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Simon Collinson Rajneesh Narula Alan M. Rugman

INTERNATIONAL
BUSINESS 7th Edition
International Business
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International
Business
Simon Collinson
7th Edition

University of Birmingham

Rajneesh Narula
Henley Business School, the University of Reading

Alan M. Rugman
Henley Business School, the University of Reading

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First published by McGraw-Hill Inc. 1995

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Seventh edition 2017 (print and electronic)

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Print edition typeset in 10/12.5 pt Times LT Pro by iEnergizer Aptara® Ltd

Printed in Slovakia by Neografia
Contents in Brief

List of Figures and Tables xv

Preface xviii
About the Authors xx
Guide to the Case Studies xxiii
Publisher’s Acknowledgments xxx
Frameworks for this Book: Our Approach to the Study of International Business xxxii

Part One THE WORLD OF INTERNATIONAL BUSINESS

Chapter 1 An Introduction to International Business 3
Chapter 2 General Frameworks in International Business 40
Chapter 3 Multinational Enterprises, Innovation, and Competitiveness 90

Part Two THE ENVIRONMENT OF INTERNATIONAL

BUSINESS
Chapter 4 International Politics 123
Chapter 5 International Culture 152
Chapter 6 International Trade 183
Chapter 7 International Financial Markets and Institutions 218

Part Three INTERNATIONAL BUSINESS STRATEGIES

Chapter 8 Multinational Strategy 255
Chapter 9 Organizing Strategy 290
Chapter 10 Corporate Strategy and National Competitiveness 318
Chapter 11 Multinational Enterprises as Responsible Stakeholders 349

Part Four FUNCTIONAL AREA STRATEGIES

Chapter 12 Production Strategy 381
Chapter 13 Marketing Strategy 416
Chapter 14 Human Resource Management Strategy 447
Chapter 15 Political Risk and Negotiation Strategy 477
Chapter 16 International Financial Management 511

Part Five REGIONAL STRATEGIES

Chapter 17 European Union 549
Chapter 18 Japan 582
Chapter 19 North America 619
Chapter 20 Emerging Economies 648
Chapter 21 China 682

Glossary 713
Index 723

v
Contents in Detail

List of Figures and Tables xv Modularization, outsourcing, and value chains 29

Preface xviii The continuing importance of the state-owned
About the Authors xx enterprise 29
Guide to the Case Studies xxiii Emerging economy MNEs—significant but
Publisher’s Acknowledgments xxx exaggerated 30
Frameworks for this Book: Our Approach Dominance of the triad continues 31
to the Study of International Business xxxii Small and medium-sized enterprises 32
The fragmented firm: global value chains and
production networks 33
Part One Key points 35
Key terms 36
The World of
Notes 36
International Business Bibliography 37
Appendix: The largest importers and
Chapter 1 exporters 38
An Introduction to International
Business 3 Chapter 2
Objectives of the chapter 3 General Frameworks
Introduction 5 in International Business 40
What is international business? 5
Objectives of the chapter 40
Globalization 6
The outcomes of globalization 6 ■ Active Learning Case
Understanding interdependence in globalization 8 Starbucks: a global “coffee culture” 42
Regional integration 9 Introduction 43
Mapping globalization 10 Firm-specific assets/ownership advantages 43
Technology and innovation 11 A classification of O advantages 44
New technologies 12 Location advantages/country-specific assets 46
The knowledge-intensive, multi-technology firm 13 A classification of L advantages 47
Socio-political developments 13 ■ International Business Strategy in Action
What are institutions? 14 US manufacturing: from China to Mexico 49
Institutions and supranational agreements 15 Internalization advantages 50
Globalization and liberalization 16 The eclectic paradigm: putting it all together 51
Multinational enterprises 17 Strategic management of MNEs: an introduction 52
Proto-globalization and the MNE in historical Steps in the strategic management process 52
context 19 A framework for global strategies:
The industrial revolutions and the growth the FSA–CSA matrix 53
of private firms 20 The FSA–CSA matrix 54
Foreign direct investment 21 Why firms become MNEs 56
Measuring FDI and MNE activity 22 How do firms engage in international activities? 59
MNEs before World War II 22 Entry modes 62
The rise of the modern MNE 23 Non-equity entry modes 62
International business in the modern era 25 Equity entry modes 63
1950–90: the rise of the triad 25 Collaborative agreements/strategic alliances 66
1990–2014: the rise of new players and International new ventures and “born global”
forms of activity 26 firms 68

vi
 Contents in detail vii

The international activities of SMEs 69

Part Two
The practical challenges for internationalizing
SMEs 70 The Environment of
■ International Business Strategy in Action International Business
Worrying times for Singapore’s SMEs 71
How do SME managers know which markets Chapter 4
to enter? 72 International Politics 123
Modes of entry and adaptation for success
in foreign markets 74 Objectives of the chapter 123
Key points 75 ■ Active Learning Case
Key term 76 How risky is foreign investment in Russia? 124
■ Real Cases Introduction 125
Toys “Я” Us 76 Political ideologies and economics 126
Tesco at home and abroad 78 Political systems 126
Notes 79 Economic systems 127
Bibliography 81 Government control of assets 128
Appendix: The largest global MNEs 82 Privatization in action 128
■ International Business Strategy in Action
Chapter 3 Greece: third (bailout) time lucky 129
Multinational Enterprises, Government–business cooperation 130
Innovation, and Competitiveness 90 Japan and EU assistance 130
US competitiveness 131
Objectives of the chapter 90 Economic integration 132
■ Active Learning Case Trade creation and trade diversion 132
GE Healthcare in India: locally driven innovation 91 Levels of economic integration 133
Introduction 92 Economic integration: an overall perspective 134
Trends in innovation at the firm and country level 93 Ethics, environment, MNEs, and the civil society 135
The resource-based view (RBV) and the VRIO ■ International Business Strategy in Action
framework 97 Non-governmental organizations
Resources and capabilities 97 and political power 136
The VRIO framework 98 The European Union (EU) 138
Dynamic capabilities 101 Other examples of economic integration 141
Quick learning/incremental learning 101 Economic integration and strategic management 142
Integration of new assets/radical learning 102 Strategic alliances and acquisitions 142
Modification and transformation of new assets 102 Localization of business operations 143
Dynamic capabilities and small firms 102 Key points 145
■ International Business Strategy in Action Key terms 146
Spreadshirt: open innovation 103 Review and discussion questions 146
Connecting FSAs to CSAs 104 ■ Real Cases
Systems of innovation 105 How environmental regulations
International dimensions of innovation 107 can be used as trade barriers 147
The location of innovation activities in the MNE 109 Embraer versus Bombardier 148
■ International Business Strategy in Action Notes 150
Innovation networks at IBM 112 Bibliography 150
The innovative MNE as a differentiated network 114
Key points 115
Chapter 5
Key terms 115
International Culture 152
■ Real Cases
Canon Group 115 Objectives of the chapter 152
R&D at Hewlett-Packard 117 ■ Active Learning Case
Notes 118 Cultures clash as big pharma gets bigger 153
Bibliography 119 Introduction 154
 viii Contents in detail

What is culture? 155 ■ International Business Strategy in Action

The importance of culture in different business Microsoft shows the world is not flat 192
contexts 156 Barriers to trade 194
Culture has always been important 158 Reasons for trade barriers 194
■ International Business Strategy in Action Commonly used barriers 194
McDonald’s 158 Tariffs 196
National stereotypes and key dimensions ■ International Business Strategy in Action
of culture 159 Boeing versus Airbus 197
Culture at two levels 159 US trade policy 199
Hofstede’s four dimensions of culture 160 Non-tariff barriers to trade 200
Trompenaars’ seven dimensions of culture 161 Quotas 200
The GLOBE project’s nine dimensions of culture 163 “Buy national” restrictions 201
Applying the national culture frameworks 164 Customs valuation 201
“The way we do things here”: the implications Technical barriers 201
of cultural differences for organizations and Anti-dumping legislation, subsidies, and
managers 165 countervailing duties 201
Cross-cultural management 168 Agricultural products 202
Organization 168 Export restraints 202
Leadership 168 Other economic developments 202
Communication 169 Countertrade 203
The corporate response 169 Trade in services 203
Multinational organization structures: Free trade zones 204
imperialist or independent? 171 Key points 205
Culture clash in cross-border M&A and Key terms 206
joint ventures 172 Review and discussion questions 206
■ International Business Strategy in Action ■ Real Cases
The collective culture of the John Lewis Job losses and offshoring to China 207
Partnership 173 Dumping on trade complaints 208
Culture embodied in national institutions 174 Notes 209
France: cultural and social characteristics Bibliography 210
that create a national distinctiveness 175 Appendix: Balance of payments 211
Key points 176
Key terms 177 Chapter 7
Review and discussion questions 177 International Financial Markets
■ Real Cases and Institutions 218
Do not throw your meishi! 178
Objectives of the chapter 218
Sport can be local and global: Manchester United 179
Notes 180 ■ Active Learning Case
Bibliography 181 Barclays Bank international financial dealings 219
Introduction 220
Chapter 6 Foreign exchange markets 221
Foreign exchange markets in the United States 222
International Trade 183
Determination of the exchange rate 227
Objectives of the chapter 183 Purchasing power parity 227
■ Active Learning Case International Fisher effect 228
Trade of the triad and China 184 Combined equilibrium relationships 229
Introduction 185 Other factors determining exchange rates 230
International trade theory 186 Protecting against exchange risk 230
Theory of absolute advantage 186 Alternatives to minimize exchange risk 231
Theory of comparative advantage 187 ■ International Business Strategy in Action
Factor endowment theory 189 China 2015: the start of the next global
International product life cycle theory 189 economic meltdown? 231
Other important considerations 191 Foreign money and capital markets 235
 Contents in detail ix

