This chapter discusses the concepts and tools used to analyse global industry. It acknowledges that a specified set of products and geographical boundaries are needed to achieve a satisfactory market. It explains how a more highly concentrated market is correlated to the concentrated power in the hands of a few firms to manipulate prices, the quantity and quality of goods and services, and the terms and conditions of the sale. The chapter also looks at the Porter Five Forces model as a means to analyse industries. It highlights that firms sometimes make strenuous efforts to avoid price competition through the establishment of cartels and systems of price leadership. Moreover, the chapter cites the significance of product differentiation as a major element of competitive strategy and entry barriers in other industries. It adds how complementary products are included as the sixth force of the Porter model.
Chapter
Analysing Global Industries
Chapter
Apple: managing complexity across firms and borders
Cases in International Business provides a bridge between course textbooks and key real-world examples. The Apple: managing complexity across firms and borders case study summarizes and examines the scenario and includes supporting commentary from Peter J. Buckley, Peter Enderwick and Henry Voss.
Chapter
Assessing Country Attractiveness
This chapter focuses on the process of assessing the attractiveness of countries. It starts with an explanation of how firms tend to follow the process of internationalization through exporting and the establishment of overseas subsidiaries. The chapter lists the reasons for foreign indirect investment (FDI) such as market access, lower production cost, and access to resources. It recognizes China as the leader in scouring raw materials in the world. The chapter explains how firms screen other countries for export and import via their attractiveness of new markets and production locations. It mentions numerous commercial organizations specializing in country and marketing analysis.
Book
Edited by Oxford University Press
Cases in International Business provides a bridge between course textbooks and key real-world examples. The case studies covered here provide an insight into how a diverse range of businesses operate and respond to challenges and opportunities.
Chapter
Chinese investment in Africa
Cases in International Business provides a bridge between course textbooks and key real-world examples. The Chinese investment in Africa case study summarizes and examines the scenario and includes supporting commentary from Peter Enderwick.
Chapter
Conclusions
Peter J. Buckley and Peter Enderwick
This chapter considers theories of the firm and strategic behaviour in relation to the contemporary global factory. Drawing on developments in internalization thinking, the chapter examines the competitive advantages of the global factory and the challenges it faces in relation to coordination, innovation, and adaptation. The chapter draw on a range of frameworks to discuss these challenges and stresses the importance of economic principles when considering under-researched aspects of the global factory.
Chapter
Corporate Social Responsibility
Hinrich Voss
This chapter introduces theories of corporate social responsibility (CSR) and discusses the relationships of multinational enterprises (MNEs) with the natural environment and human rights. It looks at key concepts that relate to the identification and evaluation of stakeholders and the proactive approaches that MNEs have adopted to address environmental and ethical concerns. It also uses case studies to develop an understanding of how the core company aims to ensure that the businesses with which it is working adhere to laws and ethical norms. The chapter presents the activities of MNEs within the global norms framework, alongside the social and environmental targets that international organizations pursue with the support of MNEs. It highlights the links between CSR and the formal and informal institutional environment and assesses the social and environmental impact of the global factory.
Chapter
Corporate Social Responsibility
This chapter looks at the firms’ economic, social, and environmental obligations which come under the term ‘corporate social responsibility’ (CSR). It highlights the idea that firms’ alleged only obligation is to maximize profit in line with CSR. The chapter explains how the international business environment is also battling cultural imperialism alongside different economic and legal contexts. It highlights concerns about child labour and corruption. Then, the chapter looks at the standard company guide provided by Global Compact. It includes a discussion on the UN’s efforts to alleviate poverty called Millennium Development Goals and Sustainable Development Goals.
Chapter
Cross-cultural Management Strategies
Hanna Gajewska-De Mattos, Virpi Outila, and Peter Enderwick
This chapter considers the growth of multiculturalism and whether there is any evidence for cultural convergence, which is growing cross-cultural homogeneity, or divergence, which is increasing heterogeneity. It introduces the concept of cultural clusters and explains how these offer a valuable tool for international managers as conflict will increasingly be the result of ethnic and religious divisions. It also builds on the positive perspectives of cultural diversity and examines ways in which cultural differences can be harnessed to create a competitive advantage. The chapter mentions the change in how diversity is perceived, which requires mindsets that are much more global and outward-focused and underpin the successful operation of a global factory system. It assesses the key implications of multiculturalism for the global factory.
Chapter
The Ecological Environment
This chapter focuses on ecological impacts on businesses. It highlights the need for concerted action on a global level, which can then be translated into national and local environmental action. The chapter points out that firms have large roles to play in the environment as they convert resources into products. It notes a growing interest in being sustainable and discusses the global impact of climate change. The chapter looks at the Rio Declaration and Agenda 21 to show how they have established a comprehensive set of principles that the UN Global Compact translated into prescriptions for responsible business behaviour. The chapter notes that businesses have to balance the risk of incurring costs for environmental compliance and the risk of doing nothing in relation to climate change. It suggests that if businesses do not redouble their efforts to reduce their ecological impact, there will be calls for tougher environmental regulation.
Chapter
The Economic Dimension
Yingqi Wei, Adam R. Cross, and Robert Read
This chapter examines the economic dimension of the external environment in which global factories operate. It extends the discussion on why governments involve themselves in economic affairs and the varying ideologies that underpin the form and extent of this involvement. It also details the various types of national economic system that can be found in countries and explores how the economic policy of governments has the potential to influence the performance and profitability of the international operations of global factory networks. The chapter considers a variety of economic indicators and factors that global factory managers can use to evaluate the attractiveness of foreign locations, emphasizing the relationship between indicators and factors and the opportunities, costs, and risks they present to the activities of the global factory. It looks at exchange rates and various types of exchange rate policy pursued by governments.
