7 natural resources and environmental sustainability international business by ball, mcculloch,...
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Natural Resources andNatural Resources andEnvironmental SustainabilityEnvironmental Sustainability
International Businessby Ball, McCulloch, Frantz,
Geringer, and Minor McGraw-Hill/Irwin Copyright © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
This chapter covers:
•Business relevance of geography
•Importance of a country’s location
•The contribution of a country’s surface features
•Importance of waterways
•Discovery and use of mineral resources and energy sources
•Impact of industrial disasters
Chapter ObjectivesChapter Objectives
Appreciate the relevance of four elements of geography Understand the importance of a country’s location in
political and trade relationships Understand the importance of a country’s location in
political and trade relationships Comprehend the importance of inland waterways Recognize that climate exerts a broad influence on business Understand why managers must monitor changes in the
discovery and the use of energy sources and changes in a nation’s infrastructure
Appreciate the impact of industrial disasters Describe major issues of the relationship between
environmental sustainability and international business Develop a working definition of a environmentally
sustainable business7-2
Why Switzerland Makes WatchesWhy Switzerland Makes Watches
Mostly mountainous Close to populated
lowlands of Western Europe
Transportation across mountains expensive
Has no mineral resources
7-3
Natural ResourcesNatural Resources
Location Topography Climate Sources of Energy Non-fuel Minerals Environmental
sustainability
7-4
LocationLocation
Political Relationships Austria took advantage of its location to
Increase trade with the East.
Become the principal financial intermediary between Western and Eastern Europe.
Strengthen its role as the regional headquarters for international businesses operating in Eastern Europe.
Passive processing
7-5
Trade RelationshipsTrade Relationships
Geographical proximityOften the major reason for trade between
nations.Delivery faster, freight costs lowerThe two largest trading partners of the United
States—Canada and Mexico—lie on its bordersMajor factor in formation of trade groups such
as EU, NAFTASouthern hemisphere opposite growing
season
7-6
TopographyTopography
The surface features of a region
Differences in topography may require products to be altered Cake mixes Internal
combustion engines
7-7
Includes
Mountains and
Plains
Deserts and
Tropical Forests
Bodies of Water
Mountains and PlainsMountains and Plains
Mountains Divide Markets in Spain Switzerland China Colombia
Population Concentration
Mountains also create concentrations of population
7-8
Insert Fig 7-2 Swiss Map
Deserts and Tropical ForestsDeserts and Tropical Forests
Deserts and Tropical Forests Separate markets
Increase the cost of transportation
Create concentrations of population
7-9
Deserts and Tropical ForestsDeserts and Tropical Forests
Deserts Australia
Continent the size of the U.S. but with only 19 million inhabitants.
Population concentrated Along the coastal
areas in and around the state capitals.
In the southeastern fifth of the nation
7-10
Tropical Rain Forests Brazilian Amazon
Occupies one-half of Brazil
Four percent of population
Canadian Shield A massive area of
bedrock covering one-half of Canada’s land mass
Bodies of WaterBodies of Water
Attracts people and facilitates transportation
Inland waterways Provide inexpensive
access to markets Rhine Waterway
Main transportation artery of Europe
Carries a greater volume of goods than do the combined railways that run parallel to it
Insert Rhine photo
7-11
Bodies of WaterBodies of Water
Other Significant Waterways
The Amazon River in South America
The Parana and Paraguay Rivers in the Mercosur region.
The Yangtze (China), the Ganges (India), and the Indus (India) Rivers is Asia.
The Great Lakes--St. Lawrence and the Mississippi River in the United States.
7-12
Outlets to the SeaOutlets to the Sea
Permit low-cost transportation of goods and people
Africa has 14 of world’s landlocked developing countries Must construct costly,
long truck routes Port countries exert
considerable political influence
7-13
ClimateClimate
Climate (temperature and precipitation)Perhaps the most important element of
physical forcesSets the limits on what people can do
both physically and economically Climate has some influence on economic
development Climate impacts product mix Climate can impede distribution
7-14
Natural ResourcesNatural Resources
Anything supplied by nature on which people depend. Principal types of
natural resources important to businesspeople include Energy Non-fuel
minerals7-15
EnergyEnergy
Non-renewable
Fossil fuels
Petroleum
Coal
Gas
7-16
Renewable Hydroelectric Wind Solar Geothermal Waves Tides Biomass and
ocean thermal energy
EnergyEnergy
PetroleumConventional sources - Oil
Estimates of oil consumption change because New discoveries continue to be made in proven fields.
Governments open up their countries to exploration and production.
New techniques enable producers to obtain greater output from wells already in operation.
Automated, less expensive equipment lowers drilling costs.
7-17
EnergyEnergy
World energy consumption expected to increase by 54 percent from 2001 to 2025
Dramatic increases as countries industrialize, such as China
Oil expected to remain dominant source, though non-renewable
Will have to commit to alternative energy source when supplies run out
7-18
Insert figure 7-8 energy consumption
EnergyEnergy
PetroleumUnconventional sources
Oil sands Located primarily in Athabasca, Alberta,
Canada.Oil-bearing shale
Largest source is in Utah, Colorado, and Wyoming.
CoalUsed primarily in South Africa
Natural gasHas been fastest growing source of energy
7-19
EnergyEnergy
Sources of Renewable Energy
Of the eight types, hydroelectric has had an extensive application.
Improved technology has resulted in new support for wind and solar energy
Wind energy fastest-growing energy technology in the world
7-20
Non-fuel MineralsNon-fuel Minerals
Nearly all of the world’s chrome, managanese, platinum, and vanadium are produced by South Africa and the former Soviet Union The United States depends on South Africa
To supply 79 percent of its platinum, 78 percent of its chromium, 41 percent of it manganese, and 20 percent of its vanadium
7-21
Changes Make Monitoring NecessaryChanges Make Monitoring Necessary
Mineral Resources
One of the most fascinating discoveries is the fuel cell.
First used by NASA in space capsules
Chemically converts fuel directly to electricity without having to burn it
7-22
Natural Resources Modifications of
infrastructure of great significance to business
New highways and railways reduce delivery times
Chunnel connects England and France
Oresund Bridge links Denmark and Sweden
Destruction of Natural ResourcesDestruction of Natural Resources
Historically nations have paid little attention to contamination and destruction of natural resources
Tragedies have forced officials to recognize Ixtoc 1 Well Blow Out Chernobyl Nuclear Disaster Alaskan Oil Spill Eco-Terrorism in Gulf War Aurul Mine Collapse
Events have led to “green approach”
7-23
Sustainable BusinessSustainable Business
An economic state where demands placed on environment can be met without reducing capacity of environment for future generations
Three characteristics of sustainable business practices Limits Interdependence Equity in distribution
7-24
Economic Challenges Trade and market
liberalization Eco-efficiency Financial impact Subsidies New production
materials Production and
consumption patterns