MNEs and national money markets 236 Key terms 277

MNEs and national capital markets 236 Review and discussion questions 277
Regional money and capital markets 237 ■ Real Cases
The eurocurrency market 237 Mountain Equipment Co-op: a small business 278
Eurocurrency interest rates 238 Benetton 279
Other market characteristics 239 Notes 280
Criticisms of the euromarkets 239 Bibliography 282
Eurobonds and euroequities 240 Appendix: Regional aspects of multinationality
■ International Business Strategy in Action and performance 283
AngloGold Ashanti 241
The IMF system 242 Chapter 9
Unresolved problems with the IMF system 245 Organizing Strategy 290
MNEs and international financial markets and
Objectives of the chapter 290
institutions 246
Key points 246 ■ Active Learning Case
Key terms 246 Procter & Gamble 291
Review and discussion questions 247 Introduction 292
Organization structures 293
■ Real Cases
Early organization structures 293
HSBC 248
Rigging LIBOR 249 ■ International Business Strategy in Action
Notes 250 Sanofi-Aventis 295
Bibliography 251 The international division 296
Global organization structures 297
■ International Business Strategy in Action
Part Three Making the matrix work 302
International Business Strategic management and organizing strategy 305
Analysis of key structural variables 305
Strategies
Coordination 306
Key points 311
Chapter 8 Key terms 311
Multinational Strategy 255 Review and discussion questions 311
Objectives of the chapter 255 ■ Real Cases
LVMH: organizing luxury products in the
■ Active Learning Case
international arena 312
Vodafone and the triad telecom market 256
Command Alkon: small but increasingly global 313
Introduction 258
Notes 314
Strategic orientations 259
Bibliography 315
■ International Business Strategy in Action
The Big Four 261
Chapter 10
Strategy formulation 262
Corporate Strategy and National
External environmental assessment 262
Internal environmental assessment 266
Competitiveness 318
Goal setting 270 Objectives of the chapter 318
Strategy implementation 270 ■ Active Learning Case
Location 271 Worldwide operations and local strategies
■ International Business Strategy in Action of ABB 319
Fuji Xerox and Xerox 271 Introduction 320
Ownership 272 The single diamond 320
Functional strategies 274 Determinants and external variables 321
Control and evaluation 274 Critique and evaluation of the model 322
Common methods of measurement 275 The double diamond 324
Key points 277 Canada and the double diamond 324
 x Contents in detail

■ International Business Strategy in Action

Nokia and Ericsson: moving beyond mobiles 328
Part Four
Mexico and the double diamond 329 Functional Area
Integration and responsiveness 332 Strategies
Integration versus national responsiveness 333
■ International Business Strategy in Action Chapter 12
Renewed advantage through vertical integration at Production Strategy 381
Floreal Knitwear 334
Balancing the trade-offs 335 Objectives of the chapter 381
Competitiveness in the triad 338 ■ Active Learning Case
Key points 341 GE production: from Six Sigma to the GE Store 382
Key terms 341 Introduction 383
Review and discussion questions 342 Research, development, and innovation 384
■ Real Cases Speed-to-market 386
There is no global beer, only local 342 Generation of goods and services 388
IBM 344 Global sourcing 388
Notes 345 ■ International Business Strategy in Action
Bibliography 347 Gap Inc.: a successful “hollow corporation” 389
Manufacturing of goods 391
Chapter 11 ■ International Business Strategy in Action
Multinational Enterprises as End of an era: the Goodyear plant closure 391
Responsible Stakeholders 349 Developing a strong service orientation 396
International logistics 398
Objectives of the chapter 349
Transportation 398
■ Active Learning Case
Packaging 400
The environment, NGOs, and MNEs 350 Storage 401
Introduction 351 Different kinds of global production systems 401
Developing effective strategies 352 Strategic management and production strategy 402
Going where the action is 352 Technology and production design 402
■ International Business Strategy in Action Continuous improvement 403
3M 354 Alliances and acquisitions 403
International business research frameworks 355 Key points 409
Theories of international business 355 Key terms 410
Practical applications of the theory 356 Review and discussion questions 410
The five partners business network framework 356 ■ Real Cases
Forging new business networks 356 Flextronics 411
Coping with changing environments 358 Nike 413
Political environment 358 Notes 414
Economic environment 360 Bibliography 414
The trade and investment framework 362
Environment and MNEs 365
Chapter 13
■ International Business Strategy in Action
Marketing Strategy 416
Is The Body Shop an ethical business? 365
The pattern of MNE responses 368 Objectives of the chapter 416
Key points 370 ■ Active Learning Case
Key terms 370 Adidas: promoting a global sports brand 417
Review and discussion questions 371 Introduction 419
■ Real Cases International market assessment 420
Dell: B2C 371 Initial screening: basic need and potential 420
Maersk Group 372 Second screening: financial and economic
Notes 375 conditions 420
Bibliography 375 Third screening: political and legal forces 421
 Contents in detail xi

Fourth screening: socio-cultural forces 421 Common elements in an international

Fifth screening: competitive environment 422 compensation package 457
Final selection 422 Compensation trends and comparisons 459
Product strategies 423 Labor relations 460
Little or no modification 423 Labor relations practices 462
Moderate to high modification 423 ■ International Business Strategy in Action
■ International Business Strategy in Action Primark: putting global stakeholders first 463
Weeby buys Tappy 426 Industrial democracy 465
Promotion 427 Industrial democracy in action 465
Nature of the product 427 Strategic management and IHRM strategies 466
Advertising 428 Language training 466
■ International Business Strategy in Action Cultural adaptation 468
IKEA in international markets 428 Competitive compensation 468
Personal selling 430 Specially designed HRM programs 469
Pricing 431 Key points 470
Government controls 431 Key terms 471
Market diversity 431 Review and discussion questions 471
Currency fluctuations 432 ■ Real Cases
Price escalation forces 432 Offshoring to India 472
Place 433 Executive search firms 473
Different distribution systems 433 Notes 474
Choosing the best distribution system 434 Bibliography 475
Strategic management and marketing
strategy 434 Chapter 15
Ongoing market assessment 434 Political Risk and Negotiation
Internet marketing and “open innovation” 438 Strategy 477
Key points 439
Key terms 440 Objectives of the chapter 477
Review and discussion questions 440 ■ Active Learning Case
■ Real Cases Nestlé in Nigeria 478
Bang & Olufsen 441 Introduction 479
Mirum—never lose your sense of wonder! 443 Generic PEST analysis 479
Notes 444 Political risk 481
Bibliography 444 Deregulation and political risk 482
The nature of political risk 483
Chapter 14 Sources of political risk 484
Country analysis and political risk assessment 485
Human Resource Management
Online risk information resources 485
Strategy 447 Quantifying risk vulnerability 486
Objectives of the chapter 447 Accounting for country risk 489
■ Active Learning Case Negotiation strategies 490
The Coca-Cola Company thinks local 448 Behavioral characteristics of the participants
Introduction 449 in negotiations 492
Selection and repatriation 450 ■ International Business Strategy in Action
International screening criteria and selection Political risk for De Beers 493
procedures 450 ■ International Business Strategy in Action
Repatriation of expats 452 Intel effect 494
Training and development 454 Transparency and corruption: politically
Types of training 454 sensitive political risk 497
■ International Business Strategy in Action Strategic management and political risk 500
The glass ceiling 455 Use of integrative and protective/defensive
Compensation 457 techniques 500
 xii Contents in detail

Key points 503 ■ Real Cases

Key terms 504 Skandia 542
Review and discussion questions 504 Ford and Volvo 543
■ Real Cases
Notes 545
Yukos and the Russian oligarchs 505 Bibliography 545
Problems with ports 506
Notes 508
Bibliography 509 Part Five
www resources 510 Regional Strategies

Chapter 16 Chapter 17
International Financial European Union 549
Management 511 Objectives of the chapter 549
Objectives of the chapter 511 ■ Active Learning Case
■ Active Learning Case The future is Orange 550
Financial transparency at Siemens 512 The EU environment 551
Introduction 513 Emergence of a Single European
Determining parent–subsidiary relationships 515 Market 553
Polycentric solution 515 The competitive status of the EU 556
Ethnocentric solution 515 Conducting a strategic analysis 559
Geocentric solution 515 Using competitive intelligence 559
Managing global cash flows 516 ■ International Business Strategy in Action
Internal funds flows 516 VW scandal 560
Funds positioning techniques 517 Evaluating locations 562
Multilateral netting 520 Strategy issues 562
■ International Business Strategy in Action Overall strategic analysis for the EU 564
Worldwide tax havens 522 Exporting 565
Managing cash 524 Strategic acquisitions and alliances 567
■ International Business Strategy in Action
Marketing considerations 568
Sovereign wealth funds 525 ■ International Business Strategy in Action
Exchange risk management 527 Deutsche Bahn: more than a railroad 568
Transaction risk 527 Manufacturing considerations 570
Translation risk 527 Management considerations 572
Economic risk 528 Barriers to EU market access 573
An example of exchange risk management 529 Key points 574
Developing forecasting and reporting Key terms 575
systems 531 Review and discussion questions 575
Capital budgeting in the MNE 532 ■ Real Cases
Use of NPV 534 Accor budget hotels 576
Institutional features 535 Carrefour 578
International financing in the MNE 536 Notes 579
Financial structure 537 Bibliography 580
Control: identifying objectives, evaluating affiliate
performance, and making performance consistent Chapter 18
with goals 538 Japan 582
Strategic international finance 539
Establishing overseas operations 539 Objectives of the chapter 582
Reducing financial risk 540 ■ Active Learning Case
Key points 540 Doing business in Japan 583
Key terms 541 Introduction 585
Review and discussion questions 541 Political, social, and cultural characteristics 585
 Contents in detail xiii

