globalization

John J. Wild
University of Wisconsin, Madison

Kenneth L. Wild
University of London, England

Harlow, England • London • New York • Boston • San Francisco • Toronto • Sydney • Dubai • Singapore • Hong Kong
Tokyo • Seoul • Taipei • New Delhi • Cape Town • São Paulo • Mexico City • Madrid • Amsterdam • Munich • Paris • Milan

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 International Business (The Challenges of Globalization) (10th Edition) Wild
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 International Business (The Challenges of Globalization) (10th Edition) Wild

Brief Contents
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Preface 16
About the Authors 25

PART 1 Global Business Environment 26

Chapter 1 Globalization Today 26
Chapter 2 Ethics, Social Responsibility, and Sustainability 66

PART 2 National Business Environment 94

Chapter 3 Cross-Cultural Business 94
Chapter 4 Political, Economic, and Legal Systems 128
Chapter 5 Economic Development of Nations 152

PART 3 International Trade and Investment 174

Chapter 6 International Trade Theory 174
Chapter 7 Governments and Trade 198
Chapter 8 Foreign Direct Investment 220
Chapter 9 Regional Economic Integration 242

PART 4 International Financial System 266

Chapter 10 International Financial Markets 266
Chapter 11 International Monetary System 284

PART 5 International Business Management 304

Chapter 12 International Strategy and Organization 304
Chapter 13 Analyzing International Opportunities 324
Chapter 14 Selecting and Managing Entry Modes 346
Chapter 15 Developing and Marketing Products 368
Chapter 16 Managing International Operations 386
Chapter 17 Hiring and Managing Employees 404

Endnotes 422
Glossary 435
Name Index 443
Subject Index 445

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 International Business (The Challenges of Globalization) (10th Edition) Wild

Contents
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Preface 16
About the Authors 25

PART 1 Global Business Environment 26

Chapter 1 Globalization Today 26
Apple’s Global iMpact 27
1.1 Introduction and Key Players 28
1.1.1 Key Players in International Business 30
• GLOBAL MANAGER: The Keys to Global Success 31
1.2 What is Globalization? 31
1.2.1 Evolution of Globalization 33
1.2.2 Globalization of Markets 34
1.2.3 Globalization of Production 38
1.3 Drivers of Globalization 39
1.3.1 Falling Barriers to Trade and Investment 39
1.3.2 Global E-commerce 41
1.3.3 Digital Transformation 42
1.3.4 Communication and Transportation 43
1.4 Globalization Debate 45
1.4.1 Globalization Harms Jobs and Wages 45
1.4.2 Globalization Improves Jobs and Wages 45
1.4.3 Debate about Income Inequality 46
1.4.4 Globalization and Culture 48
• CULTURE INSIGHTS: The Culture Debate 48
1.4.5 Globalization and National Sovereignty 49
1.4.6 Globalization and the Environment 49
1.5 Workplace Skills 50
1.5.1 Skills for Your Career 50
1.5.2 The Global Business Environment 52
Chapter Summary 53 • Key Terms 54 • Talk About It 55
Teaming Up 55 • Ethical Challenge 55 • Writing Assignments 55
• PRACTICING INTERNATIONAL MANAGEMENT CASE 56
Appendix World Atlas 57
Chapter 2 Ethics, Social Responsibility, and Sustainability 66
Tony’s Chocolonely 67
2.1 Ethics Theories 69
2.1.1 Utilitarianism 70
2.1.2 Rights Theory 70
2.1.3 Theory of Justice 71
2.1.4 Cultural Relativism 72
2.2 Business Ethics 72
2.2.1 Resolving Ethical Dilemmas 73
2.2.2 Codes of Ethics 74
2.2.3 Sources of Unethical Behavior 75

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2.3 Corporate Social Responsibility 76

2.3.1 Efficiency and Profits as Social Responsibility 76
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2.3.2 Business Responsibilities to Society 77
• CULTURE INSIGHTS: Speaking in Fewer Tongues 78
2.3.3 Stakeholder Theory 79
2.4 Sustainability 80
2.4.1 Carbon Footprints and Climate Change 81
• GLOBAL MANAGER: Three Sustainable Strategies for Three Markets 82
2.4.2 A Circular Economy 82
2.4.3 Greenwashing 83
2.5 Additional Key Global Issues 85
2.5.1 Bribery and Corruption 85
2.5.2 Working Conditions and Human Rights 86
2.5.3 Diversity, Equity, and Inclusion 87
Chapter Summary 90 • Key Terms 91 • Talk About It 92
Teaming Up 92 • Ethical Challenge 92 • Writing Assignments 92
• PRACTICING INTERNATIONAL MANAGEMENT CASE 93

