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Simon Collinson Rajneesh Narula Alan M. Rugman

INTERNATIONAL
BUSINESS 7th Edition
International Business
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International
Business
Simon Collinson
7th Edition

University of Birmingham

Rajneesh Narula
Henley Business School, the University of Reading

Alan M. Rugman
Henley Business School, the University of Reading

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Seventh edition 2017 (print and electronic)

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Printed in Slovakia by Neografia
Contents in Brief

List of Figures and Tables xv

Preface xviii
About the Authors xx
Guide to the Case Studies xxiii
Publisher’s Acknowledgments xxx
Frameworks for this Book: Our Approach to the Study of International Business xxxii

Part One THE WORLD OF INTERNATIONAL BUSINESS

Chapter 1 An Introduction to International Business 3
Chapter 2 General Frameworks in International Business 40
Chapter 3 Multinational Enterprises, Innovation, and Competitiveness 90

Part Two THE ENVIRONMENT OF INTERNATIONAL

BUSINESS
Chapter 4 International Politics 123
Chapter 5 International Culture 152
Chapter 6 International Trade 183
Chapter 7 International Financial Markets and Institutions 218

Part Three INTERNATIONAL BUSINESS STRATEGIES

Chapter 8 Multinational Strategy 255
Chapter 9 Organizing Strategy 290
Chapter 10 Corporate Strategy and National Competitiveness 318
Chapter 11 Multinational Enterprises as Responsible Stakeholders 349

Part Four FUNCTIONAL AREA STRATEGIES

Chapter 12 Production Strategy 381
Chapter 13 Marketing Strategy 416
Chapter 14 Human Resource Management Strategy 447
Chapter 15 Political Risk and Negotiation Strategy 477
Chapter 16 International Financial Management 511

Part Five REGIONAL STRATEGIES

Chapter 17 European Union 549
Chapter 18 Japan 582
Chapter 19 North America 619
Chapter 20 Emerging Economies 648
Chapter 21 China 682

Glossary 713
Index 723

v
Contents in Detail

List of Figures and Tables xv Modularization, outsourcing, and value chains 29

Preface xviii The continuing importance of the state-owned
About the Authors xx enterprise 29
Guide to the Case Studies xxiii Emerging economy MNEs—significant but
Publisher’s Acknowledgments xxx exaggerated 30
Frameworks for this Book: Our Approach Dominance of the triad continues 31
to the Study of International Business xxxii Small and medium-sized enterprises 32
The fragmented firm: global value chains and
production networks 33
Part One Key points 35
Key terms 36
The World of
Notes 36
International Business Bibliography 37
Appendix: The largest importers and
Chapter 1 exporters 38
An Introduction to International
Business 3 Chapter 2
Objectives of the chapter 3 General Frameworks
Introduction 5 in International Business 40
What is international business? 5
Objectives of the chapter 40
Globalization 6
The outcomes of globalization 6 ■ Active Learning Case
Understanding interdependence in globalization 8 Starbucks: a global “coffee culture” 42
Regional integration 9 Introduction 43
Mapping globalization 10 Firm-specific assets/ownership advantages 43
Technology and innovation 11 A classification of O advantages 44
New technologies 12 Location advantages/country-specific assets 46
The knowledge-intensive, multi-technology firm 13 A classification of L advantages 47
Socio-political developments 13 ■ International Business Strategy in Action
What are institutions? 14 US manufacturing: from China to Mexico 49
Institutions and supranational agreements 15 Internalization advantages 50
Globalization and liberalization 16 The eclectic paradigm: putting it all together 51
Multinational enterprises 17 Strategic management of MNEs: an introduction 52
Proto-globalization and the MNE in historical Steps in the strategic management process 52
context 19 A framework for global strategies:
The industrial revolutions and the growth the FSA–CSA matrix 53
of private firms 20 The FSA–CSA matrix 54
Foreign direct investment 21 Why firms become MNEs 56
Measuring FDI and MNE activity 22 How do firms engage in international activities? 59
MNEs before World War II 22 Entry modes 62
The rise of the modern MNE 23 Non-equity entry modes 62
International business in the modern era 25 Equity entry modes 63
1950–90: the rise of the triad 25 Collaborative agreements/strategic alliances 66
1990–2014: the rise of new players and International new ventures and “born global”
forms of activity 26 firms 68