A traditionally strong government role in the Business opportunities in Canada 632

economy 585 Franchising 634
Distinctive cultural characteristics 586 Mexico 634
Economic characteristics 587 Mexico’s economy 634
Japan and China: the new Asian powerhouse? 592 Mexico and NAFTA 635
Business characteristics 593 Regional trade agreements 636
Manufacturing strengths 593 Doing business in Mexico 636
Strong applied R&D 593 ■ International Business Strategy in Action
Keiretsu 594 Mexico and NAFTA 637
■ International Business Strategy in Action Key points 641
Kirin Beer goes international 597 Key terms 642
Distribution, retailing, and customer Review and discussion questions 642
orientation 598 ■ Real Cases
Japanese corporations 598 Jumex of Mexico 643
A changing nation 601 GlaxoSmithKline in the United States 644
Restructuring capital markets 601 Notes 645
Deregulation, increased M&A, and inward FDI 602 Bibliography 646
■ International Business Strategy in Action
Wal-Mart takes Seiyu 604 Chapter 20
Restructuring corporations 605 Emerging Economies 648
The decline of manufacturing and distribution
Objectives of the chapter 648
keiretsu 606
The growth of outward FDI and offshore ■ Active Learning Case
manufacturing 606 Acer Taiwan goes international 649
The decline of lifetime employment Introduction 650
and changing HRM practices 607 Triad firms and emerging economy firms:
Diversification strategies 607 why the mutual interest? 651
Conclusions 608 An overview of emerging economies,
Key points 609 by region 652
Key terms 610 Asia–Pacific and the Middle East 655
Review and discussion questions 610 Central and eastern Europe 659
Latin America and the Caribbean 659
■ Real Cases
Africa 660
Renault and Nissan: no pain, no gain 610
Sony: diversifying into the automobile industry? 613 ■ International Business Strategy in Action
Notes 615 From Oserian to Tesco: the Kenyan cut flower
Bibliography 616 industry 661
www resources 618 Shifting patterns of comparative and competitive
advantage 663
Flying Geese model 664
Chapter 19
Emerging economies as sources of innovation 667
North America 619 Market access to the triad 669
Objectives of the chapter 619 ■ International Business Strategy in Action
■ Active Learning Case Korean chaebols: Hyundai and Samsung 669
NAFTA 620 Key points 672
Introduction 622 Key terms 673
Canada 622 Review and discussion questions 673
Canada’s economy 623 ■ Real Cases
Differences in the business environment 624 The Indian IT, software, and services industry 673
■ International Business Strategy in Action Bumrungrad International in Thailand 676
Bombardier 625 Notes 678
Canada’s multinationals 630 Bibliography 679
Multilateral agreement on investment (MAI) 631 www resources 681
 xiv Contents in detail

Chapter 21 ■ International Business Strategy in Action

China 682 Haier goes global 701
Key points 704
Objectives of the chapter 682 Key terms 704
■ Active Learning Case Review and discussion questions 705
Oxford Instruments in China 683 ■ Real Cases
Introduction 684 Citigroup in China 705
Unprecedented scale, scope, and speed of growth 685 Nanjing Auto makes the MG 707
The role of government 688 Notes 708
MNE investment into China 689 Bibliography 710
■ International Business Strategy in Action www resources 712
Airbus in China 690
Foreign R&D investment 693 Glossary 713
Getting into China 695 Index 723
Outward investment and the new
multinationals from China 698

Supporting resources
Visit www.pearsoned.co.uk/rugman to find valuable online resources
For instructors
■ Instructor’s Manual
■ PowerPoints

For more information please contact your local Pearson Education sales representative or visit
www.pearsoned.co.uk/rugman
List of Figures and Tables

Figures
1 The multiple, interacting levels and lenses of 4.1 The European Union’s institutions 140
international business studies xxxii 4.2 Bombardier: revenue, 2008–14 149
2 The internationalization roadmap: decision 4.3 Embraer: revenue, 2008–14 149
stages for global expansion xxxiv 5.1 Cross-cultural business contexts 156
3 The structure of this book xxxvi 5.2 Hofstede’s power distance against
1.1 The consequences of globalization 7 individualism for 20 countries 161
1.2 The dynamics of globalization 11 5.3 Excerpts from Trompenaars’ cultural
1.3 Estimated stock of outward FDI by country attitudes survey 166
of origin, 1914 23 5.4 Management dimensions of culture 168
1.4 Estimated stock of accumulated FDI by country 5.5 Shared characteristics stemming from
of origin, 1938 25 common cultural influences 175
1.5 FDI outward stock from selected developing 6.1 The international product life cycle 190
economies as a percentage of the world’s FDI 6.2 Microsoft: revenues by geographic segment 193
outward stock 31 6.3 Impacts of a tariff 196
2.1 Classes of FSAs or ownership (O) advantages 44 6.4 The US current account balance
2.2 Cost of shipping a 40 ft container to the and its components, 2007–15 203
American East Coast 49 7.1 Foreign exchange market for euros in New York 222
2.3 The OLI framework: a decision model 51 7.2 US foreign exchange markets 223
2.4 The strategic management process in action 53 7.3 Exchange rate determination 229
2.5 The basic components of international business 54 7.4 Change in the Shanghai Composite Index,
2.6 The FSA–CSA matrix 55 June–August 2015 232
2.7 The motives of internationalization: a decision model 58 7.5 Change in Japan’s TOPIX Index,
2.8 The internationalization process of the firm 59 September 2014–July 2015 232
2.9 Entry modes: benefits and drawbacks 65 7.6 Change in Hong Kong’s Hang Seng Index,
2.10 Organizational modes of cooperative agreements: September 2014–July 2015 232
horizontal versus vertical cooperation 66 7.7 Change in Taiwan’s TAIEX Index, March–August
2.11 Risk vs. reward: country market attractiveness 2015 233
for SME managers 73 7.8 Change in the Brent oil price, August
2.12 Foreign market selection criteria 2014–August 2015 233
for international and non-international SMEs 74 7.9 Change in the copper price, 2011–15 233
3.1 Output of high-tech manufacturing industries 7.10 History of the LIBOR rates, January 1,
for selected economies, 1997–2012 93 1999–December 31, 2010 239
3.2 Global R&D expenditures by region, 2015 94 7.11 IMF special drawing rights
3.3 USPTO patents granted, by location of inventor, (February 21, 2014) 244
2003–12 95 8.1 The five forces of industry competitiveness 263
3.4 The share of the largest emerging economies in 8.2 The five-forces model applied
US patenting 95 to the semiconductor industry 265
3.5 The top 15 US patent recipients during the 8.3 A basic value chain 268
period 2010–14 96 8.4 Generic strategies in worldwide
3.6 The VRIO framework: a decision-making process 99 shipbuilding 269
3.7 The conventional model of an innovation system 106 8.5 The control and evaluation process 275
3.8 International dimensions of innovation 107 8A Multinationality and performance 284
3.9 MNE headquarters linked through its affiliates 9.1 An export department structure 294
in other countries to the innovation systems 9.2 Use of subsidiaries during the early
of other countries 108 stages of internationalization 294
3.10 Structural, strategic, and organization 9.3 An international division structure 296
dilemmas for the innovative multinational firm 110 9.4 A global product structure 297
3.11 Global MNE structures for managing innovation 110 9.5 A global area structure 299

