Global Business Today is intended for the first international business course at either the undergraduate or MBA level. My goal in writing this book has been to set a new standard for international business textbooks. I have attempted to write a book that

1. Is comprehensive and up-to-date.
2. Goes beyond an uncritical presentation and shallow explanation of the body of knowledge.
3. Maintains a tight, integrated flow between chapters.
4. Focuses on managerial implications.
5. Makes important theories accessible and interesting to students.
6. Incorporates ancillary resources that enliven the text and make it easier to teach.

Over the years, and through now five editions, I have worked hard to adhere to these goals. It has not always been easy. An enormous amount has happened over the last decade, both in the real world of economics, politics, and business, and in the academic world of theory and empirical research. Often I have had to significantly rewrite chapters, scrap old examples, bring in new ones, incorporate new theory and evidence into the book, and phase out older theories that are increasingly less relevant to the modern and dynamic world of international business. That process continues in the current edition. As noted below, there have been significant changes in this edition, and that will no doubt continue to be the case in the future. In deciding what changes to make, I have been guided not only by my own reading, teaching, and research, but also by the invaluable feedback I receive from professors and students around the world who use the book, from reviewers, and from the editorial staff at McGraw-Hill/Irwin. My thanks go out to all of them.

Comprehensive and Up-to-Date

To be comprehensive, an international business textbook must

• Explain how and why the world’s countries differ.
• Present a thorough review of the economics and politics of international trade and investment.
• Explain the functions and form of the global monetary system.
• Examine the strategies and structures of international businesses.
• Assess the special roles of an international business’s various functions.

I have always endeavored to do all of these things. Too many other texts have paid insufficient attention to the strategies and structures of international businesses and to the implications of international business for firms’ various functions. This omission has been a serious deficiency. Many of the students in these international business courses will soon be working in international businesses, and they will be expected to understand the implications of international business for their organization’s strategy, structure, and functions. This book pays close attention to these issues.

Comprehensiveness and relevance also require coverage of the major theories. It has always been my goal to incorporate the insights gleaned from recent academic work into the text. Consistent with this goal, over the last four editions I have added insights from the following research:

• The new trade theory and strategic trade policy.
• The work of Nobel Prize–winning economist Amartya Sen on economic development.
• The work of Hernando de Soto on the link between property rights and economic development.
• Samuel Huntington’s influential thesis on the “clash of civilizations.”
• The new growth theory of economic development championed by Paul Romer and Gene Grossman.
• Empirical work by Jeffery Sachs and others on the relationship between international trade and economic growth.
• Michael Porter’s theory of the competitive advantage of nations.
• Robert Reich’s work on national competitive advantage.
• The work of Nobel Prize–winner Douglas North and others on national institutional structures and the protection of property rights.
• The market imperfections approach to foreign direct investment that has grown out of Ronald Coase and Oliver Williamson’s work on transaction cost economics.
• Bartlett and Ghoshal’s research on the transnational corporation.
• The writings of C. K. Prahalad and Gary Hamel on core competencies, global competition, and global strategic alliances.
• Insights for international business strategy that can be derived from the resource based view of the firm.

In addition to including leading-edge theory, in light of the fast-changing nature of the international business environment, I have made every effort to ensure that the book was as up-to-date as possible when it went to press. A significant amount has happened in the world since I first began work on this book. The Uruguay Round of GATT negotiations were successfully concluded and the World Trade Organization was established. In 2001, the WTO embarked upon another major round of talks aimed to reduce barriers to trader, the Doha Round. The European Union moved forward with its post-1992 agenda to achieve a closer economic and monetary union, including the establishment of a common currency in January 1999. The North American Free Trade Agreement passed into law, and Chile indicated its desire to become the next member of the free trade area. The Asian Pacific Economic Cooperation forum emerged as the kernel of a possible future Asia Pacific free trade area. The former Communist states of Eastern Europe and Asia continued on the road to economic and political reform. As they did, the euphoric mood that followed the collapse of communism in 1989 was slowly replaced with a growing sense of realism about the hard path ahead for many of these countries. The global money market continued its meteoric growth. By 2006, more than $1.5 trillion per day was flowing across national borders. The size of such flows fueled concern about the ability of short-term speculative shifts in global capital markets to destabilize the world economy. The World Wide Web emerged from nowhere to become the backbone of an emerging global network for electronic commerce. The world continued to become more global. Several Asian Pacific economies, most notably China, continued to grow their economies at a rapid rate. Outsourcing of service functions to places like China and India emerged as a major issue in developed Western nations. New multinationals continued to emerge from developing nations in addition to the world’s established industrial powers. Increasingly, the globalization of the world economy affected a wide range of firms of all sizes, from the very large to the very small. And unfortunately, in the wake of the terrorist attacks on the United States that took place on September 11, 2001, global terrorism and the attendant geopolitical risks emerged as a threat to global economic integration and activity.

