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InternationalBusinessThe New Realities
Internat ional Edit ion
Second Edit ion
S. Tamer CavusgilGeorgia State University
Gary KnightFlorida State University
John R. RiesenbergerThunderbird School of Global Management,Clinical Professor of Executive Development,Corporate Learning Group
Boston Columbus Indianapolis New York San Francisco Upper Saddle River AmsterdamCape Town Dubai London Madrid Milan Munich Paris Montreal Toronto Delhi
Mexico City Sao Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo
" ContentsPreface 25
Part 1 Foundation Concepts 38
Introduction: What Is International Business? 38
A Typical Day in the Global Economy 39What Is International Business? 40What Are the Key Concepts in International Trade and Investment? 41The Nature of International Trade 41The Nature of International Investment 43Services as Well as Products 44The International Financial Services Sector 45
How Does International Business Differ from Domestic Business? 46The Four Risks in Internationalization 46
Who Participates in International Business? 48Multinational Enterprise (MNE) 48
• Global Trend: DIESEL: A Smaller Firm's Smashing International Success 51Non-governmental Organizations (NGOs) 51
Why Do Firms Internationalize? 52
Why Study International Business? 54Facilitator of the Global Economy and Interconnectedness 54Contributor to National Economic Well-Being 54A Competitive Advantage for the Firm 55A Competitive Advantage for You 55
• Recent Grad in IB: Ashley Lumb 56An Opportunity for Global Corporate Citizenship 57
• Closing Case: Whirlpool's Dramatic Turnaround ThroughInternationalization 57
• Chapter Essentials: Key Terms 59 Summary 60 Test YourComprehension 61 Apply Your Understanding 61
O globalEDGE™ Internet Exercises 62
Globalization of Markets and the Internationalizationof the Firm 64
Bangalore: IT's Global Destination 65
Why Globalization Is Not New 67
Phases of Globalization 67
Market Globalization: An Organizing Framework 70
Dimensions of Market Globalization 71
Drivers of Market Globalization 72
Technological Advances 76
! • * • • • •i m m * • • II
10 Contents
Information Technology 77Communications 77Manufacturing 78Transportation 78
• Global Trend: Globalization and E-Business in the Online World 79Societal Consequences of Market Globalization 79Contagion: Rapid Spread of Monetary or Financial Crises 80
Loss of National Sovereignty 81Offshoring and the Flight of Jobs 82Effect on the Poor 83Effect on the Natural Environment 86Effect on National Culture 86Globalization and Africa 87Firm-Level Consequences of Market Globalization: Internationalizationof the Firm's Value Chain 88
• Closing Case: Debating the Merits of Globalization 89
• Chapter Essentials: Key Terms 91 Summary 91 Test YourComprehension 92 Apply Your Understanding 92
O globalEDGE™ Internet Exercises 93
3 Organizational Participants That Make InternationalBusiness Happen 94
i- The Emergence of Born Global Firms 95
Four Types of Participants in International Business 96
Participants Arranged by Value-Chain Activity 97Illustrating the International Value Chain Using Dell Inc. 98
Focal Firms in International Business 99The Multinational Enterprise (MNE) 100Small and Medium-Sized Enterprises 101Born Global Firms 102
International Entry Strategies of Focal Firms 103A Framework for Classifying International Entry Strategies 103Other Types of International Entry Strategies 104
Distribution Channel Intermediaries in International Business 106Intermediaries Based in the Foreign Market 107Intermediaries Based in the Home Country 108
Online Intermediaries 110
• Global Trend: Online Retailers: Contemporary Global Intermediaries 111
Facilitators in International Business 111
* Recent Grad in IB: Cynthia Asoka 113
Governments in International Business 115
• Closing Case: DHL, FedEx, and UPS: Shifting Fortunes in the GlobalLogistics Services Industry 116
• Chapter Essentials: Key Terms 118 Summary 118 Test YourComprehension 119 Apply Your Understanding 119
O globalEDGE™ Internet Exercises 12Q
Contents 11
Part 2 The Environment of International Business 122
4 The Cultural Environment of International Business 122American Football . . . in Europe? 123
Culture and Cross-Cultural Risk 124
Key Concepts of Culture 126
What Culture Is Not 127Socialization and Acculturation 127The Many Dimensions of Culture 127National, Professional, and Corporate Culture 129