vi
 Contents in detail vii

The international activities of SMEs 69

Part Two
The practical challenges for internationalizing
SMEs 70 The Environment of
■ International Business Strategy in Action International Business
Worrying times for Singapore’s SMEs 71
How do SME managers know which markets Chapter 4
to enter? 72 International Politics 123
Modes of entry and adaptation for success
in foreign markets 74 Objectives of the chapter 123
Key points 75 ■ Active Learning Case
Key term 76 How risky is foreign investment in Russia? 124
■ Real Cases Introduction 125
Toys “Я” Us 76 Political ideologies and economics 126
Tesco at home and abroad 78 Political systems 126
Notes 79 Economic systems 127
Bibliography 81 Government control of assets 128
Appendix: The largest global MNEs 82 Privatization in action 128
■ International Business Strategy in Action
Chapter 3 Greece: third (bailout) time lucky 129
Multinational Enterprises, Government–business cooperation 130
Innovation, and Competitiveness 90 Japan and EU assistance 130
US competitiveness 131
Objectives of the chapter 90 Economic integration 132
■ Active Learning Case Trade creation and trade diversion 132
GE Healthcare in India: locally driven innovation 91 Levels of economic integration 133
Introduction 92 Economic integration: an overall perspective 134
Trends in innovation at the firm and country level 93 Ethics, environment, MNEs, and the civil society 135
The resource-based view (RBV) and the VRIO ■ International Business Strategy in Action
framework 97 Non-governmental organizations
Resources and capabilities 97 and political power 136
The VRIO framework 98 The European Union (EU) 138
Dynamic capabilities 101 Other examples of economic integration 141
Quick learning/incremental learning 101 Economic integration and strategic management 142
Integration of new assets/radical learning 102 Strategic alliances and acquisitions 142
Modification and transformation of new assets 102 Localization of business operations 143
Dynamic capabilities and small firms 102 Key points 145
■ International Business Strategy in Action Key terms 146
Spreadshirt: open innovation 103 Review and discussion questions 146
Connecting FSAs to CSAs 104 ■ Real Cases
Systems of innovation 105 How environmental regulations
International dimensions of innovation 107 can be used as trade barriers 147
The location of innovation activities in the MNE 109 Embraer versus Bombardier 148
■ International Business Strategy in Action Notes 150
Innovation networks at IBM 112 Bibliography 150
The innovative MNE as a differentiated network 114
Key points 115
Chapter 5
Key terms 115
International Culture 152
■ Real Cases
Canon Group 115 Objectives of the chapter 152
R&D at Hewlett-Packard 117 ■ Active Learning Case
Notes 118 Cultures clash as big pharma gets bigger 153
Bibliography 119 Introduction 154
 viii Contents in detail

What is culture? 155 ■ International Business Strategy in Action

The importance of culture in different business Microsoft shows the world is not flat 192
contexts 156 Barriers to trade 194
Culture has always been important 158 Reasons for trade barriers 194
■ International Business Strategy in Action Commonly used barriers 194
McDonald’s 158 Tariffs 196
National stereotypes and key dimensions ■ International Business Strategy in Action
of culture 159 Boeing versus Airbus 197
Culture at two levels 159 US trade policy 199
Hofstede’s four dimensions of culture 160 Non-tariff barriers to trade 200
Trompenaars’ seven dimensions of culture 161 Quotas 200
The GLOBE project’s nine dimensions of culture 163 “Buy national” restrictions 201
Applying the national culture frameworks 164 Customs valuation 201
“The way we do things here”: the implications Technical barriers 201
of cultural differences for organizations and Anti-dumping legislation, subsidies, and
managers 165 countervailing duties 201
Cross-cultural management 168 Agricultural products 202
Organization 168 Export restraints 202
Leadership 168 Other economic developments 202
Communication 169 Countertrade 203
The corporate response 169 Trade in services 203
Multinational organization structures: Free trade zones 204
imperialist or independent? 171 Key points 205
Culture clash in cross-border M&A and Key terms 206
joint ventures 172 Review and discussion questions 206
■ International Business Strategy in Action ■ Real Cases
The collective culture of the John Lewis Job losses and offshoring to China 207
Partnership 173 Dumping on trade complaints 208
Culture embodied in national institutions 174 Notes 209
France: cultural and social characteristics Bibliography 210
that create a national distinctiveness 175 Appendix: Balance of payments 211
Key points 176
Key terms 177 Chapter 7
Review and discussion questions 177 International Financial Markets
■ Real Cases and Institutions 218
Do not throw your meishi! 178
Objectives of the chapter 218
Sport can be local and global: Manchester United 179
Notes 180 ■ Active Learning Case
Bibliography 181 Barclays Bank international financial dealings 219
Introduction 220
Chapter 6 Foreign exchange markets 221
Foreign exchange markets in the United States 222
International Trade 183
Determination of the exchange rate 227
Objectives of the chapter 183 Purchasing power parity 227
■ Active Learning Case International Fisher effect 228
Trade of the triad and China 184 Combined equilibrium relationships 229
Introduction 185 Other factors determining exchange rates 230
International trade theory 186 Protecting against exchange risk 230
Theory of absolute advantage 186 Alternatives to minimize exchange risk 231
Theory of comparative advantage 187 ■ International Business Strategy in Action
Factor endowment theory 189 China 2015: the start of the next global
International product life cycle theory 189 economic meltdown? 231
Other important considerations 191 Foreign money and capital markets 235
 Contents in detail ix