To reflect this rapid change, in this edition of the book I have tried to ensure that all material and statistics are as up-to-date as possible as of 2006.

What’s New in the Fifth Edition

The success of the first four editions of Global Business Today was based in part upon the incorporation of leading-edge research into the text, the use of the up-to-date examples and statistics to illustrate global trends and enterprise strategy, and the discussion of current events within the context of the appropriate theory. Building on these strengths, my goals for the fifth revision have been threefold:

1. Incorporate new insights from recent scholarly research wherever appropriate.
2. Make sure the content of the text covers all appropriate issues.
3. Make sure the text is as up-to-date as possible with regard to current events, statistics, and examples.

As part of the overall revision process, changes have been made to every chapter in the book. All statistics have been updated to incorporate the most recently available data. New examples, cases, and boxes have been added and older examples updated to reflect new developments. New material has been inserted wherever appropriate to reflect recent academic work or important current events.

Additionally, at several places in the book, there is extended discussion of the out-sourcing of service activities, from software testing and diagnosis of MRI scans to telephone call centers and billing functions, to developing nations such as India. The implications of this development for international business are explored. However, being absolutely up-to-date is impossible because change is always with us. What is current today may be outdated tomorrow. Accordingly, this edition is accompanied by three programs created to help instructors stay in touch with current events and issues:

Enhanced Course Cartridge We have also created an enhanced course cartridge for this text, which walks students through each chapter with remedial activities, quizzes that report directly to an instructor gradebook, and interactive review exercises to help students master the concepts presented in the book. (www.mhhe.com/hillgbt5e)

Revised and Expanded DVD Finally, a revised and expanded DVD accompanies this text to help spark classroom discussions. Classic footage joins new stories to help you engage your students in international business topics. The Instructor’s Manual includes notes on how to use the videos with each chapter.

Beyond Uncritical Presentation and Shallow Explanation

Many issues in international business are complex and thus necessitate considerations of pros and cons. To demonstrate this to students, I have adopted a critical approach that presents the arguments for and against economic theories, government policies, business strategies, organizational structures, and so on.

Related to this, I have attempted to explain the complexities of the many theories and phenomena unique to international business so the student might fully comprehend the statements of a theory or the reasons a phenomenon is the way it is. I believe that these theories and phenomena are explained in more depth in this book than they are in competing textbooks, which seem to use the rationale that a shallow explanation is little better than no explanation. In international business, a little knowledge is indeed a dangerous thing.

To help students go a step farther in expanding their understanding of international business, each chapter incorporates two globalEDGE research tasks designed and written by Tunga Kiyuk and the team at Michigan State University’s globalresearch.com site to dovetail with the content just covered.

Integrated Progression of Topics

A weakness of many texts is that they lack a tight, integrated flow of topics from chapter to chapter. In Chapter 1 of this book, students will learn how the book’s topics are related to each other. I’ve achieved integration by organizing the material so that each chapter builds on the material of the previous ones in a logical fashion.

PART ONE Chapter 1 provides an overview of the key issues to be addressed and explains the plan of the book.

PART TWO Chapters 2 and 3 focus on national differences in political economy and culture, and Chapter 4 examines ethical issues in international business. Most international business textbooks place this material at a later point, but I believe it is vital to discuss national differences first. After all, many of the central issues in inter-national trade and investment, the global monetary system, international business strategy and structure, and international business operations arise out of national differences in political economy and culture. To fully understand these issues, students must first appreciate the differences in countries and cultures. Ethical issues are dealt with at this juncture primarily because many ethical dilemmas flow out of national differences in political systems, economic systems, and culture.

PART THREE Chapters 5 through 8 investigate the political economy of international trade and investment. The purpose of this part is to describe and explain the trade and investment environment in which international business occurs.

PART FOUR Chapters 9 and 10 describe and explain the global monetary system, laying out in detail the monetary framework in which international business transactions are conducted.

PART FIVE In Chapters 11 through 16, attention shifts from the environment to the firm. Here the book examines the strategies that firms adopt to compete effectively in the international business environment and explains how firms can perform key functions—production, marketing, R&D, human resource management, accounting, and finance—in order to compete and succeed in the international business environment.