The Role of Culture in International Business 130
• Recent Grad in IB: Zhibo [Lawrence] Yu 132Cultural Metaphors, Stereotypes, and Idioms 133Cultural Metaphors 133
Stereotypes 133Idioms 134
Interpretations of Culture 134High- and Low-Context Cultures 134Hofstede's Research on National Culture 135
Subjective versus Objective Dimensions of Culture 137Values and Attitudes 137Deal versus Relationship Orientation 137Manners and Customs 138Perceptions of Time 138Perceptions of Space 139Religion 139Symbolic Productions 142Material Productions and Creative Expressions of Culture 142Language as a Key Dimension of Culture 142Contemporary Issues in Culture 144Culture and the Services Sector 144Technology, the Internet, and Culture 144Globalization's Effect on Culture: Are Cultures Converging? 145
Overcoming Cross-Cultural Risk: Managerial Guidelines 145
• Global Trend: Minimizing Cross-Cultural Bias with Critical IncidentAnalysis 147
• Closing Case: Hollywood's Influence on Global Culture 148
• Chapter Essentials: Key Terms 150 Summary 150 Test YourComprehension 151 Apply Your Understanding 152
O globalEDGE™ Internet Exercises 153
5 Ethics and International Business 154> The Challenge of Corruption Around the World 155
Ethics in International Business 157The Value of Ethical Behavior 160Variation in Ethical Standards among Countries 160
12 Contents
An Ethical Dilemma 162Linking Ethics, Corruption, and Responsible Behavior 162
Corporate Social Responsibility 163The Value of CSR 164
• Global Trend: Global Corporate Social Responsibility Rises to the Topof the MNE Agenda 165
The Role of Sustainability in International Operations 165
Corporate Governance and Its Implications for Managers 167
A Framework for Making Ethical Decisions 168Embracing CSR and Sustainability 169A Global Consensus 169Ethics, CSR, and Sustainability in Practice 170
• Closing Case: Corruption at Siemens 171
• Chapter Essentials: Key Terms 173 Summary 173 Test YourComprehension 174 Apply Your Understanding 174
O globalEDGE™ Internet Exercises 175
Theories of International Trade and Investment 176** Dubai: The Path to Creating a Knowledge-Based Economy 177
Theories of International Trade and Investment 178
Why Do Nations Trade? 180Classical Theories 180
How Can Nations Enhance Their Competitive Advantage? 187Contemporary Theories 187
• Global Trend: Moving from Comparative to National CompetitiveAdvantages 193
Why and How Do Firms Internationalize? 193Firm Internationalization 193
How Can Internationalizing Firms Gain and Sustain CompetitiveAdvantage? 195FDI-Based Explanations 195Non-FDI-Based Explanations 200
• Closing Case: Hyundai: Leading the Way in the Global Auto Industry 201
• Chapter Essentials: Key Terms 204 Summary 204 Test YourComprehension 205 Apply Your Understanding 206
O globalEDGE™ Internet Exercises 207
Political and Legal Systems in National Environments 208> The Political and Legal Realities of Doing Business in Russia 209
The Nature of Country Risk 210How Prevalent Is Country Risk? 211
Political and Legal Environments in International Business 212
Political Systems 213Totalitarianism 213Socialism 214
Contents 13
Democracy 215
Democracy's Link to Economic Freedom and Openness 215
The Relationship between Political Systems and Economic Systems 216
Legal Systems 217
Common Law 218
Civil Law 218
Religious Law 219
Mixed Systems 220
Participants in Political and Legal Systems 220
Government 220
International Organizations 221
Regional Economic Blocs 221
Special Interest Groups 221
Competing Firms 222
Types of Country Risk Produced by Political Systems 222
Government Takeover of Corporate Assets 222
Embargoes and Sanctions 223
Boycotts against Firms or Nations 223
War, Insurrection, and Violence 224
Terrorism 224
Types of Country Risk Produced by Legal Systems 224
Country Risk Arising from the Host Country Legal Environment 224
Country Risk Arising from the Home Country Legal Environment 227
• Global Trend: Evolving Legal Aspects of E-Commerce 2 2 8
Managing Country Risk 229
Proactive Environmental Scanning 229
Strict Adherence to Ethical Standards 230
Alliances with Qualified Local Partners 230
Protection through Legal Contracts 230
• Closing Case: Political, Legal, and Ethical Dilemmas in the GlobalPharmaceutical Industry 2 3 0
