Publisher's Synopsis
This first book in the series covers essential knowledge for managers and MBAs seeking to practice International Business. Suitable for an introductory course for MBAs, it also is a review of the essentials for practicing executives at the middle or senior level in multinational companies. This is not a book on geography or the international business environment, per se. Instead, it takes a "management strategy" perspective. The management of difficulties in global supply chains and across cultures, currency and political risks, alliance partner risks, leakage of proprietary intellectual property, and handling foreign currency risk are treated as the ingredients of an overall strategy. The book also alludes to international issues such as "dumping," international price discrimination, and the benefits and drawbacks of having foreign joint venture and licensing partners. It also addresses the question of strategically choosing between reaching foreign markets via exporting, versus contractual licensing or joint ventures, versus establishing foreign subsidiaries in foreign nations. The few theories and concepts included are presented in language accessible to the thoughtful manager and are related to real-world issues. For example, underlying the net benefits of free trade is the concept of comparative advantage of nations, treated briefly with emphasis on policy implications for companies and governments. Similarly, the concept of purchasing power parity underlies the long-term trajectory of the value of a currency. The reader will gain insights on when some currencies are "undervalued" and others "overvalued" so that a company can make an educated guess about the future of its operations in a foreign country. When concepts are discussed, the manager also needs to be aware of their limitations and their applicability to the real world, as well as the occasional negative effects of international business and the operations of multinational firms. Every 24 hours, more than $5.1 trillion worth of currencies change hands in foreign exchange markets worldwide. The exchange of one currency for another is the "lifeblood" or flow of international business. There is no escape from currency risk, even for so-called domestic businesses. Even pizza restaurants in Manhattan or San Francisco are subject to foreign exchange risk affecting their profits if they import San Marzano tomatoes, Grana Padano cheese, or other ingredients invoiced in euros, while the restaurants' revenue from pizza eaters is in dollars. In twelve, easy-to-understand arithmetic problems and solutions, a chapter in this book covers the management of foreign exchange risk for importers, exporters, and multinational companies and includes related issues, such as how pricing in foreign markets is affected by changes in currency values over time. The art of international management also includes balancing or reconciling the two imperatives of standardization and local adaptation. Either can improve global total profits, but they are at least partially contradictory strategies: (1) Global standardization (of product designs, brands, marketing, and other business methods) across many countries reduces global total costs, whereas (2) country-by-country adaptation (of products, brands, and other criteria) is liked by each country's customers or governments, which increases sales revenue in each nation and hence worldwide. Some multinational companies lean closer to the standardization end of the spectrum, whereas others prefer more country-by-country adaptation. Ethical issues increasingly compel the attention of international managers in areas such as tax avoidance, ethical sourcing in global supply chains, treatment of foreign workers, sustainability, compliance with government mandates, bribery, and other sensitive subjects. While this book is consciously a short text, it delves sufficiently deeply into the most important topics essential to International Business.