PART 2 National Business Environment 94

Chapter 3 Cross-Cultural Business 94
Vans: Off The Wall 95
3.1 What Is Culture? 96
3.1.1 Cross-Cultural Literacy 96
3.1.2 National Culture 98
3.1.3 Subcultures 98
3.1.4 Physical Environment 99
3.1.5 Material Culture 100
3.2 Values, Attitudes, and Behavior 100
3.2.1 Values 100
3.2.2 Attitudes 100
3.2.3 Aesthetics 101
3.2.4 Behaviors 101
• CULTURE INSIGHTS: A Globetrotter’s Guide to Meetings 102
3.3 Social Structure and Education 103
3.3.1 Social Group Associations 103
3.3.2 Social Status 104
3.3.3 Social Mobility 105
3.3.4 Education 108
• GLOBAL MANAGER: Social Flexibility 109
3.4 Religion 109
3.4.1 Christianity 109
3.4.2 Islam 112
3.4.3 Hinduism 112
3.4.4 Buddhism 114
3.4.5 Judaism 114
3.4.6 Confucianism 115
3.5 Personal Communication 115
3.5.1 Spoken and Written Language 115
3.5.2 Body Language 117
3.6 Culture in the Global Workplace 118
3.6.1 Perception of Time 118
3.6.2 View of Work 118

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3.6.3 Cultural Change 119

3.6.4 Kluckhohn-Strodtbeck Framework 120
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3.6.5 Hofstede Framework 121
Chapter Summary 123 • Key Terms 125 • Talk About It 125
Teaming Up 125 • Ethical Challenge 125 • Writing Assignments 126
• PRACTICING INTERNATIONAL MANAGEMENT CASE 127
Chapter 4 Political, Economic, and Legal Systems 128
TikTok Rocks 129
4.1 Political Systems 130
4.1.1 Totalitarianism 131
• GLOBAL MANAGER: From Civil War to Civil Society 132
4.1.2 Democracy 134
4.2 Economic Systems 135
4.2.1 Centrally Planned Economy 136
4.2.2 Mixed Economy 137
4.2.3 Market Economy 138
4.3 Legal Systems 142
4.3.1 Common Law 143
4.3.2 Civil Law 143
• CULTURE INSIGHTS: Playing by the Rules 144
4.3.3 Theocratic Law 144
4.4 Global Legal Issues 144
4.4.1 Intellectual Property 145
4.4.2 Product Safety and Liability 147
4.4.3 Antitrust Regulations 148
4.4.4 Taxation 148
Chapter Summary 149 • Key Terms 149 • Talk About It 150
Teaming Up 150 • Ethical Challenge 150 • Writing Assignments 150
• PRACTICING INTERNATIONAL MANAGEMENT CASE 151
Chapter 5 Economic Development of Nations 152
Paytm in India 153
5.1 Economic Development 154
5.1.1 Classifying Countries 154
5.1.2 National Production 156
5.1.3 Purchasing Power Parity 157
5.1.4 Human Development 157
5.2 Political Risk 160
5.2.1 Conflict and Violence 160
• GLOBAL MANAGER: Your Global Security Checklist 161
5.2.2 Property Seizure 161
5.2.3 Government Policies 162
5.3 Managing Political Risk 163
5.3.1 Adaptation 163
5.3.2 Information Gathering 164
5.3.3 Political Influence 164
5.3.4 International Relations 164
5.3.5 The United Nations 165
5.4 Economic Transition 166
5.4.1 Transition obstacles 166
5.4.2 China’s Economic Transition 167
• CULTURE INSIGHTS: Guidelines for Good Guanxi 168
5.4.3 Russia’s Economic Transition 169

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Chapter Summary 170 • Key Terms 171 • Talk About It 171

Teaming Up 171 • Ethical Challenge 172
• Writing Assignments 172
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• PRACTICING INTERNATIONAL MANAGEMENT CASE 173