xv
xvi List of Figures and Tables

9.6 A global functional structure 300 16.1 Financial management in the MNE 514
9.7 A geographic matrix structure 300 16.2 Common examples of internal sources
9.8 A multinational matrix structure 301 and flows of funds 517
9.9 A mixed structure 303 16.3 World’s top tax havens based on Secrecy
9.10 A transnational network structure 304 Index value, 2015 520
9.11 Organizational epigrams 309 16.4 Multilateral dollar flows between subsidiaries 521
10.1 Porter’s single-diamond framework 321 16.5 Centralized netting process in action 521
10.2 The four stages of national development 17.1 The European Union 552
and the historical position of select nations 323 17.2 Hourly compensation costs in manufacturing,
10.3 The single-diamond view 325 2010 and 2013 557
10.4 Canadian–US double diamond 326 17.3 Productivity: increase in output per hour,
10.5 The shape of North America 331 1979–2010 558
10.6 Integration and national responsiveness 333 17.4 Business strategies for the EU 564
11.1 Network linkage and the changing shape of 17.5 Competition and shelter-based strategies 574
international distribution systems 357 18.1 Japan’s foreign trade by country/region, 2014 590
11.2 Network linkages for successful MNEs 358 18.2 Japan’s major export and import
11.3 FDI and NAFTA 363 commodities, 2014 591
11.4 NAFTA and the EU 364 18.3 Japan, 2014 592
11.5 Different perceptions of the WTO 367 18.4 The Fuyo keiretsu group before restructuring 595
11.6 Institutional alternatives for trade and investment 368 18.5 Bank group consolidation in Japan 603
11.7 MNE strategies and civil society 368 18.6 Cross-border M&A activity in Japan 603
11.8 Segmentation of the Maersk Group activities 374 18.7 Top 10 Renault and Nissan
12.1 Global R&D: markets and hierarchies 385 alliance markets, 2015 612
12.2 Where Starbucks gets its coffee 395 18.8 Top 10 Renault and Nissan markets 612
12.3 Product- and service-dominated businesses 397 19.1 North America, 2014 623
12.4 Global production systems: where 20.1 What is the attraction for triad
is the value added? 401 and non-triad firms investing in each
13.1 Selected examples of product modification other’s home regions? 651
in the international arena 423 20.2 Flying Geese model: changing national-level
13.2 Product life cycles: two different approaches 427 specialization 664
14.1 The management of multinational enterprises 449 20.3 Flying Geese model: the shifting location
14.2 Cost of expatriate managers 459 of industrial production 665
14.3 Trade union density, 2012 461 20.4 Flying Geese model: the pattern of shifting
14.4 Primark’s key stakeholders 463 comparative advantage 665
15.1 PEST framework for country analysis 480 20.5 Accelerated structural transformation
15.2 Types and levels of political risk 483 (are the geese flying faster?) 666
15.3 FDI drivers: the strategic objectives of MNEs, 20.6 Firm-specific advantages (FSAs) for the
host-country attractiveness, and host- new multinationals 667
government requirements 491 20.7 India’s IT industry: rapid growth in
15.4 FDI flows in Costa Rica, 1984–2004 495 the early years 674
15.5 Costa Rica: imports and exports, 1995–2003 495 20.8 The growth of the Indian IT market:
15.6 Zones of acceptance in the negotiating process 497 local and global 675
15.7 Select examples of the use of integrative and 20.9 How the IT sector impacts India 675
protective/defensive techniques 501 21.1 South and East Asia  685

Tables
1.1 Measures of institutions between countries 14
1.2 FDI outward stock by countries, 1980–2014 27 2.3 Growth in annual salary costs within
1.3 FDI inward stock by countries, 1980–2014 28 the automotive OEM workforce,
1.4 Internationalization statistics of the 100 2009–14 50
largest non-financial MNEs 32 2.4 Internationalization motives 56
1.5 Key figures of cross-border non-equity mode 2.5 Types of international SMEs by trade
activity, selected industries, 2010 34 and FDI up and down the value chain 70
1A Top 25 importers in the world, 2014 38 2.6 SMEs’ internationalization strategies 71
1B Top 25 exporters in the world, 2014 39 2.7 Changes in SBF-DP SME Index in all
2.1 A classification of L advantages 47 four quarters of 2015 72
2.2 China’s and Mexico’s market share in the 2A The 25 largest global MNEs, 2015 ranking 82
global automotive industry, 2005–13 49 2B The 25 largest US MNEs, 2015 ranking 82
 List of Figures and Tables xvii

2C The 25 largest European MNEs, 2015 ranking 83 13.3 International market penetration:
2D The 25 largest Japanese MNEs, 2015 ranking 83 location of subsidiaries, holdings, and
2E The 25 largest Chinese MNEs, 2015 ranking 84 joint ventures 435
2F The 25 largest MNEs from emerging markets, 14.1 Employer incentive practices around
2015 ranking 84 the world 460
2G The world’s top 100 non-financial TNCs, 14.2 Ratio between CEO and average worker
ranked by foreign assets, 2013 85 pay, 2014 461
3.1 Firm-specific resources and capabilities 97 14.3 Cost of living in select cities, 2015 469
3.2 Top ten patent recipients, 2014 112 14.4 Top executive search firms, 2014 473
3.3 IBM’s research labs 113 15.1 Changes in national regulations on
5.1 World population percentages in terms FDI, 2000–13 482
of home region, language, and religion 155 15.2 Political risk: sources, agents, and effects 484
5.2 Average and intra-country ranking of 15.3 The Weighted Country Risk Assessment Model 487
work goals: a seven-nation comparison 167 15.4 Twelve examples of the differences in verbal
5.3 Organization types reflecting cultural behaviors among Japanese, American,
predispositions 171 and Brazilian negotiators 498
6.1 China’s share of the world’s market for 16.1 Shifting profits by transfer pricing 518
exports of manufactures, 2000–13 184 16.2 Transfer pricing through tax havens 519
6.2 The triad’s share of world merchandise 16.3 Net cash positions of subsidiaries 520
exports, 1993–2013 184 16.4 The world’s top tax havens, 2015 523
6.3 OPEC exports 195 16.5 Largest sovereign wealth funds by
6.4 Common non-tariff barriers to trade 200 assets under management, 2015 527
6.5 Outsourcing and job losses in the 16.6 Exchange risk hedging techniques 529
United States, third quarter of 2010 208 16.7 International sources of credit (including
6A Balance of payments: IMF presentation 212 markets and intrafirm transfers) 536
6B US international transactions, 2014 216 16.8 Ford and its brands, 2014 544
6C US merchandise trade, 2014 216 17.1 Economic profile of the big three, 2015 552
7.1 The Barclays Group’s structural currency 17.2 The world’s most competitive economies 558
exposures as at December 31, 2014 219 17.3 Comparison of location factors 563
7.2 Analysis of loans and advances to customers 17.4 Direction of EU trade 566
as at December 31, 2014 220 17.5 EU anti-dumping cases investigated
7.3 Exchange rates in the interbank market, by sector, 2006–14 573
October 29, 2015 224 17.6 Accor Hotel portfolio by region, 2014 577
7.4 Currency futures contract specifications 18.1 Economic and trade data for Japan, 2009–14 588
at the Chicago Mercantile Exchange 226 18.2 Japan’s FDI imbalance, 2008–14 588
8.1 Typical strategic orientations of MNEs 260 18.3 Japan: FDI by country/region, 2010–14 589
8.2 The Big Four 261 18.4 The 25 largest Japanese MNEs, 2015 ranking 600
8.3 Typical goals of an MNE 270 19.1 Direction of US trade, 1999–2014 621
9.1 World’s ten largest pharmaceutical 19.2 Direction of Canada’s trade, 1999–2014 621
companies, 2014 (based on revenue) 295 19.3 Direction of Mexico’s trade, 1999–2014 621
9.2 Factors that encourage centralization or 19.4 The largest 25 Canadian-based firms,
decentralization of decision making in 2014 ranking 630
multinational operations 307 19.5 The largest 15 foreign-owned companies
10.1 FDI positions by Canada, the United States, in Canada, 2014 ranking 631
and Mexico, 2003–14 330 20.1 FDI inflows, by host region and economy,
10.2 AD and CVD orders by product category, 2014 338 1995–2014 653
10.3 Largest worldwide brewers, 2009 343 20.2 FDI from developing countries, 2000–13 654
11.1 The world’s most admired companies, 2015 350 20.3 The top 50 non-financial TNCs from developing
11.2 The world’s major trade agreements 361 economies ranked by foreign assets, 2013 656
11.3 Top six container shipping companies 20.4 Comparing the international costs of medical
in order of TEU capacity, February 25, 2011 373 procedures 677
12.1 The cost of arriving late to market 21.1 China: key economic indicators, 2009–14 686
(and still being on budget) 387 21.2 China: key trade indicators, 2014 687
12.2 Gap Inc. number of store locations, by region, 21.3 China: direct investment flows, outward
January 2015 390 and inward, 2011–14 687
12.3 The Mitsubishi and Mitsui keiretsu in Japan 404 21.4 Common examples of synergies between
13.1 Adidas’s marketing objectives and foreign multinationals and local Chinese firms 697
measurements 418 21.5 Top 25 Chinese (mainland) firms in the
13.2 The effect of MNE pricing on final “Forbes 2000” list, 2015 ranking 699
consumer costs 432 21.6 Haier goes global 702
Preface

