International Business Competing in the Global Marketplace International Business Competing in the Global Marketplace 12e C h a r l e s W. H i l l UNIVERSITY OF WASHINGTON G. H u l t MICHIGAN STATE UNIVERSITY INTERNATIONAL BUSINESS: COMPETING IN THE GLOBAL MARKETPLACE, TWELFTH EDITION Published by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121. Copyright © 2019 by McGraw-Hill Education.
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All credits appearing on page or at the end of the book are considered to be an extension of the copyright page. Library of Congress Control Number: 2017963876 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.com/highered For my mother June Hill, and t h e m e m o r y o f m y f a t h e r, M i k e H i l l — C h a r l e s W. H i l l For Gert & Margareta Hult, m y p a r e n t s — G.
H u l t about the AUTHORS C h a r l e s W. H i l l University of Washington Charles W. Hill is the Hughes M. and Katherine Blake Professor of Strategy and International Business at the Foster School of Business, University of Washington.
The Foster School has a Center for International Business Education and Research (CIBER), one of only 17 funded by the U. Department of Education, and is con- sistently ranked as a Top-25 business school. Learn more about Professor Hill at foster.edu/faculty-research/directory/charles-hill A native of the United Kingdom, Professor Hill received his PhD from the University of Manchester, UK. In addition to the University of Washington, he has served on the faculties of the University of Manchester, Texas A&M University, and Michigan State University.
Professor Hill has published over 50 articles in top academic journals, including the Academy of Management Journal, Academy of Management Review, Strategic Management Journal, and Organization Science. Professor Hill has also published several textbooks including International Business (McGraw-Hill) and Global Busi- ness Today (McGraw-Hill). His work is among the most widely cited in the world in international business and strategic management. Beginning in 2014, Dr.
Hill partnered with Dr. Tomas Hult in a formidable co-authorship of the IB franchise of textbooks (International Business, Global Business Today). This brought together two of the most cited international business scholars in history. Professor Hill has taught in the MBA, Executive MBA, Technology Management MBA, Management, and PhD programs at the University of Washington.
During his time at the University of Washington he has received over 25 awards for teaching excellence, including the Charles E. Summer Outstanding Teaching Award. Professor Hill works on a private basis with a number of organizations. His clients have included Microsoft, where he has been teaching in-house executive education courses for two decades.
He has also consulted for a variety of other large companies (e., AT&T Wireless, Boeing, BF Goodrich, Group Health, Hexcel, Microsoft, Philips Healthcare, Philips Medical Systems, Seattle City Light, Swedish Health Services, Tacoma City Light, Thompson Financial Services, WRQ, and Wizards of the Coast). Professor Hill has also served on the advisory board of several start-up companies. For recreation, Professor Hill enjoys skiing, and competitive sailing! G. H u l t Michigan State University G.
Hult is the John W. Byington Endowed Chair, professor of marketing and international business, and director of the International Business Center in the Eli Broad College of Business at Michigan State University. The Broad College has a Center for International Business Education and Research (CIBER), one of only 17 funded by the U. Department of Education, and is consistently ranked as a Top-25 business school.
Learn more about Professor Hult at broad.edu/ facultystaff/hult A native of Sweden, Professor Hult received a mechanical engineer degree in Sweden before obtaining a PhD at The University of Memphis. In addition to Michigan State University, he has served on the faculties of Florida State University vi and the University of Arkansas at Little Rock. Hult holds visiting professorships in the International Business group of his native Uppsala University, Sweden (since 2013) and the International Business division of Leeds University, UK (since 2010). Michigan State, Uppsala, and Leeds are all ranked in the top 10 in the world in international business research.
Several studies have ranked Professor Hult as one of the most cited scholars in the world in business and management. He served as editor of Journal of the Academy of Marketing Science, a Financial Times Top-50 business journal, and has published more than 70 articles in premier business journals, including Journal of International Business Studies, Academy of Management Journal, Strategic Management Journal, Journal of Management, Journal of Marketing, Journal of the Academy of Marketing Science, Journal of Retailing, Journal of Operations Management, Decision Sciences, and IEEE. He has also published several textbooks including International Business (McGraw-Hill) and Global Business Today (McGraw-Hill). Hult’s other books include Second Shift: The Inside Story of the Keep GM Movement, Global Supply Chain Management, Total Global Strategy, and Extending the Supply Chain.
He is a regular contributor of op-ed and articles in the popular press (e., Time, Fortune, World Economic Forum, The Conversation). Professor Hult is a well-known keynote speaker on international business, interna- tional marketing, global supply chain management, global strategy, and marketing strat- egy. He teaches in doctoral, master’s, and undergraduate programs at Michigan State University. He also teaches frequently in executive development programs and has developed a large clientele of the world’s top multinational corporations (e., ABB, Albertsons, Avon, BG, Bechtel, Bosch, BP, Defense Logistics Agency, Domino’s, FedEx, Ford, FreshDirect, General Motors, GroceryGateway, HSBC, IBM, Michigan Economic Development Corporation, Masco, NASA, Raytheon, Shell, Siemens, State Farm, Steelcase, Tech Data, and Xerox).