• Chapter Essentials: Key Terms 2 3 3 Summary 2 3 3 Test YourComprehension 2 3 4 Apply Your Understanding 2 3 4
Q globalEDGE™ Internet Exercises 235
8 Government Intervention in International Business 236India's Transition to a Liberal Economy 237
The Nature of Government Intervention 238
Rationale for Government Intervention 240
Defensive Rationale 240
Offensive Rationale 241
Instruments of Government Intervention 242
Tariffs 243
Nontariff Trade Barriers 244
Investment Barriers 246
Subsidies and Other Government Support Programs 247
14 Contents
Consequences of Government Intervention 249
Evolution of Government Intervention 252
• Global Trend: The World Trade Organization and Collapseof the Doha Round 253
Intervention and the Global Financial Crisis 254
How Firms Can Respond to Government Intervention 255
Strategies for Managers 255
• Closing Case: Government Intervention at Airbus and Boeing 257
H Chapter Essentials: Key Terms 259 Summary 259 Test Your
Comprehension 260 Apply Your Understanding 260
O globalEDGE™ Internet Exercises 261
9 Regional Economic Integration 262Evolution of the European Union 263
Regional Integration and Economic Blocs 264
Levels of Regional Integration 265
The Leading Economic Blocs 267
The European Union (EU) 267
European Free Trade Association (EFTA) 272
North American Free Trade Agreement (NAFTA) 272
• Global Trend: Integrating Eastern Europe and Turkey into the EU 273
El Mercado Comun del Sur (MERCOSUR) 274
The Caribbean Community (CARICOM) 275
Comunidad Andina de Naciones (CAN) 275
Association of Southeast Asian Nations (ASEAN) 275
Asia Pacific Economic Cooperation (APEC) 276
Australia and New Zealand Closer Economic Relations Agreement (CER) 276
Economic Integration in the Middle East and Africa 277
Advantages of Regional Integration 277
Success Factors for Regional Integration 278
Ethical Dilemmas and Drawbacks of Regional Integration 279
Management Implications of Regional Integration 281
• Closing Case: Russell Corporation: Choosing between Global and RegionalFree Trade 283
• Chapter Essentials: Key Terms 285 Summary 285 Test YourComprehension 286 Apply Your Understanding 286
O globalEDGE™ Internet Exercises 287
10 Emerging Markets, Developing Economies,and Advanced Economies 288
The New Global Challengers: MNEs from Emerging Markets 289
Advanced Economies, Developing Economies, and
Emerging Markets 290
Advanced Economies 291
Developing Economies 291
Contents 15
Emerging Market Economies 294
• Global Trend: China's Evolving Challenges and Opportunities 298
What Makes Emerging Markets Attractive for International Business 298Emerging Markets as Target Markets 299Emerging Markets as Manufacturing Bases 299Emerging Markets as Sourcing Destinations 300Assessing the True Potential of Emerging Markets 300Per-Capita Income as an Indicator of Market Potential 300Middle Class as an Indicator of Market Potential 302Risks and Challenges of Emerging Markets 303Political Instability 303Weak Intellectual Property Protection 304Bureaucracy, Red Tape, and Lack of Transparency 304
' Poor Physical Infrastructure 304Partner Availability and Qualifications 304Dominance of Family Conglomerates 305Strategies for Emerging Markets 306Customize Offerings to Unique Emerging Market Needs 306Partner with Family Conglomerates 307Target Governments in Emerging Markets 307
• Recent Grads in IB: Andrew & Jamie Waskey 308Skillfully Challenge Emerging Market Competitors 309
Corporate Social Responsibility in Emerging Markets and DevelopingEconomies 310Foster Economic Development with Profitable Projects 310
Microfinance to Facilitate Entrepreneurship 311
The Special Case of Africa 311
• Closing Case: Tata Group: India's New Global Challenger 313
• Chapter Essentials: Key Terms 315 Summary 315 Test YourComprehension 316 Apply Your Understanding 316
O globalEDGE™ Internet Exercises 317
11 The International Monetary and Financial Environment 318The Complex Monetary and Financial Relationship between China and the
United States 319Exchange Rates and Currencies in International Business 320Convertible and Nonconvertible Currencies 321Foreign Exchange Markets 322Exchange Rates Fluctuate Constantly 322
How Exchange Rates Are Determined 324Economic Growth 324Inflation and Interest Rates 325Market Psychology 325Government Action 326
Emergence of the Modern Exchange Rate System 326The Bretton Woods Agreement 327
16 Contents