Dedication The structure of the book has also changed, although

we have kept the five main sections and made them
The seventh edition of International Business is dedi- more distinctive. A new introduction: “Frameworks for
cated to the memory of Alan Rugman, who began this this Book: Our Approach to the Study of International
textbook series over 30 years ago and invited me to join Business” appears just before the start of Part One and
him as co-author for the fourth edition published in 2006. the main chapters. It provides an overview of our
Our writing partnership began when I was a visiting pro- approach and the structure of the book as well as the
fessor at the Kelley School, University of Indiana in standard sections of each chapter. Figure 3 provides the
2004 and I reflect on our collaboration in a volume dedi- new outline, linked to a description of how the book is
cated to Alan, edited by Rob Van Tulder, Alain Verbeke organized.
and Rian Drogendijk (Collinson, 2015).1 He was a great The themes covered in the previous Chapter 11 have
scholar and a much-missed mentor. For Alan this book now been integrated into the new Chapter 3. Chapter 22
series represented a lifelong project to continually has been thoroughly revised and sits in Part Three, as
improve the way we teach international business and the new Chapter 11. This leaves Part Five to focus on
engage people in a subject he was passionate about. the five key countries and regions (Chapters 17–21).
Alan would be extremely pleased to know that his Within the chapters the structure should be familiar
colleague and friend, Rajneesh Narula has joined me to to those who have used the book before. We have kept
co-author this, the latest edition of his book. Alan’s five case studies in each chapter (except Chapter 1,
ideas and insights remain at the core of this book, but which introduces the field of international business).
we have thoroughly revised and updated the text in step We have 100 case studies and almost one-quarter of
with the ever-changing world of international business. these are entirely new. Most of the rest have been com-
A brief biography of Alan can be found on page xxi. pletely updated or rewritten. Every chapter has been
Simon Collinson thoroughly updated, with new data, trends, and refer-
ences. A revised bibliography appears at the end of
each chapter.
The seventh edition of International Business
With a new co-author, Rajneesh Narula, we have three
Acknowledgements
completely new chapters (Chapters 1–3) to open the
book. As shown in these new chapters, we have signifi- Our lead researcher on this project was Amir Qamar, a
cantly restructured the book to place a much greater Ph.D. student at Birmingham Business School, the
emphasis on: (1) technology and innovation, as key University of Birmingham, who deserves huge thanks
drivers of international competitiveness; (2) institutions for coordinating the revision process and updating large
as mediators and moderators of MNE (multinational parts of the book. He also provided 12 of the new case
enterprise) activities; (3) small and medium-sized studies and helped shaped the new emphasis described
enterprises as important global players; and (4) how above. He was lead author on US manufacturing: from
MNEs can be responsible businesses, taking a broader, China to Mexico (Ch. 2); Worrying times for
more ethical stakeholder approach, rather than a nar- Singapore’s SMEs (Ch. 2); R&D at Hewlett-Packard
rowly profit-oriented shareholder approach. (Ch. 3); Greece: third (bailout) time lucky (Ch. 4); The

1 Collinson, Simon (2015). “Dedication: Yin and Yang: Integrating Disparate Perspectives for International Business Research and Teach-
ing”, in Rob Van Tulder, Alain Verbeke, and Rian Drogendijk (ed.) The Future of Global Organizing (Progress in International Business
Research, Volume 10) Emerald Group Publishing Limited, pp. 27–35.

xviii
 Preface xix

collective culture of the John Lewis Partnership (Ch. 5); the book. Dev led on Floreal Knitwear (Ch. 10) and
China 2015: the start of the next global economic melt- Mirum (Ch. 13). Emma was lead author for: Tesco at
down? (Ch. 7); End of an era: the Goodyear plant clo- home and abroad (Ch. 2); The Big Four (Ch. 8); Glass
sure (Ch. 12); Adidas: promoting a global sports brand ceiling (Ch.14); and Sony-diversifying into the auto-
(Ch. 13); Primark: putting global stakeholders first (Ch. mobile industry? (Ch. 18). Support for Rajneesh Narula
14); Intel Effect (Ch. 15); Financial transparency at was provided by Karim Kirollos, Teaching Fellow in
Siemens (Ch. 16); and VW scandal (Ch. 17). He is also International Business at Aston University, who helped
the author for the Instructor’s Manual. edit and update the text and cases associated with
Thanks also go to Dev K. (Roshan) Boojihawon, a Chapters 1–3. Further assistance was provided by
Senior Lecturer in IB at the University of Birmingham, Jong Min Lee and Maite Alvez Bezerra, doctoral
and another of our Ph.D. students, Emma C. Gardner, researchers at Henley Business School, University of
who also both provided excellent new case studies for Reading.
About the Authors

Dr Simon Collinson is Dean of Birmingham Business knowledge, and intellectual asset management in mul-
School and Professor of International Business and tinational firms; the competitiveness of international
Innovation at the University of Birmingham. He is also UK firms; national systems of innovation and emerg-
Chair of the Chartered Association of Business Schools ing economies; high-technology entrepreneurship,
(CABS), a member of the UK Economic and Social small-firm networks, and regional development; Japan
Research Council (ESRC) and the Council of the and China: local business practices and cross-cultural
Greater Birmingham Chamber of Commerce, and a management, foreign direct investment, and economic
Fellow of the Royal Society (FRSA). change. Simon has received research funding awards
Previous roles include Professor of International from the UK ESRC and the Engineering and Physical
Business at Henley Business School, University of Sciences Research Council (EPSRC), the UK govern-
Reading and Deputy Dean and Professor of International ment’s Department of Trade and Industry, Japan’s
Business at Warwick Business School, University of Science and Technology Agency, the British Royal
Warwick (UK), where he was also Head of the Society, and European Commission Director General
Marketing and Strategic Management Group. He was (/Directorate) XII (DGXII) of the European Union.
an Academic Associate at the Centre for International He has research, consulting, and executive teaching
Business and Management (CIBAM), Judge Business experience with a wide range of multinational firms.
School, Cambridge, and a Research Associate at the He has published a range of books and articles in refer-
Centre for Competitive Advantage in the Global eed journals including Journal of International
Economy (CAGE) at Warwick University. During his Business Studies, Organization Studies, Business
time at Warwick he held the role of Lead Ghoshal History, Research Policy, Multinational Business
Fellow (and then sat on the Board of Directors) in the Review, International Journal of Technology
Research Council UK- (RCUK-)funded Advanced Management, European Management Journal, R&D
Institute of Management (AIM) initiative. Prior to Management, Organization Dynamics, and Technology
Warwick he was Lecturer and Senior Research Fellow Analysis & Strategic Management. His research has
at Edinburgh University Management School and the also featured in the Independent, The Times, The
Assistant Director of the Japanese–European Sunday Times, BBC Radio 4, the New Statesman and
Technology Studies (JETS) Institute for seven years. the U.S. News & World Report.
Simon has held visiting positions at Zhejiang While continuing to publish on China, innovation,
University, the Australian Graduate School of and the evolving competitiveness of emerging econo-
Management (AGSM) in Sydney, the Kelley School of mies, he has recently focused on two areas of research.
Business, Indiana University, Hitotsubashi University First, the performance effects of organizational com-
and the National Institute of Science and Technology plexity. His most recent book, From Complexity to
Policy (NISTEP) in Tokyo, and the John Dunning Simplicity was shortlisted for the Chartered
Centre for International Business, Henley Business Management Institute (CMI) business book of the year
School, University of Reading. Following a Joint BA prize. Second, as joint-lead of City-REDI, the City-
(Hons.) in Geography and Sociology at Leeds Region Economic Development Institute at
University and an MA in Human Geography at the Birmingham Business School, he has been working
University of Florida, Gainesville, Simon was awarded with regional policy-makers to accelerate local innova-
his D.Phil. from the Science Policy Research Unit tion and economic growth.
(SPRU) at Sussex University in 1991.
His original research was on technology transfer Dr Rajneesh Narula is the John H. Dunning Chair of
and indigenous technological capabilities in Kenyan International Business Regulation at the Henley
manufacturing firms. Since then projects and papers Business School, University of Reading, UK. He has
have focused on global innovation strategies, R&D, previously held positions at Copenhagen Business

xx
 About the Authors xxi

School, the BI Norwegian Business School, the International Business and Economics from Rutgers
University of Oslo, and the University of Maastricht. University, US. Before academia, Professor Narula
He currently holds honorary appointments at UNU- worked as an Engineer in Nigeria, and later as a
MERIT, Norwegian Business School, and Oxford Planning Analyst at IBM Asia/Pacific Headquarters in
University. Hong Kong.
His research and consulting have focused on the Until his untimely death in July 2014, Dr Alan M.
role of multinational firms in development, innovation Rugman was Professor of International Business at the
and industrial policy, R&D alliances, and outsourcing. Henley Business School and Head of School,
He has published over a hundred articles and chapters International Business and Strategy at the University of
in books on these themes. He was Editor-in-Chief of Reading, UK. Previously he was L. Leslie Waters Chair
Multinational Business Review from 2014 to 2016, and of International Business at the Kelley School of
is currently Area Editor in development and interna- Business, Indiana University, from 2002 to 2009. He
tional business for the Journal of International was Thames Water Fellow in Strategic Management at
Business Studies (2016–20). He was Editor-in-Chief of Templeton College, University of Oxford, from 1998 to
The European Journal of Development Research from 2001 and an Associate Fellow of Green Templeton
2009 to 2013. College. Previously, he was Professor of International
He regularly acts as a consultant and advisor to the Business at the University of Toronto, Dalhousie
European Commission, United Nations Industrial University, and the University of Winnipeg. He was
Development Organization (UNIDO), United Nations also a visiting professor at Columbia Business School,
Conference on Trade and Development (UNCTAD), London Business School, Harvard University, UCLA,
the Organization for Economic Co-operation and MIT, Warwick Business School, the University of
Development (OECD), and a variety of other interna- Paris–La Sorbonne, University of Sydney, Saint Louis
tional organizations. He has travelled widely, having University, and the University of Lyon.
undertaken research and consultancy projects or taught He earned his BA in economics from Leeds
in Tanzania, Uganda, Thailand, China, Vietnam, University in 1966, his M.Sc. in economic develop-
Russia, India, Qatar, UAE, Colombia, Australia, Japan, ment from London University’s School of Oriental and
Mauritius, Senegal, and Pakistan, in addition to almost African Studies (SOAS) in 1967, and his Ph.D. in eco-
all the countries of the EU. nomics from Simon Fraser University in 1974. He was
He is listed as one of the top 20 most cited academic elected to an MA (Oxon) in 1998.
authors worldwide in the fields of international busi- Dr Rugman published over 300 articles dealing with
ness, emerging markets, economics of innovation, and the economic, managerial, and strategic aspects of mul-
economic development. His publications with John tinational enterprises and with trade and investment
Dunning and Sanjaya Lall on FDI-assisted development policy. These have appeared in such leading refereed
are especially well-cited contributions on the subject. journals as: Journal of International Business Studies,
He is the author or editor of ten books, including Management International Review, The American
Globalization & Technology (Polity Press, 2003), Economic Review, Strategic Management Journal,
Multinationals and Industrial Competitiveness (with Journal of Management Studies, and Journal of
John Dunning, Edward Elgar, 2004), Understanding Business Ethics. He is recognized as one of the ten
FDI-assisted Economic Development (with Sanjaya most-cited scholars in the field of international business
Lall, Routledge, 2004), and Multinationals on the worldwide. (His Google Scholar Citations count is over
Periphery (with Gabriel Benito, Palgrave, 2007). His 21,000 and his h-index 67.)
publications have appeared in leading journals, includ- His books include: Inside the Multinationals
ing the Journal of International Business Studies, (Columbia University Press, 1981 and Palgrave, 2006);
Oxford Development Studies, Research Policy, Journal International Business (McGraw-Hill, 1995);
of Management Studies, Journal of World Business, Environmental Regulations and Corporate Strategy
and Management International Review. His 2003 book (Oxford University Press, 1999); Multinationals as
Globalization and Technology has been translated and Flagship Firms (Oxford University Press, 2000); The
published in Chinese and Arabic. End of Globalization (Random House, 2000); The
He obtained his B.Eng. (Electrical Engineering, with Oxford Handbook of International Business (Oxford
Hons.) from Ahmadu Bello University, Zaria Nigeria, University Press, 2001, 2009); The Regional
his MBA from Rutgers University and his Doctorate in Multinationals (Cambridge University Press, 2005);
 xxii About the Authors

