International Business: Competing in the Global Market Place

Nnamdi O. Madichie (University of East London, London, UK)

Management Decision

ISSN: 0025-1747

Article publication date: 7 March 2008

4902

Citation

Madichie, N.O. (2008), "International Business: Competing in the Global Market Place", Management Decision, Vol. 46 No. 2, pp. 342-344. https://doi.org/10.1108/00251740810854195

Publisher

:

Emerald Group Publishing Limited

Copyright © 2008, Emerald Group Publishing Limited


International business refers to business activities that involve the transfer of resources (raw materials, capital and people), goods (finished assemblies and products), services (management consulting, financial services, insurance and education, etc.), knowledge and skills (managerial skills, intellectual property rights), or information (databases and networks) across national boundaries. Indeed multinational companies are the beneficiaries of, as well as the reason for, this growing interdependence among nations. Levi Strauss jeans and other apparel are made by subcontractors in Bangladesh and sold all over the world, IBM and Microsoft software are written by Indian software developers based in both India and the US (Shenkar and Luo, 2004, p. 9).

Daniels et al. (2004) defined international business as all commercial transactions (including sales, investments and transportation) – private and governmental – between two or more countries.

In this six part book comprising of 20 Chapters, Charles Hill (2007) recognises these issues and deals with them in an engaging manner. In part 1, he provides a broad overview of international business concepts encompassing recent developments in the international business environment. In this part there is an acknowledgment of the complexities in international business operations as well as tips on how to manage these.

Part 2 is made up of three Chapters (Chapter 2, 3, and 4, which dwell on discussions about cultural differences in international business. This point is also recognised in other leading international business texts such as Daniels et al. (2004 – Chapter 2) and Shenkar and Luo (2004) – Chapter 6).

In part 3 – Global Trade and Investment Environment – five Chapters are covered (Chapters 5 to 9). Two Chapters stand out in this part – while Chapter 5 discusses international trade theories, Chapter 7 deals with foreign direct investment in great detail.

However, Chapter 7 merits attention in this part – it highlights everything the student needs to know about foreign direct investment – from source, through form (acquisitions versus Greenfield investments), to trends, direction and more importantly the shift from manufacturing towards services. Moreover the opening and closing case studies in this Chapter illustrate the latter point from ‘Cemex’ (largest cement company in the world) in manufacturing to ‘Starbucks’ in services (operating mainly through licensing agreements particularly in Asia).

Part 4 – Global Monetary System – is a short part made up of two‐Chapters (Chapters 10 and 11) which consider another important dimension to international business – banking and finance, foreign exchange markets and risks, the Bretton Woods Institutions (notably the IMF and World Bank) and the global financial crisis – from the Mexican crisis of 1995 to the Asian crisis of 1997.

In part 5 ‐ Strategy and structure of International Business – three Chapters (12, 13 and 14) are covered on “the strategy and structure of international business”. Interestingly Chapter 14 on entry strategy and strategic alliances deserves particular mention for one main reason – it has glaring links with Chapter 7 on foreign direct investment (FDI).

In Chapter 14 also, a detailed discussion of entry strategies and strategic alliances in undertaken. The Chapter also discusses basic market entry decision issues –why, where and how? It highlights the timing of entry, which markets to enter, why these markets are worth trying out and more importantly how to enter these markets. On the latter note, the entry modes evaluated include exporting, turnkey projects, licensing, franchising, joint ventures – and their pros and cons, which were discussed in some detail.

In this Chapter also, two important case studies (one service based – Tesco; and another manufacturing‐based Diebold) were used to demonstrate the importance of this aspect of international business and perhaps how this links with other market entry strategy options. The opening case – Tesco Goes Global, demonstrates Tescos first international expansion in 1994 when it acquired majority stake in Global (Hungary) only to become market leader ten years later in 2004; and its forays into Thailand in 1998 after acquiring Lotus – the local Thai food retailer in that country. In the closing case study – Diebold Inc – the Ohio, US‐based manufacturer of ATM machines embarked upon a foreign “acquisition binge” in the 1990s in Latin America (notably in Brazil), which was extended to Asia by 2002.

Part 6 – Business Operations ‐ provides another important aspect of international business– “Business Operations” in a labouriosly long six‐Chapter run (from Chapters 15‐20). While Chapter 15 discusses exporting, importing and counter trade, Chapter 16 looks at global production, outsourcing and logistics. In Chapter 17 marketing and R&D issues are highlighted, Chapter 18 probes Global HRM. In Chapters 19 and 20 there is a detailed coverage of accounting and financial management issues in international business respectively.

When it comes to illustrations, there is clear evidence of extensive country coverage from considerations of FDI in places such as India and Ireland; Volvo's presence in South Korea (Chapter 7); The “Jollibee” phenomenon – where a true US‐based fast food giant (originally from the Philippines) gives McDonalds a run for its money in the US market (see Chapter 14); Madison Avenue's Marketing case in the Middle Eastern country of Jordan; to the case of Merrill Lynch in Japan and GTI in Russia (see Chapter 20).

It must be said that the coverage of this text is excellent ‐ covering all aspects of international business from the basics to international trade theories, finance and accounting, international operations, HRM and marketing. In this regard the text provides a holistic academic reference source/repository.

However, there are some structural problems that may confuse the reader especially those on an undergraduate programme. For example, Chapters 4, 7, 8 and 14 all consider market entry strategies and should therefore be grouped under one part. In Chapter 4 specifically, there is an evaluation of which foreign markets to enter, the timing of entry and the scope of entry/ degree of strategic commitments required. Exporting is considered alongside turnkey projects, licensing and franchising and joint ventures, which are clear examples of strategic alliances discussed in Chapter 14 – this fragmentation of discourse surely deserves some degree of consolidation in order to make Hill's text one to beat in the academic literature.

References

Daniels, J., Radebaugh, L. and Sullivan, D. (2004), International Business: Environments and Operations, Pearson Education Inc., Upper Saddle River, NJ.

Shenkar, O. and Luo, Y. (2004), International Business, John Wiley & Sons Inc., Danvers, MA.

Further Reading

Byrne, H. (2002), “Money machine”, Barrons, May 27, p. 24.

Child, P. (2002), “Taking Tesco global”, The McKenzie Quarterly, No. 3.

Keenan, C. (1997), “A Bugger Diebold, phasing out IBM alliance, will market ATMs itself”, American Banker, July 3, p. 8.

Keers, H. (2004), “Global Tesco sets out its stall in China”, The Daily Telegraph, July 15, p. 31.

Lee, W. (2000), “After the slump, Diebold pins hopes on new ATM market features”, American Banker, September 15, p. 1.

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