(Test Bank) Introduction To Global Business Introduction To Global Business: Understanding The International Environment And Global Business Functions

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01188_fm_ptg01_i-xx.indd 4 14/10/15 8:27 PM `ˆÌi`Ê܈̅Ê̅iÊ`i“œÊÛiÀȜ˜ÊœvÊ ˜vˆÝÊ*ÀœÊ*Ê `ˆÌœÀ Ê /œÊÀi“œÛiÊ̅ˆÃʘœÌˆVi]ÊۈÈÌ\ÊÜÜÜ°ˆVi˜ˆ°Vœ“É՘œVŽ°…Ì“5 REASONS to buy your textbooks and course materials at SAVINGS: Prices up to 75% off, daily coupons, and free shipping on orders over $25 CHOICE: Multiple format options including textbook, eBook and eChapter rentals CONVENIENCE: Anytime, anywhere access of eBooks or eChapters via mobile devices SERVICE: Free eBook access while your text ships, and instant access to online homework products STUDY TOOLS: Study tools* for your text, plus writing, research, career and job search resources *availability varies1 2 3 4 5 Find your course materials and start saving at: www.cengagebrain.com Engaged with you. www.cengage.comSource Code: 14M-AA0107 01188_ifc_ptg01_hires.indd 1 12/10/15 8:28 AMCopyright 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. `ˆÌi`Ê܈̅Ê̅iÊ`i“œÊÛiÀȜ˜ÊœvÊ ˜vˆÝÊ*ÀœÊ*Ê `ˆÌœÀ Ê /œÊÀi“œÛiÊ̅ˆÃʘœÌˆVi]ÊۈÈÌ\ÊÜÜÜ°ˆVi˜ˆ°Vœ“É՘œVŽ°…Ì“introduction to global Business Understanding the International Environment and Global Business Functions Australia • Brazil • Mexico • Singapore • United Kingdom • United States Second edition Julian E. Gaspar Texas A&M University antonio arrEola- risa Texas A&M UniversitylEonard Bi Erman Texas A&M University richard t. hisE Texas A&M UniversityJam Es W. Kolari Texas A&M University l. murphy smith Murray State University 01188_fm_ptg01_i-xx.indd 1 14/10/15 8:27 PMCopyright 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. `ˆÌi`Ê܈̅Ê̅iÊ`i“œÊÛiÀȜ˜ÊœvÊ ˜vˆÝÊ*ÀœÊ*Ê `ˆÌœÀ Ê /œÊÀi“œÛiÊ̅ˆÃʘœÌˆVi]ÊۈÈÌ\ÊÜÜÜ°ˆVi˜ˆ°Vœ“É՘œVŽ°…Ì“01188_fm_ptg01_i-xx.indd 4 14/10/15 8:27 PM This is an electronic version of the print textbook. Due to electronic rights restrictions, some third party content may be suppressed. Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. The publisher reserves the right to remove content from this title at any time if subsequent rights restrictions require it. Forvaluable information on pricing, previous editions, changes to current editions, and alternate formats, please visit www.cengage.com/highered to search by ISBN#, author, title, or keyword for materials in your areas of interest. Important Notice: Media content referenced within the product description or the product text may not be available in the eBook version. Copyright 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. `ˆÌi`Ê܈̅Ê̅iÊ`i“œÊÛiÀȜ˜ÊœvÊ ˜vˆÝÊ*ÀœÊ*Ê `ˆÌœÀ Ê /œÊÀi“œÛiÊ̅ˆÃʘœÌˆVi]ÊۈÈÌ\ÊÜÜÜ°ˆVi˜ˆ°Vœ“É՘œVŽ°…Ì“© 2017, 2014 Cengage Learning ALL RIGHTS RESERVED. No part of this work covered by the copyright herein may be reproduced, transmitted, stored, or used in any form or by any means graphic, electronic, or mechanical, including but not limited to photocopying, recording, scanning, digitizing, taping, Web distribution, information networks, or information storage and retrieval systems, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without the prior written permission of the publisher. Library of Congress Control Number: 2015954158 ISBN: 978 -1-305-50118-8 Cengage Learning 20 Channel Center Street Boston, MA 02210 USA Cengage Learning is a leading provider of customized learning solutions with employees residing in nearly 40 different