Regional Aspects of Multinationality and Performance Academy of Management. He was also honored at a
(Elsevier, 2007); Rugman Reviews International special plenary session of the European International
Business (Palgrave Macmillan, 2009); and Business Association annual meetings, Slovenia,
Multinationals and Development (Yale University December 2004 for the 25th Anniversary of his 1979
Press, 2009). book, International Diversification and the
As a leading authority in international business, Dr Multinational Enterprise. In 2011, he received the
Rugman served as President of the Academy of Simon Fraser University Outstanding Alumni Award
International Business from 2004 to 2006, was elected for Academic Achievement. His final plenary was at
a Fellow of the Academy in 1991, and served as Dean the Academy of International Business (AIB) confer-
of the Fellows. He was also a Fellow of the Royal ence in Vancouver, June 2014, fittingly an AIB Fellows
Society of Arts, elected 1998. He served on the Editorial Plenary with his peer group. A number of special issues
Board of the Journal of International Business Studies of journals have been published in his honor, most
and was the Editor-in-Chief of the Multinational recently a special section in Journal of World Business,
Business Review. edited by Rajneesh Narula and Alain Verbeke. 1
In 2004 he received the Booz Allen Hamilton Award http://henley.ac.uk/news/news-item/in-memoriam-
as Eminent Scholar in International Management, professor-alan-rugman/

1 Narula, R., and Verbeke, A. (2015). Making internalization theory good for practice: The essence of Alan Rugman’s contributions to inter-
national business. Journal of World Business, 50(4), 612–22.
Guide to the Case Studies

COUNTRY/ NEW/
CHAPTER TYPE OF CASE ORGANIZATION/INDUSTRY REGION REVISED PAGE

Chapter 1 (n/a)
An Introduction
to International
Business

Chapter 2 ■ Active Learning Case Starbucks: a global “coffee US Revised 42

General culture”
Frameworks in
International ■ International Business US manufacturing: from China to US/Emerging New 49
Business Strategy in Action Mexico Economies:
China/Mexico

■ International Business Worrying times for Singapore’s Singapore New 71

Strategy in Action SMEs

■ Real Case Toys “R” Us US/EU/Japan Revised 76

■ Real Case Tesco at home and abroad US/Japan/UK New 78

Chapter 3 ■ Active Learning Case GE Healthcare in India: locally US/Asia 91

Multinational driven innovation
Enterprises,
Innovation, and ■ International Business Spreadshirt: open innovation EU Revised 103
Competitiveness Strategy in Action

■ International Business Innovation networks at IBM US Revised 112

Strategy in Action

■ Real Case Canon Group Japan Revised 115

■ Real Case R&D at Hewlett-Packard US New 117

Chapter 4 ■ Active Learning Case How risky is foreign investment in Emerging Revised 124
International Russia? Economies
Politics
■ International Business Greece: third (bailout) time lucky Greece New 129
Strategy in Action

■ International Business Non-governmental organizations US/EU 136

Strategy in Action and political power

■ Real Case How environmental regulations US/Emerging 147

can be used as trade barriers Economies

■ Real Case Embraer vs. Bombardier Canada/ Revised 148

Emerging
Economies:
Brazil

xxiii
xxiv Guide to the Case Studies

COUNTRY/ NEW/
CHAPTER TYPE OF CASE ORGANIZATION/INDUSTRY REGION REVISED PAGE

Chapter 5 ■ Active Learning Case Cultures clash as big pharma gets EU: Sweden Revised 153
International bigger and Italy/US
Culture
■ International Business McDonald’s US Revised 158
Strategy in Action

■ International Business The collective culture of the John UK New 173

Strategy in Action Lewis Partnership

■ Real Case Do not throw your meishi! EU: UK/Japan 178

■ Real Case Sport can be local and global: EU/US/Asia Revised 179
Manchester United

Chapter 6 ■ Active Learning Case Trade of the triad and China US/EU/Japan/ Revised 184
International Emerging
Trade Economies:
China

■ International Business Microsoft shows the world US/EU Revised 192

Strategy in Action is not flat

■ International Business Boeing versus Airbus US/EU Revised 197

Strategy in Action

■ Real Case Job losses and offshoring US/Emerging 207

to China Economies:
China

■ Real Case Dumping on trade complaints Canada/US 208

Chapter 7 ■ Active Learning Case Barclays Bank international EU: UK Revised 219
International financial dealings
Financial Markets
and Institutions ■ International Business China 2015: the start of the next China New 231
Strategy in Action global economic meltdown?

■ International Business AngloGold Ashanti Emerging Revised 241

Strategy in Action Economies:
South Africa

■ Real Case HSBC EU: UK Revised 248

■ Real Case Rigging LIBOR UK New 249

Chapter 8 ■ Active Learning Case Vodafone and the triad telecom EU Revised 256
Multinational market
Strategy

■ International Business The Big Four UK New 261

Strategy in Action
 Guide to the Case Studies xxv

COUNTRY/ NEW/
CHAPTER TYPE OF CASE ORGANIZATION/INDUSTRY REGION REVISED PAGE

■ International Business Fuji Xerox and Xerox US/Japan Revised 271

Strategy in Action

■ Real Case Mountain Equipment Co-op: Canada Revised 278

a small business

■ Real Case Benetton EU: Italy Revised 279

Chapter 9 ■ Active Learning Case Procter & Gamble US Revised 291

Organizing
Strategy ■ International Business Sanofi-Aventis EU: France/ Revised 295
Strategy in Action Germany

■ International Business Making the matrix work EU/US/Japan 302

Strategy in Action

■ Real Case LVMH: organizing luxury products EU: France Revised 312
in the international arena

■ Real Case Command Alkon: small but US 313

increasingly global

Chapter 10 ■ Active Learning Case Worldwide operations and local EU Revised 319
Corporate strategies of ABB
Strategy and
National ■ International Business Nokia and Ericsson: moving EU Revised 328
Competitiveness Strategy in Action beyond mobiles

■ International Business Renewed advantage through Asia New 334

Strategy in Action vertical integration at Floreal
Knitwear

■ Real Case There is no global beer, only local US/EU 342

■ Real Case IBM US/EU Revised 344

Chapter 11 ■ Active Learning Case The environment, NGOs, EU/US Revised 350
Multinational and MNEs
Enterprises as
Responsible ■ International Business 3M US Revised 354
Stakeholders Strategy in Action

■ International Business Is The Body Shop an ethical EU: UK Revised 365

Strategy in Action business?

■ Real Case Dell: B2C US/Emerging 371

Economies:
China

■ Real Case Maersk Group EU: Denmark/ 372

US/Asia
xxvi Guide to the Case Studies

COUNTRY/ NEW/
CHAPTER TYPE OF CASE ORGANIZATION/INDUSTRY REGION REVISED PAGE

Chapter 12 ■ Active Learning Case GE production: from Six Sigma to US Revised 382
Production the GE Store
Strategy
■ International Business Gap Inc.: a successful “hollow EU/US Revised 389
Strategy in Action corporation”

■ International Business End of an era: the Goodyear plant UK New 391

Strategy in Action closure

■ Real Case Flextronics Emerging Revised 411

Economies:
Singapore

■ Real Case Nike US Revised 413

Chapter 13 ■ Active Learning Case Adidas: promoting a global sports UK/Brazil New 417
Marketing brand
Strategy
■ International Business Weeby buys Tappy US/Emerging New 426
Strategy in Action Economies:
Vietnam

■ International Business IKEA in international markets EU: Sweden Revised 428

Strategy in Action

■ Real Case Bang & Olufsen EU: Denmark/ Revised 441

US

■ Real Case Mirum—never lose your sense of US New 443

wonder!