IMF and the World Bank 327The Modern Exchange Rate System 327
The Monetary and Financial Systems 328International Monetary System 328Global Financial System 329
• Global Trend: Global Financial Crisis 330
Key Players in the Monetary and Financial Systems 331The Firm 331National Stock Exchanges and Bond Markets 332Commercial Banks 332
• Recent Grad in IB: Chip Besse 333Central Banks 335The Bank for International Settlements 335International Monetary Fund 335The World Bank 336
• Closing Case: AIG and Global Financial Contagion 337
• Chapter Essentials: Key Terms 339 Summary 339 Test YourComprehension 340 Apply Your Understanding 341
O globalEDGE™ Internet Exercises 341
Part 3 Strategy and Opportunity Assessment 342
12 Strategy and Organization in the International Firm 342IKEA's Global Strategy 343
Strategy in International Business 345
Building the Global Firm 346Visionary Leadership 346Organizational Culture 348Organizational Processes 348The Distinction between Multidomestic and Global Industries 349
The Integration-Responsiveness Framework 350Pressures for Global Integration 351Pressures for Local Responsiveness 351
Strategies Based on the Integration-Responsiveness Framework 352
Organizational Structure 355Centralized or Decentralized Structure? 356
Organizational Structures for International Operations 357Export Department 357International Division Structure 357Geographic Area Structure (Decentralized Structure) 359Product Structure (Centralized Structure) 360Functional Structure (Centralized Structure) 361Global Matrix Structure 361
• Closing Case: Carlos Ghosn: Leading for Global Successat Renault-Nissan 363
Contents 17
• Chapter Essentials: Key Terms 366 Summary 366 Test YourComprehension 367 Apply Your Understanding 367
O globalEDGE™ Internet Exercises 368
13 Global Market Opportunity Assessment 370> Estimating Demand in Emerging Markets 371
Assessing Global Market Opportunities 372
Task One: Analyze Organizational Readiness to Internationalize 374
Task Two: Assess the Suitability of Products and Services for ForeignMarkets 376Factors Contributing to Product Suitability for International Markets 376Key Issues to Resolve in Measuring Product Potential 377
Task Three: Screen Countries to Identify Target Markets 377Screening Countries for Exporting 377
• Global Trend: Global Macro Trends That Affect International Business 379Country Screening for Foreign Direct Investment 383Country Screening for Sourcing 384Task Four: Assess Industry Market Potential 385Practical Methods for Managers to Assess Industry Market Potential 386Data Sources for Estimating Industry Market Potential 386
m Recent Grad in IB: Javier Estrada 388
Task Five: Choosing Foreign Business Partners 389Criteria for Choosing a Partner 389Searching for Prospective Partners 390Task Six: Estimate Company Sales Potential 390Determinants of Company Sales Potential 390Practical Approaches to Estimating Company Sales Potential 391In Conclusion 393
• Closing Case: Advanced Biomedical Devices: Assessing Readinessto Export 394
• Chapter Essentials: Key Terms 396 Summary 396 Test YourComprehension 397 Apply Your Understanding 397
Q globalEDGE™ Internet Exercises 399
Part 4 Entering and Operatingin International Markets 400
14 Exporting and Countertrade 400> Exporter's Dogged Pursuit of International Customers 401An Overview of Foreign Market Entry Strategies 402Internationalization of the Firm 404
Diverse Motives for Pursuing Internationalization 404Characteristics of Firm Internationalization 405Exporting as a Foreign Market Entry Strategy 406Exporting and the Global Economy 407
18 Contents
Exporting: A Popular Entry Strategy 407Service Sector Exports 408Advantages of Exporting 409Limitations of Exporting 409
• Global Trend: The Emergence of SME Exporters 410A Systematic Approach to Exporting 410Importing 413
Managing Export-Import Transactions 414Documentation 414Shipping and Incoterms 415
Payment Methods in Exporting and Importing 416Cash in Advance 416Letter of Credit 417Open Account 418Export-Import Financing 418Commercial Banks 419Factoring, Forfaiting, and Confirming 419Distribution Channel Intermediaries 419Buyers and Suppliers 419Intracorporate Financing 419Government Assistance Programs 420Multilateral Development Banks (MDBs) 420Identifying and Working with Foreign Intermediaries 420Working with Foreign Intermediaries 421When Intermediary Relations Go Bad 422