countries and sales in more than 125 countries around the world. Find your local representative at www.cengage.com Cengage Learning products are represented in Canada by Nelson Education, Ltd. To learn more about Cengage Learning Solutions, visit www.cengage.com Purchase any of our products at your local college store or at our preferred online store www.cengagebrain.comIntroduction to Global Business: Understanding the International Environment & Global Business Functions, 2e Julian E. Gaspar, Antonio Arreola-Risa, Leonard Bierman, Richard T. Hise, James W. Kolari, and L. Murphy Smith Vice President, General Manager, Social Science & Qualitative Business: Erin Joyner Product Director: Jason Fremder Product Manager: Mike RocheContent Developer: John Rich Product Assistant: Jamie MackMarketing Director: Kristen HurdMarketing Manager:  Emily HorowitzMarketing Coordinator: Christopher WalzArt and Cover Direction, Production Management, and Composition: Lumina Datamatics Inc. Intellectual Property Analyst: Diane Garrity Project Manager: Sarah Shainwald Manufacturing Planner: Ron MontgomeryCover Image(s): ©Leaflux/ShutterstockFor product information and technology assistance, contact us at Cengage Learning Customer & Sales Support, 1-800-354-9706 For permission to use material from this text or product, submit all requests online at www.cengage.com/permissions Further permissions questions can be emailed to permissionrequest@cengage.com Printed in the United States of America Print Number: 01 Print Year: 2015 01188_fm_ptg01_i-xx.indd 2 10/26/15 5:08 PM `ˆÌi`Ê܈̅Ê̅iÊ`i“œÊÛiÀȜ˜ÊœvÊ ˜vˆÝÊ*ÀœÊ*Ê `ˆÌœÀ Ê /œÊÀi“œÛiÊ̅ˆÃʘœÌˆVi]ÊۈÈÌ\ÊÜÜÜ°ˆVi˜ˆ°Vœ“É՘œVŽ°…Ì“Copyright 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. `ˆÌi`Ê܈̅Ê̅iÊ`i“œÊÛiÀȜ˜ÊœvÊ ˜vˆÝÊ*ÀœÊ*Ê `ˆÌœÀ Ê /œÊÀi“œÛiÊ̅ˆÃʘœÌˆVi]ÊۈÈÌ\ÊÜÜÜ°ˆVi˜ˆ°Vœ“É՘œVŽ°…Ì“WCN: 02-200-203iiiPreface xiii About the authors xix Part I Foundations of Global Business 1 Chapter 1: The Rise of Globalization 2 Chapter 2: The Evolution of International Business 34 Chapter 3: Regional Economic Integration 58 Chapter 4: The International Flow of Funds and Exchange Rates 88 Part II Global Business Environment 115 Chapter 5: The Cultural Environment 116 Chapter 6: The Legal and Political Environment of Global Business 142 Chapter 7: Corruption and Ethics in Global Business 166 Part III Global Business Strategy and Organization 191 Chapter 8: Entry Strategies in Global Business 192 Chapter 9: Control of Global Business 218 Chapter 10: The Organization of Global Business 240 Part IV Managing Global Business 265 Chapter 11: Global Human Resource Management 266 Chapter 12: Global Marketing 288 Chapter 13: Global Operations and Supply-Chain Management 314 Chapter 14: Global Financial Management 338 Chapter 15: Accounting and Taxation in Global Business 366 Subject Index 391 Organization Index 403 brief contents 01188_fm_ptg01_i-xx.indd 3 14/10/15 10:06 PMCopyright 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. `ˆÌi`Ê܈̅Ê̅iÊ`i“œÊÛiÀȜ˜ÊœvÊ ˜vˆÝÊ*ÀœÊ*Ê `ˆÌœÀ Ê /œÊÀi“œÛiÊ̅ˆÃʘœÌˆVi]ÊۈÈÌ\ÊÜÜÜ°ˆVi˜ˆ°Vœ“É՘œVŽ°…Ì“01188_fm_ptg01_i-xx.indd 4 14/10/15 8:27 PMCopyright 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. `ˆÌi`Ê܈̅Ê̅iÊ`i“œÊÛiÀȜ˜ÊœvÊ ˜vˆÝÊ*ÀœÊ*Ê `ˆÌœÀ Ê /œÊÀi“œÛiÊ̅ˆÃʘœÌˆVi]ÊۈÈÌ\ÊÜÜÜ°ˆVi˜ˆ°Vœ“É՘œVŽ°…Ì“v contents Preface xiii About the authors xix Part I Foundations of Global Business 1 Chapter 1: The Rise of Globalization 2 Introduction 4 1-1 What Is Globalization? 