PART 3 International Trade and Investment 174

Chapter 6 International Trade Theory 174
Tesla Charges Ahead 175
6.1 The Nature of International Trade 176
6.1.1 Benefits of Trade 176
6.1.2 Economic Importance of Trade 177
6.1.3 Top Trading Nations 177
6.1.4 Global Trade and output 180
6.1.5 Trade Interdependence 180
• CULTURE INSIGHTS: Business Culture in the Pacific Rim 181
6.2 Mercantilism 181
6.2.1 How Mercantilism Worked 182
6.2.2 Flaws of Mercantilism 182
6.3 Theories of Absolute and Comparative Advantage 183
6.3.1 Absolute Advantage 183
6.3.2 Comparative Advantage 185
6.4 Factor Proportions Theory 187
6.4.1 Labor Versus Land and Capital Equipment 187
6.4.2 Evidence on Factor Proportions Theory: The Leontief Paradox 188
6.5 International Product Life Cycle 188
6.5.1 Stages of the Product Life Cycle 188
6.5.2 Limitations of the Theory 189
• GLOBAL MANAGER: Five Fulfillment Mistakes 190
6.6 New Trade Theory 190
6.6.1 First-Mover Advantage 190
6.7 National Competitive Advantage 191
6.7.1 Factor Conditions 191
6.7.2 Demand Conditions 192
6.7.3 Related and Supporting Industries 193
6.7.4 Firm Strategy, Structure, and Rivalry 193
6.7.5 Government and Chance 193
Chapter Summary 194 • Key Terms 195 • Talk About It 195
Teaming Up 195 • Ethical Challenge 196 • Writing Assignments 196
• PRACTICING INTERNATIONAL MANAGEMENT CASE 197
Chapter 7 Governments and Trade 198
Netflix Reinvents TV 199
7.1 Why Do Governments Intervene in Trade? 200
7.1.1 Political Motives 200
• CULTURE INSIGHTS: A Culture of Business Security 202
7.1.2 Economic Motives 203
7.1.3 Cultural Motives 204
7.2 Instruments of Trade Promotion 205
7.2.1 Subsidies 205
7.2.2 Export Assistance 206
• GLOBAL MANAGER: Experts in Exporting 206
7.2.3 Foreign Trade Zones 207
7.2.4 Special Government Agencies 207

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7.3 Instruments of Trade Restriction 208

7.3.1 Tariffs 208
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7.3.2 Quotas 209
7.3.3 other Nontariff Barriers 210
7.4 Global Trading System 211
7.4.1 General Agreement on Tariffs and Trade (GATT) 212
7.4.2 World Trade organization (WTo) 213
Chapter Summary 216 • Key Terms 217 • Talk About It 217
Teaming Up 217 • Ethical Challenge 217 • Writing Assignments 218
• PRACTICING INTERNATIONAL MANAGEMENT CASE 219
Chapter 8 Foreign Direct Investment 220
Spotify for Every Mood 221
8.1 The Nature of Foreign Direct Investment 222
8.1.1 Forms of Foreign Direct Investment 222
• CULTURE INSIGHTS: Cross-Cultural Mergers and Acquisitions 223
8.1.2 Worldwide Flows of FDI 223
8.1.3 Recipients and Sources of FDI 224
8.2 Theories of Foreign Direct Investment 226
8.2.1 International Product Life Cycle 226
8.2.2 Market Imperfections 227
8.2.3 Eclectic Theory 228
8.2.4 Market Power 228
8.3 Management Issues and Foreign Direct Investment 228
8.3.1 Control 228
8.3.2 Purchase-or-Build Decision 230
8.3.3 Production Costs 230
• GLOBAL MANAGER: Surprises of Investing Abroad 230
8.3.4 Customer Knowledge 232
8.3.5 Following Clients 232
8.3.6 Following Rivals 232
8.4 Why Governments Intervene in FDI 233
8.4.1 Balance of Payments 233
8.4.2 Reasons for Intervention by the Host Country 233
8.4.3 Reasons for Intervention by the Home Country 234
8.5 Government Policy Instruments and FDI 235
8.5.1 Host Countries: Promotion 235
8.5.2 Host Countries: Restriction 237
8.5.3 Home Countries: Promotion 237
8.5.4 Home Countries: Restriction 237
Chapter Summary 238 • Key Terms 239 • Talk About It 239
Teaming Up 239 • Ethical Challenge 239 • Writing Assignments 240
• PRACTICING INTERNATIONAL MANAGEMENT CASE 241
Chapter 9 Regional Economic Integration 242
Nestlé’s Global Recipe 243
9.1 The Nature of Regional Integration Efforts 244
9.1.1 Levels of Regional Integration 244
9.1.2 The Case for Regional Integration 245
9.1.3 The Case Against Regional Integration 247
9.2 Integration in Europe 249
9.2.1 European Union 249
• CULTURE INSIGHTS: Doing Business in the Czech Republic 253
9.2.2 European Free Trade Association (EFTA) 255

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