Countertrade: A Popular Approach for Emerging Markets and DevelopingEconomies 423Magnitude and Drivers of Countertrade 424Types of Countertrade 424Risks of Countertrade 425Why Consider Countertrade? 425
• Closing Case: Barrett Farm Foods: A Small Firm's InternationalLaunch 426
• Chapter Essentials: Key Terms 428 Summary 428 Test YourComprehension 429 Apply Your Understanding 430
O globalEDGE™ Internet Exercises 431
15 Foreign Direct Investment and Collaborative Ventures 432> Deutsche Post DHL's Rapid International Expansion 433
International Investment and Collaboration 434Trends in Foreign Direct Investment and CollaborativeVentures 435
Motives for FDI and Collaborative Ventures 436Market-Seeking Motives 436Resource- or Asset-Seeking Motives 437Efficiency-Seeking Motives 437Characteristics of Foreign Direct Investment 438
Contents 19
• Recent Grad in IB: Jennifer Knippen 439Key Features of Foreign Direct Investment 439Corporate Social Responsibility and FDI 441Most Active Firms in FDI 441Service Firms and FDI 441Leading Destinations for FDI 443Factors to Consider in Choosing FDI Locations 443
Types of Foreign Direct Investment 444Greenfield Investment versus Mergers and Acquisitions 444The Nature of Ownership in FDI 445
Vertical versus Horizontal Integration 445
• Global Trend: FDI in the Global Financial Crisis 447
International Collaborative Ventures 447Equity Joint Ventures 448Project-Based, Nonequity Ventures 448Differences between Equity and Project-Based, Nonequity Ventures 448Consortium 449Cross-Licensing Agreements 449Managing Collaborative Ventures 450Understand Potential Risks in Collaboration 450Pursue a Systematic Process for Partnering 450Ensure Success with Collaborative Ventures 451
The Experience of Retailers in Foreign Markets 452Challenges of International Retailing 453International Retailing Success Factors 454
• Closing Case: AUTOLATINA: A Failed International Partnership 455
• Chapter Essentials: Key Terms 457 Summary 457 Test YourComprehension 459 Apply Your Understanding 460
O globalEDGE™ Internet Exercises 461
16 Licensing, Franchising, and Other ContractualStrategies 462
Harry Potter: The Magic of Licensing 463
Contractual Entry Strategies 464Unique Aspects of Contractual Relationships 465Types of Intellectual Property 465Licensing as an Entry Strategy 466Trademark and Copyright Licensing 467Know-How Licensing 468The World's Top Licensing Firms 469
Advantages and Disadvantages of Licensing 469Advantages of Licensing 470Disadvantages of Licensing 470
Franchising as an Entry Strategy 471Who Are the Top Global Franchisors? 473
• Global Trend: Internationalization of Franchising: Emerging Markets 473
Advantages and Disadvantages of Franchising 475
20 Contents
The Franchisor Perspective 475The Franchisee Perspective 476Managerial Guidelines for Licensing and Franchising 476
Other Contractual Entry Strategies 477Turnkey Contracting 477Build-Operate-Transfer Arrangements (BOT) 478Management Contracts 478Leasing 478The Special Case of Internationalization by Professional Service Firms 479
Guidelines for Protecting Intellectual Property 479
• Closing Case: Subway and the Challenges of Franchising in China 482
• Chapter Essentials: Key Terms 484 Summary 485 Test YourComprehension 486 Apply Your Understanding 486
O globalEDGE™ Internet Exercises 487
17 Global Sourcing 488Global Sourcing of Pharmaceutical Drug Trials 489
Outsourcing, Global Sourcing, and Offshoring 490Decision 1: Outsource or Not? 491Decision 2: Where in the World Should Value-Adding Activities BeLocated? 491Global Sourcing 492Offshoring 494Scope of Global Sourcing 495Diversity of Countries That Initiate and Receive Outsourced Work 495
• Global Trend: China and India: Chief Rivals in the Global SourcingGame 496
Strategic Choices in Global Sourcing 497Benefits of Global Sourcing 498Cost Efficiency 498Ability to Achieve Strategic Goals 498Risks of Global Sourcing 501
Strategies for Minimizing the Risks of Global Sourcing 502Implementing Global Sourcing Through Supply-Chain Management 503Information and Communications Technology 505Logistics and Transportation 506Transportation Modes 506Global Sourcing and Corporate Social Responsibility 507Potential Harm to Local and National Economy from Global Sourcing 507Public Policy on Global Sourcing 508
B Closing Case: Good Hopes for Global Outsourcing 509