5 1-1a Emerging Economies 6 1-1b Decoupling and the Move to a Multipolar World Economic Order 8 1-2 Key International Institutions That Facilitate Globalization 10 1-2a The International Monetary Fund 10 1-2b The World Bank 12 1-2c The World Trade Organization 13 1-3 Institutional Structure and Its Impact on Globalization 14 1-3a What Is Institutional Structure? 14 1-3b Transparency of Political Institutions 15 1-3c Adaptive Institutions to Strengthen Public Participation 16 1-3d Independent Judiciary and Free Press 17 1-4 Effective Policy Measures That Promote Globalization 17 1-4a Good Governance 17 1-4b Competitive Markets 18 1-4c Property Rights 19 1-4d Anticorruption Policies 19 1-5 Impact of Information Technology on Globalization 19 1-5a The Digital Generation 20 1-5b Expanding the Global Use of Information Technology 20 1-5c The Digital Divide Myth 21 1-5d How Countries “Leapfrog” into the Internet and Cell Phone Era 22 1-6 The Globalization Controversy 23 1-6a Job Losses and Income Stagnation 23 1-6b Sustainable Development and Environmental Degradation 24 1-7 Making Globalization Work for All 25 1-7a Globalization’s Winners and Losers 26 1-7b Globalization’s Losers Need Support 27 Chapter 2: The Evolution of International Business 34 Introduction 36 2-1 Benefits of Trade and Foreign Direct Investment 36 2-2 Major Theories of International Trade 40 2-2a Wealth Accumulation as a Basis for Trade Theory: Mercantilism 40 2-2b Specialization as a Basis for Trade Theory: Absolute and Comparative Advantage 41 01188_fm_ptg01_i-xx.indd 5 14/10/15 8:27 PMCopyright 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. `ˆÌi`Ê܈̅Ê̅iÊ`i“œÊÛiÀȜ˜ÊœvÊ ˜vˆÝÊ*ÀœÊ*Ê `ˆÌœÀ Ê /œÊÀi“œÛiÊ̅ˆÃʘœÌˆVi]ÊۈÈÌ\ÊÜÜÜ°ˆVi˜ˆ°Vœ“É՘œVŽ°…Ì“vi Contents 2-2c Factor Endowments as a Basis for Trade Theory: Heckscher–Ohlin and Factor Price Equalization 43 2-2d Porter’s “Diamond” Model of National Competitive Advantage 43 2-3 The Practice of Trade Policy 47 2-3a Tariffs, Preferential Duties, and Most Favored Nation Status 47 2-3b Nontariff Barriers 48 2-4 Current Practice of “Managed” Trade 50 2-4a Socioeconomic Rationale 50 2-4b Geopolitical Rationale 51 Chapter 3: Regional Economic Integration 58 Introduction 60 3-1 What Is Regional Economic Integration? 60 3-1a Stages of Regional Integration 61 3-1b Pros and Cons of Regional Integration 62 3-2 The Economic Geography of Regional Integration 63 3-2a Steps to Regional Integration 64 3-2b Major Classes and Characteristics of Regional Integration 65 3-3 Does Regional Integration Confound Global Trade? 71 3-4 The European Union (EU) 71 3-4a Turkey 73 3-4b The Euro 73 3-5 The North American Free Trade Agreement (NAFTA) 75 3-6 Association of South East Asian Nations (ASEAN) 77 3-6a ASEAN Security Community (ASC) 78 3-6b ASEAN Economic Community 78 3-6c ASEAN Sociocultural Community 80 3-6d The Future of ASEAN 80 3-7 Regional Integration in Latin America 80 Chapter 4: The International Flow of Funds and Exchange Rates 88 Introduction 90 4-1 The Balance of International Payments 91 4-1a The Current Account 91 4-1b The Financial Account 93 4-1c World Trade and the Balance of Payments 95 4-2 The Foreign Exchange Market 96 4-2a The Exchange Rate 97 4-2b Components of the Foreign Exchange Market 97 4-3 International Monetary Systems 99 4-3a Money and Inflation 100 4-3b The Bretton Woods System 100 4-3c The Flexible Exchange Rate System 101 4-3d The European Euro 101 4-3e Hard and Soft Currencies 102 4-4 International Flows