Chapter
The European horsemeat scandal
Cases in International Business provides a bridge between course textbooks and key real-world examples. The European horsemeat scandal case study summarizes and examines the scenario and includes supporting commentary from Peter J Buckley, Peter Enderwick and Hinrich Voss.
Chapter
The Financial Framework
This chapter looks at the impact of the financial environment on businesses. It highlights that the financial environment plays a significant role through the provision of money and credit; the operation of system payment; and monetary phenomena like inflation, interest rates, or exchange rates. The chapter references financial markets and large institutions in London, New York, and Tokyo to emphasize their importance in the effective functioning of businesses and economies. It acknowledges the difficulties of accessing finance for international businesses. The chapter considers the businesses industry’s size, diversification, and internationalization, which continue to pose great challenges to regulatory authorities. The chapter notes the argument that the improvements in regulation seem inadequate. It also states that the international finance system’s stability should not be taken for granted.
Chapter
Financial Management Strategies
Chris Jones, Yama Temouri, and Robert Read
This chapter explains how a global factory operates within a multi-currency environment and that managers need to understand the implications of exchange rate exposure and currency risk. It discusses the nature of and key players in the foreign exchange market and explores theories of foreign exchange rate determination and forecasting. It also examines the implications for global factory operations and techniques for currency risk hedging. The chapter considers financial management techniques available to the global factory manager and concludes with a discussion of transfer pricing and the use of tax havens within the global factory.
Chapter
Foreign Operations Modes
Peter Enderwick
This chapter examines ways of entering and operating in overseas markets and considers the wide range of factors that are both internal and external to the firm in order to determine operating modes. It discusses the variety of operating modes that multinational enterprises (MNEs) may adopt, classifying these as trade-related, investment-related, and resource-transfer modes. It also talks about the dynamic aspects of operating mode choice, examining entry timing, mode switching, and divestment and the implications for mode choice within the global factory. The chapter explores the multifaceted nature and complexity of foreign entry and operating modes and the principal factors that influence mode choice. It notes key influences on the choice of foreign operating mode within global factory systems.
Chapter
Formulating the Strategic Response
Peter Enderwick, Hinrich Voss, and Michael McDermott
This chapter examines the strategy formulation process, elaborating that strategy is a disputed concept and process and is more than simply planning, the pursuit of goals, or operational excellence. It talks about various schools of strategy thought that offer different perspectives and considers industry approaches, market exploitation, and strategy as problem-solving. It also highlights some of the key tools of strategic analysis, including SWOT, PESTLE, industry, and market analysis. The chapter analyses international strategy formulation and multi-domestic, global, and transnational approaches. It investigates strategy formulation within both small and medium-sized enterprises (SMEs) and service MNEs and strategy formulation within the global factory, noting how this differs in terms of competitive advantages, coordination, and the reconciliation of strategic trade-offs.
Chapter
Foxconn surviving in China
Cases in International Business provides a bridge between course textbooks and key real-world examples. The Foxconn surviving in China case study summarizes and examines the scenario and includes supporting commentary from Peter Enderwick and Hinrich Voss.
Chapter
The Global Business Environment
This chapter explores the global external business environment. It notes that the factors in this environment are highly interdependent but can be analysed using the PESTLE model. The elements of the PESTLE model are political, economic and financial, socio-cultural, technological, legal, and ecological. The model regards the business environment as increasingly complex, dynamic, uncertain, and hostile. The chapter notes that firms need to scan the environment in order to identify opportunities for new markets, cost reductions, and sources of supply. Moreover, the chapter shows how firms need to avoid threats posed by competitors, economic and financial volatility, political instability, new technology, and natural disasters. The chapter explains how organizations assess the impact of external issues by looking into their effect on the industry structure and the organization’s stakeholders.
Chapter
The Global Economy
This chapter looks at international patterns of wealth, international trade, and exchange rates. It identifies the USA as the richest economy while noting that China has the bigger purchasing power parity (PPP). The chapter explains what it means to make a GDP comparison between countries. It explains that the UNDP also looks at other indicators such as income inequality, life expectancy, literacy rates, and school enrolments to determine a country’s degree of development. The chapter states that economic growth is the key to raising living standards. It looks at the growth of international trade, which is predicted to reach 34% by 2030. The chapter points out that fluctuations in exchange rates could have a major impact on businesses. It considers the accusation that some countries manipulate the exchange rates of their respective currencies to make their goods more competitive in the global market.
Chapter
Global Innovation Management
Mario Kafouros
This chapter examines one of the key drivers of firm growth and global competitiveness: innovation. It explains that innovation differs significantly across firms and can take different forms and types, elaborating on how innovation can help firms to build significant competitive advantages in the global economy. It talks about the globalization of research and development (R&D) which represents a major challenge, such as increasing knowledge leakage which leads to imitation, although it provides the opportunity to access diverse technologies from multiple countries. The chapter analyses how the global factory helps explain the trade-offs that specific R&D location choices may cause in terms of value creation and value capture and may assist firms to locate their R&D units across countries in an optimal way. It explains how open innovation can help firms to gain a competitive advantage in the global economy.