Chapter 14 ■ Active Learning Case The Coca-Cola Company thinks US Revised 448
Human Resource local
Management
Strategy ■ International Business The glass ceiling UK New 455
Strategy in Action

■ International Business Primark: putting global UK New 463

Strategy in Action stakeholders first

■ Real Case Offshoring to India US/Emerging 472

Economies:
India

■ Real Case Executive search firms EU Revised 473

Chapter 15 ■ Active Learning Case Nestlé in Nigeria Emerging New 478

Political Risk and Economies:
Negotiation Nigeria
Strategy
 Guide to the Case Studies xxvii

COUNTRY/ NEW/
CHAPTER TYPE OF CASE ORGANIZATION/INDUSTRY REGION REVISED PAGE

■ International Business Political risk for De Beers Emerging Revised 493

Strategy in Action Economies:
South Africa

■ International Business Intel effect Emerging New 494

Strategy in Action Economies:
Costa Rica

■ Real Case Yukos and the Russian oligarchs Emerging Revised 505
Economies:
Russia

■ Real Case Problems with ports Japan/ Revised 506

Emerging
Economies:
Kenya

Chapter 16 ■ Active Learning Case Financial transparency at EU: UK/US New 512
International Siemens
Financial
Management ■ International Business Worldwide tax havens Emerging Revised 522
Strategy in Action Economies

■ International Business Sovereign wealth funds Middle East/ Revised 525

Strategy in Action US/EU

■ Real Case Skandia EU: Sweden Revised 542

■ Real Case Ford and Volvo US/EU: Revised 543

Sweden

Chapter 17 ■ Active Learning Case The future is Orange EU: France Revised 550
European Union
■ International Business VW diesel dispute US/EU New 560
Strategy in Action

■ International Business Deutsche Bahn: more than a EU: Germany/ Revised 568
Strategy in Action railroad US

■ Real Case Accor budget hotels EU: France Revised 576

■ Real Case Carrefour EU: France Revised 578

Chapter 18 ■ Active Learning Case Doing business in Japan Japan Revised 583
Japan
■ International Business Kirin Beer goes international Japan Revised 597
Strategy in Action

■ International Business Wal-Mart takes Seiyu US/Japan Revised 604

Strategy in Action
xxviii Guide to the Case Studies

COUNTRY/ NEW/
CHAPTER TYPE OF CASE ORGANIZATION/INDUSTRY REGION REVISED PAGE

■ Real Case Renault and Nissan: no pain, Japan/EU: Revised 610

no gain France

■ Real Case Sony: diversifying into the Japan New 613

automobile industry?

Chapter 19 ■ Active Learning Case NAFTA US/Emerging Revised 620

North America Economies:
Mexico and
Canada

■ International Business Bombardier Canada/ Revised 625

Strategy in Action Emerging
Economies:
Brazil

■ International Business Mexico and NAFTA US/Emerging Revised 637

Strategy in Action Economies:
Mexico

■ Real Case Jumex of Mexico Emerging Revised 643

Economies:
Mexico

■ Real Case GlaxoSmithKline in the United UK/US Revised 644

States

Chapter 20 ■ Active Learning Case Acer Taiwan goes international Emerging Revised 649
Emerging Economies:
Economies Taiwan

■ International Business From Oserian to Tesco: the Emerging Revised 661

Strategy in Action Kenyan cut flower industry Economies:
Kenya

■ International Business Korean chaebols: Hyundai and Emerging Revised 669

Strategy in Action Samsung Economies: S.
Korea

■ Real Case The Indian IT, software, and Emerging Revised 673
services industry Economies:
India

■ Real Case Bumrungrad International in Emerging Revised 676

Thailand Economies:
Thailand
Other documents randomly have
different content
 modification of the human
body by alchemy, 65;
alchemy the science of the
four elements, 93;
the Seal of God set on the
secret of alchemy, 165

Alfarabi, 48

Alipili, 22, 23

Altotas, 221, 234

Ancient War of the Knights, 43

Anima Magica Abscondita, 21

Anonymous adept, 184

Antimony, Basil Valentine’s

preparation for the study of,
17;
the Triumphal Chariot of
Antimony, 121

Aphrodite Urania, 37

Apono, Peter d’, 88

Aquinas, St Thomas, 61

Argent Vive—Reduction of
metals into sophic Argent
Vive, 87;
the Medicine of all Metals, 90;
the first thing to be
ascertained in alchemy is
the significance of this
term, 92
Arnold de Villanova, 88

Ars Lulliana, 68

Avicenna, 51

Azoth, or The Star in the East, a

forthcoming work on the
psychic potencies which
enter into the higher act of
transmutation, on the
mysteries of spiritual
chemistry, and on the
possibilities of practical
transcendentalism, 37

Bacon, Roger, 63

Balsamo, Joseph, Travels,

Adventures, and
Imprisonments, 220

Basil, Valentine, 120

Belin, Albert, 186

Berigard of Pisa, 148

Bird, William, unknown adept,

150

Böhme, Jacob, 161

Bono, Peter, 118

Borri, Guiseppe Francesco, 208

Botticher, John Frederich,
neophyte, 212

Braccesco, Giovanni, 151

Busardier, unknown adept, 182

Butler, 168

Cagliostro, Count Allesandro,

name assumed by
Balsamo, 230

Calcination, an alchemical
process, 13, 19

Canons of Espagnet, 19

Charnock, Thomas, 148

Chemistry, said to have no

connection with alchemy,
14;
distinction between alchemy
and chemistry, 21, 25;
a counter view, 44

Contemplation, a preparation
for alchemical practices, 18

Cremer, John, pseudo-abbot of

Westminster, 83

Dalton, Thomas, 133

Dee, John, 153

Delisle, 216

D’Espagnet, Jean, 170;

on the obstacles which beset
the alchemist, 39

Diana Unveiled, 180

Dissolution, an alchemical
process, 12

Dominic, St, said to have been

an adept, 58

Dubois, descendant of Flamel,

114

Dunstan, St, Book of, 154, 155

Egyptian Masonry, 245, 250,

and Appendix II.

Elias the Artist, 193

Eliphas Lévi, 82

Elixir, the White and Red, 195

Étoile Flamboyante, 59

Eugenius Philalethes, 21, 31,

189

Exaltation, an alchemical
process, 32
Fabre, Pierre Jean, 200

Ferarius, 92

Figuier, Louis, alchemical critic,

27, 63

Fioravanti, Leonardi, 153

Flamel, Nicholas, 95

Fontaine, John, 129

Galip, 55

Geber, 44

Generation of Metals, 38, 48,

133

Goëtic magic, 65

Gold, 10, 28, 140

Grand Magisterium, 57, 123

Grand Secret and Grand Act,

170, 189

Great Art, 130

Grimoire, 60

Gustenhover, 181
Helmont, J. B. Van, 166

Helvetius, John Frederick, 201

Hermetic—Aim of Hermetic
science, 29;
true method of Hermetic
interpretation, 30;
supreme secret of Hermetic
philosophy, 66;
the Hermetic art a gift of God,
68

Heydon, John, 210

Hitchcock—His Remarks on
Alchemy and the
Alchemists, 10, 14, 23, 30

Interpretation of Hermetic
theories, &c.—Hermetic
typology, 10;
the moral method, 13;
the Psychic method, 122

Invocation as a preparation for

the practice of alchemy, 17

Isaac of Holland, 123

Jean de Meung, 90

Johannes de Rupecissa, 119

John XXII., Pope, 93

Kalid, an initiated monarch, 54

Khunrath, Henry, 159;

treats of spiritual alchemy, 33,
36

Lascaris, 211

Lavures, alchemical operations,

112

Light—Veritable light of
alchemy, 15;
vision in the Divine Light, 16;
light the First Matter of the
Magnum Opus, 38

Magic Chain, 22

Magnum Opus—The first

Matter of the Magnum
Opus in its psychic aspect
to be revealed in a
forthcoming work, Azoth,
or The Star in the East,
37;
processes for the
accomplishment of the
Magnum Opus, 42;
 these described by Arnold,
90;
the composition of the Stone
is the accomplishment of
the Magnum Opus, 152;
manner of the
accomplishment of the
Magnum Opus described
in “The Adventures of an
Unknown Philosopher,”
186

Maier, Michael, 58, 87, 160

Man—The concealed subject of

every adept, 11;
the mystic vase of election,
14

Manuel, Domenico, 215

Mary of Alexandria, 36

Matter, the first matter of the

Magnum Opus, said to be
gold, 28;
defined as a fifth element, 39;
one only and self-same thing,
40;
its true nature not disclosed
by the adepts, 41;
its informing spirit variously
adaptable, 43;
a duplex nature, 53;
contained in silver and gold,
87;
the seed of every metal can
be reduced into the first
 matter, 93;
figured in the book of Rabbi
Abraham, 103;
found by Nicholas Flamel,
106;
mercury the true first matter,
118;
the matter of the
philosophical stone a
viscous water, 119;
said to be Saturn, or lead,
124;
is found everywhere, 136;
may be discovered by
studying the best books
of the philosophers, 145

Medicine—Properties of a
universal medicine
attributed to the Stone, 13;
the Stone a medicine for
metals and man, 32;
life is prolonged by the stone,
123;
application of the tincture as
a medicine for the
human body, 148