of Goods and Capital 102 4-4a Purchasing Power Parity 103 4-4b Interest Rate Parity 105 4-5 Forecasting Exchange Rates 108 01188_fm_ptg01_i-xx.indd 6 14/10/15 8:27 PMCopyright 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. `ˆÌi`Ê܈̅Ê̅iÊ`i“œÊÛiÀȜ˜ÊœvÊ ˜vˆÝÊ*ÀœÊ*Ê `ˆÌœÀ Ê /œÊÀi“œÛiÊ̅ˆÃʘœÌˆVi]ÊۈÈÌ\ÊÜÜÜ°ˆVi˜ˆ°Vœ“É՘œVŽ°…Ì“Contents vii Part II Global Business Environment 115 Chapter 5: The Cultural Environment 116 Introduction 118 5-1 Defining Culture and Its Characteristics 118 5-2 Elements of Culture 118 5-2a Language 118 5-2b Religion 119 5-2c Values and Attitudes 120 5-2d Manners and Customs 120 5-2e Material Elements 123 5-2f Aesthetics 123 5-2g Education 123 5-2h Social Institutions 124 5-3 Clustering Countries and Regions by Culture 124 5-3a Hofstede’s Research 124 5-3b Trompenaars’s Cultural Dimensions 125 5-3c The GLOBE Project 125 5-3d Gannon’s Cultural Metaphors 128 5-4 Sources of Cultural Information 128 5-5 Cultural Dimensions of Conducting Business in Individual Countries 129 5-5a Cultural Dimensions of Doing Business in Japan 129 5-5b Cultural Dimensions of Doing Business in Korea 130 5-5c Cultural Dimensions of Doing Business in China 130 5-5d Cultural Dimensions of Doing Business in Arab Countries 131 5-5e Cultural Dimensions of Doing Business in Latin America 131 5-6 The Importance of Culture for Managing and Marketing in Overseas Markets 133 5-6a Management Styles 133 5-6b Product Development and Management 134 5-6c Advertising Campaigns 135 5-6d Communication 136 Chapter 6: The Legal and Political Environment of Global Business 142 Introduction 144 6-1 Political Systems 144 6-2 National Economic Ideologies 146 6-2a Communism 146 6-2b Socialism 146 6-2c Capitalism 147 6-3 Political Risks, Economic Risks, and Corruption 148 6-3a Econimic Risks 148 6-3b Political Risks 149 6-3c Corruption 151 6-3d Public Corruption 152 6-4 The Legal Environment 153 6-4a Legal Systems 153 6-4b Criminal Law 155 6-4c Contract Law 155 6-4d Tax Law 156 6-4e Antitrust Law 157 01188_fm_ptg01_i-xx.indd 7 14/10/15 8:27 PMCopyright 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. `ˆÌi`Ê܈̅Ê̅iÊ`i“œÊÛiÀȜ˜ÊœvÊ ˜vˆÝÊ*ÀœÊ*Ê `ˆÌœÀ Ê /œÊÀi“œÛiÊ̅ˆÃʘœÌˆVi]ÊۈÈÌ\ÊÜÜÜ°ˆVi˜ˆ°Vœ“É՘œVŽ°…Ì“6-4f Product Safety Law 157 6-4g Dispute Settlement Law 158 6-5 Intellectual Property Protections 159 6-5a Patents 160 6-5b Trademarks 160 6-5c Copyrights 162 Chapter 7: Corruption and Ethics in Global Business 166 Introduction 168 7-1 What Is Ethics? 168 7-2 Ethics in Business and Society 170 7-2a Ethics and Economics 170 7-2b The Corruption Perceptions Index and Transparency International 171 7-3 What Is Corporate Social Responsibility? 172 7-3a Rules, Policies, and Guidelines 173 7-3b Ethics Codes at Selected Companies 174 7-4 Financial Scandals 176 7-4a Enron 176 7-4b Worldcom 177 7-4c Vivendi 177 7-4d Parmalat 178 7-4e Other Financial Scandals 178 7-5 Can Ethics Be Taught? 180 7-6 Internal Controls 183 7-6a Foreign Corrupt Practices Act 184 7-6b Computer Security of Accounting Information 186 Part III Global Business Strategy and Organization 191 Chapter 8: Entry Strategies in Global Business 192 Introduction 194 8-1 Strategy Choice and Implementation: Going International 194 8-1a Export-Import Business 195 8-1b Licensing 197 8-1c Franchising 197 8-1d Strategic Alliances 198 8-1e International Joint Ventures 198 8-1f Cross-Border Mergers and Acquisitions 200 8-1g Wholly Owned Subsidiaries 201 8-2 Multinational Enterprises (MNEs) 