Tomas Hult is an elected Fellow of the Academy of International Business (AIB), one of only about 90 scholars worldwide receiving this honor, and serves as the executive director and foundation president of AIB. He also serves on the U. District Export Council and holds board member positions on the International Trade Center of Mid-Michigan and the Sheth Foundation. Tomas enjoys tennis, golf, and traveling as his favorite recreational activities.
vii 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 90 Chapter 5 Ethics, Corporate Social Responsibility, and Sustainability 128 part three The Global Trade and Investment Environment Chapter 6 International Trade Theory 158 Chapter 7 Government Policy and International Trade 192 Chapter 8 Foreign Direct Investment 222 Chapter 9 Regional Economic Integration 252 part four The Global Monetary System Chapter 10 The Foreign Exchange Market 286 Chapter 11 The International Monetary System 312 Chapter 12 The Global Capital Market 340 part five The Strategy and Structure of International Business Chapter 13 The Strategy of International Business 362 Chapter 14 The Organization of International Business 392 Chapter 15 Entry Strategy and Strategic Alliances 430 part six International Business Functions Chapter 16 Exporting, Importing, and Countertrade 460 Chapter 17 Global Production and Supply Chain Management 486 Chapter 18 Global Marketing and R&D 516 Chapter 19 Global Human Resource Management 552 Chapter 20 Accounting and Finance in the International Business 582 viii part seven Integrative Cases Global Medical Tourism 609 Venezuela under Hugo Chávez and Beyond 611 Political and Economic Reform in Myanmar 612 Will China Continue to Be a Growth Marketplace? 613 Lead in Toys and Drinking Water 614 Creating the World’s Biggest Free Trade Zone 616 Sugar Subsidies Drive Candy Makers Abroad 617 Volkswagen in Russia 618 The NAFTA Tomato Wars 619 Subaru’s Sales Boom Thanks to the Weaker Yen 620 The IMF and Ukraine’s Economic Crisis 621 The Global Financial Crisis and Its Aftermath: Declining Cross-Border Capital Flows 622 Ford’s Global Platform Strategy 624 Philips’ Global Restructuring 625 General Motors and Chinese Joint Ventures 626 Exporting Desserts by a Hispanic Entrepreneur 627 Apple: The Best Supply Chains in the World? 628 Domino’s Global Marketing 630 Siemens and Global Competitiveness 632 Microsoft and Its Foreign Cash Holdings 633 Glossary 635 Organization Index 645 Name Index 650 Subject Index 652 ix THE PROVEN CHOICE FOR INTERNATIONAL BUSINESS RELEVANT. and they will be expected to understand the implications of international business for their organization’s strategy, It is now more than a quarter of a century since work be- structure, and functions in the context of the global mar- gan on the first edition of International Business: Compet- ketplace. We are proud and delighted to have put together ing in the Global Marketplace. By the third edition the this international business learning experience for the book was the most widely used international business text leaders of tomorrow.
in the world. Since then its market share has only in- Over the years, and through now 12 editions, creased. The success of the book can be attributed to a Dr. Charles Hill has worked hard to adhere to these goals.
number of unique features. Specifically, for the twelfth Since Global Business Today 9e (2015), and International edition we have developed a learning program that Business 11e (2017), Charles’s co-author, Dr. Tomas Hult, · Is comprehensive, state of the art, and timely. follows the same approach.
As a team, we have been guided not only by our own reading, teaching, and re- · Is theoretically sound and practically relevant. search but also by the invaluable feedback we received · Focuses on applications of international business from professors and students around the world, from re- concepts. viewers, and from the editorial staff at McGraw-Hill Edu- · Tightly integrates the chapter topics throughout. Our thanks go out to all of them.
· Is fully integrated with results-driven technology. · Takes full and integrative advantage of RELEVANT AND COMPREHENSIVE globalEDGE.edu—the Google-ranked #1 web To be relevant and comprehensive, an international busi- resource for “international business resources.” ness package must International Business, now in its twelfth edition, co-authored · Explain how and why the world’s cultures, coun- by Charles W. Hult, is a compre- tries, and regions differ. hensive and case-oriented version of our text that lends itself to the core course in international business for those · Cover economics and politics of international trade and investment.
courses that want a deeper focus on the global monetary system, structure of international business, international · Tackle international issues related to ethics, corpo- accounting, and international finance. We cover more rate social responsibility, and sustainability. and integrated cases in International Business 12e and we · Explain the functions and form of the global mon- provide a deeper treatment of the global capital market, etary system.