Mercury—Identified with the

supernatural, 11;
obstacles to its discovery, 39;
sophic mercury described by
Avicenna, 52;
mercury the water of metals,
129;
a matchless treasure, 197
Morien, 53

Morning Star, 36

New Birth, 11, 12

Norton, Thomas, 130

Obereit, John Hermann, 219

One Thing Needful—The

exaltation of the cognising
faculty, 15

Orizon Æternitatis, mystical

term of Paracelsus, 36

Palingenesis, 92

Philalethes, Eirenæus, 187;

on the Aqua Philosophorum,
22

Picus de Mirandola, 136

Psychic Chemistry—A Scheme

of Absolute Reconstruction,
36;
accomplished by the Divine
Power in the Soul, 22;
general observations on
spiritual alchemistry, 32-
37
Regnauld, Brother, 63

Rhasis, 46

Richthausen, his transmutations

with stolen powder, 183

Ripley, George, 134;

his description of the Stone,
41;
supposed to have initiated
Thomas Norton, 130

Romance of the Rose, 90

Rose Nobles, 82, 84, 86

Rosicrucians—Had other
alchemical objects than
metallic transmutations, 36;
the associates defended by
Michael Maier, 160;
initiation offered by the
Rosicrucians to
Sendivogius, 179

Sendivogius, Michael, 175;

“The New Light of Alchemy”
falsely ascribed to this
neophyte, 21, 31

Separation an alchemical
process, 12, 17

Sethon, Alexander, 171

Son of the Sun, 37

Sophistication of metals, 62

Starkey, George, 165, 195, 197,

&c.

Stone of the Philosophers—

Said to be a symbol of
immortality, 13;
analogous in its nature to the
state of primeval man,
31;
Transmutation accomplished
by its means, 38;
in appearance a subtle,
brown, and opaque
earth, 132;
dark, disesteemed, and grey
in colour, 165;
the seed out of which gold
and silver are generated,
201

Subject of Alchemy—According
to Hitchcock, 13;
according to George Starkey,
24

Suggestive inquiry concerning

the Hermetic Mystery, 9,
14, 17, 24, 30, 34

Sulphur (Sophic)—Said to
symbolise Nature, 11;
sophic sulphur and the
conscience, 12;
difficulties in its discovery, 39;
 described by Avicenna, 52

Transmutation—Doubts as to
the significance of the term,
9;
identified with spiritual
conversion, 13;
the physical theory of
Transmutation, 38, &c.;
possibility of the fact, 33

Transmutations performed by
adepts and their
emissaries, 84, 94, 106,
118, 133, 136, 148, 156,
167, 168, 177, 178, 181,
183, 184, 185, 196, 201-
208, 212-216, 217, 218

Trévisan, Bernard, 124;

honoured by Philalethes, 194

Tschoudy, Baron, 39

Typology—Possibility of an
infinite variety of
interpretations of any
sequence of typology, 29

Urbigerus—His alchemical
aphorisms, 40
 Vase of the Philosophers—
Identified with man, 14;
its true nature unexplained by
adepts, 41;
described by Geber, 46

Vaughan, Thomas, 187

Wisdom Faculty, 15

Wood of Life, 152

Zachaire, Denis, 140

Turnbull & Spears, Printers, Edinburgh.

 PUBLISHED BY MR GEORGE
REDWAY.

With Illustrations. Crown 8vo. Historico-Symbolical Binding. 454 pp,

price 7s. 6d.
THE REAL
HISTORY OF THE
ROSICRUCIANS.
Founded on their own
Manifestoes, and on Facts
and Documents collected
from the Writings of
Initiated Brethren. By
ARTHUR EDWARD
WAITE.
“We desire to speak of Mr Waite’s work
with the greatest respect on the points of
honesty, impartiality, and sound
scholarship. Mr Waite has given, for the
first time, the documents with which
Rosicrucianism has been connected in
extenso.”—Literary World.
“There is something mysterious and
fascinating about the history of the Virgin
Fraternity of the Rose.”—Saturday
Review.
“A curious and interesting story of the
doings of a mysterious association in
times when people were more ready to
believe in supernatural phenomena than
 the highly-educated, matter-of-fact
people of to-day.”—Morning Post.

Crown 8vo, cloth, with Frontispiece, price 7s. 6d. Third Edition,
revised and enlarged.
MAGIC, WHITE
AND BLACK; or,
The Science of Finite
and Infinite Life, containing
Practical Hints for Students
of Occultism. By FRANZ
HARTMANN, M.D.
“Dr Hartmann’s ‘Magic,’ as compared
with ‘Light on the Path,’ is a bulky tome;
and in its closely-printed pages students
of occultism will find hints, ‘practical’ and
otherwise, likely to be of great service to
them in the pursuit of their studies and
researches. It was not the author’s
‘object, in composing this book, to write
merely a code of Ethics, and thereby to
increase the already existing enormous
mountain of unread moral precepts, but
to assist the student of occultism in
studying the elements of which his own
soul is composed, and to learn to know
his own physical organism. I want to give
an impulse to the study of a science
which may be called the “anatomy and
physiology of the Soul,” which
investigates the elements of which the
soul is composed, and the source from
which man’s desires and emotions
spring.’ Dr Hartmann’s compendium is
‘an attempt to show the way how man
may become a co-operator of the Divine
Power, whose product is Nature,’ and his
pages, as described by himself,
‘constitute a book which may properly
have the title of “Magic,” for if the readers
succeed in practically following its
teaching, they will be able to perform the
greatest of all magical feats, the spiritual
regeneration of Man.’ Dr Hartmann’s
book has also gone into a third edition,
and has developed from an insignificant
pamphlet, ‘written originally for the
purpose of demonstrating to a few
inexperienced inquirers that the study of
the occult side of nature was not identical
with the vile practices of sorcery,’ into a
compendious volume, comprising, we
are willing to believe, the entire
philosophic system of occultism. There
are abundant evidences that the science
of theosophy has made vast strides in
public estimation of late years, and that
those desirous of experimenting in this
particular and in many respects
fascinating, branch of ethics, have
leaders whose teaching they can follow
with satisfaction to themselves.”—
Saturday Review.

Crown 8vo, Cloth, price 7s. 6d.

POSTHUMOUS
HUMANITY; A
Study of Phantoms.
By ADOLPHE D’ASSIER,
 Member of the Bordeaux
Academy of Sciences.
Translated and Annotated
by HENRY S. OLCOTT,
President of the
Theosophical Society. To
which is added an
Appendix shewing the
Popular Beliefs current in
India respecting the Post-
mortem Vicissitudes of the
Human Entity.
Truth says—“If you care for ghost
stories, duly accredited, excellently told,
and scientifically explained, you should
read the translation by Colonel Olcott of
M. Adolphe d’Assier’s ‘Posthumous
Humanity,’ a study of phantoms. There is
no dogmatism so dogged and offensive
as that of the professed sceptic—of the
scientific sceptic especially—who ex vi
termini ought to keep the doors of his
mind hospitably open; and it is
refreshing, therefore, to find such
scientists as Wallace, Crookes, and M.
d’Assier, who is a Positivist, in the ranks
of the Psychical Research host. For my
own part, though I have attended the
séance of a celebrated London medium,
and there convinced myself beyond all
doubt of his imposture, I no more think
that the detection of a medium fraud
disposes of the whole question of ghosts,
&c., than that the detection of an atheist
priest disposes of the whole question of
Christianity. Whatever view you take of
this controversy, however, I can promise
you that you will find the book interesting
at least if not convincing.”

Pott 8vo, Cloth, Limp, price 1s. 6d.

LIGHT ON THE
PATH. A Treatise
written for the
Personal Use of those who
are ignorant of the Eastern
Wisdom, and who desire to
enter within its influence.
Written down by M. C.,
Fellow of the Theosophical
Society. New Edition, with
Notes, by the Author.
“So far as we can gather from the
mystic language in which it is couched,
‘Light on the Path’ is intended to guide
the footsteps of those who have
discarded the forms of religion while
retaining the moral principle to its fullest
extent. It is in harmony with much that
was said by Socrates and Plato,
although the author does not use the
phraseology of those philosophers, but
rather the language of Buddhism, easily
understood by esoteric Buddhists, but
difficult to grasp by those without the
pale. ‘Light on the Path’ may, we think,
be said to be the only attempt in this
language and in this century to put
practical occultism into words; and it may
be added, by way of further explanation,
that the character of Gautama Buddha,
as shown in Sir Edwin Arnold’s ‘Light of
Asia,’ is the perfect type of the being who
has reached the threshold of Divinity by
this road. That it has reached a third
edition speaks favourably for this multum
in parvo of the science of occultism; and
‘M. C.’ may be expected to gather fresh
laurels in future.”—Saturday Review.

Crown 8vo, cloth, price 6s.

A BIOGRAPHICAL ROMANCE.

A PROFESSOR OF
ALCHEMY (Denis
Zachaire).
By PERCY ROSS, Author
of “A Comedy without
Laughter” and “A Misguidit
Lassie.”
“A clever story.... The hero is an
alchemist who actually succeeds in
manufacturing pure gold.”—Court
Journal.
“Shadowy and dream-like.”—
Athenæum.
“An interesting and pathetic picture.”—
Literary World.
“The story is utterly tragical, and is
powerfully told.”—Westminster Review.
“A vivid picture of those bad old
times.”—Knowledge.
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