202 8-3 MNEs and Their Global Strategic Motives 203 8-3a Revenue Maximizing Strategies 203 8-3b Cost-Minimizing Strategies 205 8-3c Risk Minimizing Strategies 206 8-3d Dunning’s Eclectic Theory of Foreign Direct Investment 207 8-4 Host Country Perspective of Foreign Direct Investment 208 8-4a Benefits of Foreign Direct Investment 209 8-4b Costs of Foreign Direct Investment 209 8-5 Improving Host Country’s Investment Climate 211viii Contents 01188_fm_ptg01_i-xx.indd 8 14/10/15 8:27 PMCopyright 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. `ˆÌi`Ê܈̅Ê̅iÊ`i“œÊÛiÀȜ˜ÊœvÊ ˜vˆÝÊ*ÀœÊ*Ê `ˆÌœÀ Ê /œÊÀi“œÛiÊ̅ˆÃʘœÌˆVi]ÊۈÈÌ\ÊÜÜÜ°ˆVi˜ˆ°Vœ“É՘œVŽ°…Ì“Chapter 9: Control of Global Business 218 Introduction 220 9-1 Strategy Formulation 220 9-1a Mission Statement 220 9-1b Shareholders Versus Stakeholders 221 9-2 Strategy Implementation 223 9-2a An Example of Strategic Implementation: Walmart Corporation 224 9-2b Prospectors, Defenders, Reactors, and Analyzers 224 9-3 Coordination 226 9-3a Impediments to Coordination 226 9-3b Knowledge Management and Systems 227 9-4 Control Systems 228 9-4-1 Bureaucratic Controls 228 9-4-2 Interpersonal Controls 229 9-4-3 Output Controls and Measurement 230 9-5 Organization Culture and the Change Control Function 233 9-5a Types of Organizational Culture 233 9-5b Organizational Change 234 Chapter 10: The Organization of Global Business 240 Introduction 242 10-1 The Stateless Corporation 242 10-2 Organizing Global Business 243 10-3 Export Departments and International Divisions 246 10-3a Creating an Export Department 246 10-3b International Division 247 10-4 Four Organizational Structures for Global Business 248 10-4a Functional Structure 248 10-4b Divisional Structure 249 10-4c Hybrid Structure 252 10-4d Matrix Structure 254 Part IV Managing Global Business 265 Chapter 11: Global Human Resource Management 266 Introduction 268 11-1 Global Strategic Human Resource Management 268 11-1-1 Statistical Overview 268 11-1-2 Cultural Issues and Differences 269 11-1-3 Regulatory Issues Including Immigration and Border Security 271 11-1-4 Outsourcing and Offshoring 273 11-2 Staffing Policies 274 11-2a Virtual Staffing 274 11-2b Expatriate Issues in Staffing 275 11-2c What Are Training and Development? 275 11-2d Needs Assessment 275 11-2e Types of Training and Development 276 11-2f Expatriate Needs in Training and Development 276Contents ix 01188_fm_ptg01_i-xx.indd 9 14/10/15 8:27 PMCopyright 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. `ˆÌi`Ê܈̅Ê̅iÊ`i“œÊÛiÀȜ˜ÊœvÊ ˜vˆÝÊ*ÀœÊ*Ê `ˆÌœÀ Ê /œÊÀi“œÛiÊ̅ˆÃʘœÌˆVi]ÊۈÈÌ\ÊÜÜÜ°ˆVi˜ˆ°Vœ“É՘œVŽ°…Ì“11-3 Performance Appraisal and Compensation 278 11-3a Assessing Performance 278 11-3b Cultural Differences in Performance Appraisal 278 11-3c Compensation and National Differences in Cost of Living 278 11-3d Expatriate Issues in Compensation 279 11-3e Executive Pay 279 11-4 International Trade, Labor Relations, and HRM 280 11-4a The North American Agreement on Labor Cooperation (NAALC) 281 11-4b International Labor Relations 281 11-4c Comparative Labor Relations 282 Chapter 12: Global Marketing 288 Introduction 290 Analyzing International Markets 290 Kinds of Markets 290 Information Required: Surveying International Demographics 290 12-1 Marketing Research vs. Marketing Intelligence Systems 292 12-2 Making the Standardization and Adaptation Decision 294 12-3 Developing the International Product Mix 295 12-3a Developing New Products for International Markets 295 