• Chapter Essentials: Key Terms 511 Summary 511 Test YourComprehension 512 Apply Your Understanding 512
O globalEDGE™ Internet Exercises 513
Contents 21
Part 5 Functional Area Excellence 514
18 Marketing in the Global Firm 514Zara's Unique Model for International Marketing Success 515
Global Marketing Strategy 516Targeting Customer Segments and Positioning 517
Standardization and Adaptation of International Marketing 518
Standardization 518Adaptation 520
• Recent Grad in IB: John Dykhouse: Trade Development Manager 521Standardization and Adaptation: A Balancing Act 522
Global Branding and Product Development 523Global Branding 523Global Product Development 525
• Global Trend: Growing Role for Marketing in Developing Economies 526
International Pricing 527Factors That Affect International Pricing 527A Framework for Setting International Prices 528Managing International1 Price Escalation 530Managing Pricing under Varying Currency Conditions 530Transfer Pricing 531Gray Market Activity (Parallel Imports) 532
International Marketing Communications 534International Advertising 534International Promotional Activities 536
International Distribution 537Global Account Management 537
• Closing Case: H&M: International Marketing Success Story 538
H Chapter Essentials: Key Terms 540 Summary 540 Test YourComprehension 541 Apply Your Understanding 541
O globalEDGE™ Internet Exercises 542
19 Human Resource Management in the Global Firm 544> Johnson & Johnson: A Leader in International Human ResourceManagement 545
The Strategic Role of Human Resources in International Business 546Three Employee Categories 546Differences between Domestic and International HRM 547Key Tasks in International Human Resource Management 549International Staffing Policy 549Recruiting, Selecting, and Developing Talent 550Cultivating Global Mind-sets 550Cultural Intelligence 551 '"
22 Contents
Expatriate Assignment Failure and Culture Shock 552
Preparation and Training of International Employees 552Preparing Employees for Repatriation 553Charting Global Careers for Employees 553International Performance Appraisal 554Compensation of Employees 554International Labor Relations 556Distinctive Features of Labor around the World 557Cost, Quality, and Productivity of Labor 558Workforce Reduction 558Trends in International Labor 559Firm Strategy in International Labor Relations 560Diversity in the International Workforce 560Women in International Business 560
• Global Trend: Global Corporate Social Responsibility and the Role ofInternational Human Resource Management 561
Success Strategies for Women Managers in International Business 563
• Closing Case: Evolving Human Resource Challenges at Sony 564
• Chapter Essentials: Key Terms 566 Summary 566 Test YourComprehension 567 Apply Your Understanding 567
O globalEDGE™ Internet Exercises 569
20 Financial Management and Accountingin the Global Firm 570
A Small Firm Rides the Waves of Foreign Exchange 571
Key Tasks in International Financial Management 572
Task One: Decide on the Capital Structure 573
Task Two: Raise Funds for the Firm's International Activities 574Financial Centers 574Sources of Funds for International Operations 575Debt Financing 577
• Global Trend: Emerging Markets as International InvestmentDestinations 577
Intracorporate Financing 579
Task Three: Manage Working Capital and Cash Flow 579Methods for Transferring Funds within the MNE 579Multilateral Netting 580
Task Four: Perform Capital Budgeting 581Net Present Value Analysis of Capital Investment Projects 581
Task Five: Manage Currency Risk 582Three Types of Currency Exposure 582
• Recent Grad in IB: Maria Keeley 583Foreign Exchange Trading 584Types of Currency Traders 585Exchange Rate Forecasting 586
Contents 23
Managing Exposure to Currency Risk through Hedging 587
Best Practice in Minimizing Currency Exposure 588
Task Six: Manage the Diversity of International Accounting and Tax
Practices 589
Transparency in Financial Reporting 589
Trends toward Harmonization 590
Consolidating the Financial Statements of Subsidiaries 591
International Taxation 591
• Closing Case: International Financial Operations at Tektronix 594
• Chapter Essentials: Key Terms 596 Summary 596 Test YourComprehension 597 Apply Your Understanding 598
O globalEDGE™ Internet Exercises 599
Glossary 601
Notes 808
Photo Credits 628
Author index 630
Company Index 635
Subject Index 639