Throughout the book, the relationship of new material to topics discussed in earlier chapters is pointed out to the students to reinforce their understanding of how the material comprises an integrated whole.

Focus on Managerial Implications

I have always believed that it is important to show students how the material covered in the text is relevant to the actual practice of international business. This is explicit in the later chapters of the book, which focus on the practice of international business, but it is not always obvious in the first half of the book, which considered many macro-economic and political issues, from international trade theory and foreign direct investment flows to the IMF and the influence of inflation rates on foreign exchange quotations. Accordingly, at the end of each chapter in Parts Two, Three, and Four—where the focus is on the environment of international business, as opposed to particular firms—there is a section titled “Focus on Managerial Implications.” In this section, the managerial implications of the material discussed in the chapter are clearly explained.

In addition, each chapter begins with an opening case that sets the stage for the chapter content and familiarizes students with how real international companies conduct business.

I have also added a closing case to each chapter. These cases are also designed to illustrate the relevance of chapter material for the practice of international business as well as to provide continued insight into how real companies handle those issues.

Another tool that I have used to focus on managerial implications are Management Focus boxes. There is at least one Management Focus in most chapters. Like the opening cases, the purpose of these boxes is to illustrate the relevance of chapter material for the practice of international business.

Accessible and Interesting

The international business arena is fascinating and exciting, and I have tried to communicate my enthusiasm for it to the student. Learning is easier and better if the subject matter is communicated in an interesting, informative, and accessible manner. One technique I have used to achieve this is weaving interesting anecdotes into the narrative of the text, that is, stories that illustrate theory. The use of Another Perspective boxes also serves to provide additional context for the chapter topics.

In addition to the Management Focus feature, most chapters also have a Country Focus box that provides background on the political, economic, social, or cultural aspects of countries grappling with an international business issue.

Ancillary Resources That Enliven the Text and Make It Easier to Teach

For instructors, this text offers a number of materials to help them keep their students active and engaged in the learning process. In addition to the course cartridge, and International Business DVD, the Instructor’s Resource CD-ROM is a one-stop place for several key instructor aids, including the following:

• Instructor’s Manual. The Instructor’s Manual, prepared by Veronica Horton, contains course outlines; chapter teaching resources, including chapter overviews and outlines, teaching suggestions, chapter objectives, teaching suggestions for opening cases, lecture outlines, answers to critical discussion questions, teaching suggestions for the closing case, and two student activities (some with Internet components); and expanded Video Notes with discussion questions for each video. The answers to globalEDGE research tasks will also be included here.
• Test Bank. The test bank was prepared by Amit Shah of Frostburg State University and contains approximately 100 true-false, multiple-choice, and essay questions per chapter. New to this edition, the test bank questions are also categorized by Bloom’s taxonomy levels of learning and how they meet various AACSB objectives.
• EZ Test. A computerized version of the test bank is available, allowing the instructor to generate random tests and to add his or her own questions.
• PowerPoint®. Recreated for this edition by Veronica Horton, the PowerPoint program consists of approximately 500 slides featuring original materials not found in the text in addition to reproductions and illuminations of key text figures, tables, and maps. Quiz questions to keep students on their toes during classroom presentations are also included, along with instructor notes.
• Online Learning Center ( www.mhhe.com/hill/gbt5e ). A password-protected portion of the book’s Web site will be available to adopters of Global Business Today, featuring online access to the Instructor’s Manual, PowerPoints, Video Cases, and globalEDGE answers. Instructors can also view student resources to make more effective supplementary assignments.

For students, this book also provides rich interactive resources to help them learn how to practice international business.

The Online Learning Center ( www.mhhe.com/hillgbt5e ) for students includes chapter quizzes, student PowerPoints, and chapter overviews. Students can also access the text glossary as well as all Global Business Today interactive modules, including the following:

• Concept Exercises. Concept Exercises help students learn how to solve realistic problems by exploring Flash modules, linked to the appropriate chapter, of the Hofstede study, absolute and comparative advantage, foreign direct investment, balance of payments, purchasing power parity and inflation, historical exchange rates, and export and import financing.
• Concept Videos. The eight Concept Videos, complemented by cases and discussion questions written by Charles Hill, are also exclusive to these online activities. Students can watch and learn more when they access this activity for the appropriate chapter.
• Global Business Plan. The Global Business Plan helps students take it one step further into applications, allowing them to build their own business plan one section at a time to prepare for entering a foreign market.
• Enhanced Cartridge. The enhanced cartridge, already mentioned above, allows students access to additional remedial activities that capture grades for instructors and promotes greater accountability for student engagement with the course.