12-3b Managing Existing Products 296 12-3c Where to Locate Research and Development Facilities 297 12-3d Product Counterfeiting 298 12-4 Developing the International Promotion Mix 298 12-4a Advertising 298 12-4b Sales Promotion 299 12-4c Publicity 300 12-5 Developing the International Distribution Mix 301 12-5a Channels of Distribution 301 12-5b Physical Distribution 302 12-6 Developing the International Pricing Mix 304 12-6a Pricing Objectives 305 12-6b Setting Prices in International Markets 305 12-6c Dumping 306 12-6d Transfer Pricing 307 12-7 Developing the International Customer Service Mix 307 Chapter 13: Global Operations and Supply-Chain Management 314 Introduction 316 13-1 Global Operations Management 316 13-2 Global Procurement 319 13-2a Advantages of Global Procurement 320 13-2b Disadvantages of Global Procurement 320 13-2c Outsourcing and Insourcing 321 13-3 Global Production 324 13-3a Advantages of Making 324 13-3b Disadvantages of Making 325x Contents 01188_fm_ptg01_i-xx.indd 10 14/10/15 8:27 PMCopyright 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. `ˆÌi`Ê܈̅Ê̅iÊ`i“œÊÛiÀȜ˜ÊœvÊ ˜vˆÝÊ*ÀœÊ*Ê `ˆÌœÀ Ê /œÊÀi“œÛiÊ̅ˆÃʘœÌˆVi]ÊۈÈÌ\ÊÜÜÜ°ˆVi˜ˆ°Vœ“É՘œVŽ°…Ì“13-4 Location Decision 326 13-4a Location of Production Facilities for Components and Raw Materials 326 13-4b Location of Production Facilities for Products 327 13-4c Relocation of Production Facilities 328 13-5 Global Supply-Chain Management 329 13-5a Improving Global Supply-Chain Management 329 13-5b The Role of Information Technologies 330 Chapter 14: Global Financial Management 338 Introduction 340 14-1 Measuring Foreign Exchange Exposure 340 14-2 Hedging Forex Risk with Derivatives 342 14-2-1 Futures Contracts 342 14-2-2 Forward Contracts 344 14-2-3 Options Contracts 344 14-2-4 Swap Contracts 345 14-3 Financing International Trade and Investment 346 14-3a International Banking 347 14-3b International Bond Markets 347 14-3c International Stock Markets 350 14-3d Government Financing 352 14-4 Multinational Capital Budgeting 354 14-4a Parent Firm Capital Budgeting 354 14-4b The Cost of Capital: Domestic Versus Global 357 14-5 Currency Risk and Stock Valuation 358 14-5a Cash Flow Sensitivity to Exchange Rate Risk 359 14-5b Stock Values and Foreign Exchange Movements 359 Chapter 15: Accounting and Taxation in Global Business 366 Introduction 368 15-1 Accounting and Financial Reporting in Global Business 370 15-1a Management Accounting 370 15-1b Financial Accounting 370 15-2 Generally Accepted Accounting Principles (GAAP) 371 15-2a U.S. GAAP 372 15-2b International GAAP 373 15-2c Differences Between U.S. and International GAAP 373 15-2d Differences Between U.S. GAAP and Selected Countries 374 15-3 International Financial Reporting Standards 375 15-4 The Role of Auditing and the Sarbanes-Oxley Act 376 15-5 Financial Statement Analysis 379 15-5a Financial Ratios 379 15-5b Evaluating Trends 380 15-6 Global Tax Matters 381 15-6a Tax Rates Among Selected Countries 381 15-6b Transfer Pricing 381 Subject Index 391 Organization Index 403Contents xi 01188_fm_ptg01_i-xx.indd 11 14/10/15 10:06 PMCopyright 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. `ˆÌi`Ê܈̅Ê̅iÊ`i“œÊÛiÀȜ˜ÊœvÊ ˜vˆÝÊ*ÀœÊ*Ê `ˆÌœÀ Ê /œÊÀi“œÛiÊ̅ˆÃʘœÌˆVi]ÊۈÈÌ\ÊÜÜÜ°ˆVi˜ˆ°Vœ“É՘œVŽ°…Ì“01188_fm_ptg01_i-xx.indd 12 14/10/15 8:27 PMCopyright 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. `ˆÌi`Ê܈̅Ê̅iÊ`i“œÊÛiÀȜ˜ÊœvÊ ˜vˆÝÊ*ÀœÊ*Ê `ˆÌœÀ Ê /œÊÀi“œÛiÊ̅ˆÃʘœÌˆVi]ÊۈÈÌ\ÊÜÜÜ°ˆVi˜ˆ°Vœ“É՘œVŽ°…Ì“