MNEs and national money markets 236 Key terms 277

MNEs and national capital markets 236 Review and discussion questions 277
Regional money and capital markets 237 ■ Real Cases
The eurocurrency market 237 Mountain Equipment Co-op: a small business 278
Eurocurrency interest rates 238 Benetton 279
Other market characteristics 239 Notes 280
Criticisms of the euromarkets 239 Bibliography 282
Eurobonds and euroequities 240 Appendix: Regional aspects of multinationality
■ International Business Strategy in Action and performance 283
AngloGold Ashanti 241
The IMF system 242 Chapter 9
Unresolved problems with the IMF system 245 Organizing Strategy 290
MNEs and international financial markets and
Objectives of the chapter 290
institutions 246
Key points 246 ■ Active Learning Case
Key terms 246 Procter & Gamble 291
Review and discussion questions 247 Introduction 292
Organization structures 293
■ Real Cases
Early organization structures 293
HSBC 248
Rigging LIBOR 249 ■ International Business Strategy in Action
Notes 250 Sanofi-Aventis 295
Bibliography 251 The international division 296
Global organization structures 297
■ International Business Strategy in Action
Part Three Making the matrix work 302
International Business Strategic management and organizing strategy 305
Analysis of key structural variables 305
Strategies
Coordination 306
Key points 311
Chapter 8 Key terms 311
Multinational Strategy 255 Review and discussion questions 311
Objectives of the chapter 255 ■ Real Cases
LVMH: organizing luxury products in the
■ Active Learning Case
international arena 312
Vodafone and the triad telecom market 256
Command Alkon: small but increasingly global 313
Introduction 258
Notes 314
Strategic orientations 259
Bibliography 315
■ International Business Strategy in Action
The Big Four 261
Chapter 10
Strategy formulation 262
Corporate Strategy and National
External environmental assessment 262
Internal environmental assessment 266
Competitiveness 318
Goal setting 270 Objectives of the chapter 318
Strategy implementation 270 ■ Active Learning Case
Location 271 Worldwide operations and local strategies
■ International Business Strategy in Action of ABB 319
Fuji Xerox and Xerox 271 Introduction 320
Ownership 272 The single diamond 320
Functional strategies 274 Determinants and external variables 321
Control and evaluation 274 Critique and evaluation of the model 322
Common methods of measurement 275 The double diamond 324
Key points 277 Canada and the double diamond 324
 x Contents in detail

■ International Business Strategy in Action

Nokia and Ericsson: moving beyond mobiles 328
Part Four
Mexico and the double diamond 329 Functional Area
Integration and responsiveness 332 Strategies
Integration versus national responsiveness 333
■ International Business Strategy in Action Chapter 12
Renewed advantage through vertical integration at Production Strategy 381
Floreal Knitwear 334
Balancing the trade-offs 335 Objectives of the chapter 381
Competitiveness in the triad 338 ■ Active Learning Case
Key points 341 GE production: from Six Sigma to the GE Store 382
Key terms 341 Introduction 383
Review and discussion questions 342 Research, development, and innovation 384
■ Real Cases Speed-to-market 386
There is no global beer, only local 342 Generation of goods and services 388
IBM 344 Global sourcing 388
Notes 345 ■ International Business Strategy in Action
Bibliography 347 Gap Inc.: a successful “hollow corporation” 389
Manufacturing of goods 391
Chapter 11 ■ International Business Strategy in Action
Multinational Enterprises as End of an era: the Goodyear plant closure 391
Responsible Stakeholders 349 Developing a strong service orientation 396
International logistics 398
Objectives of the chapter 349
Transportation 398
■ Active Learning Case
Packaging 400
The environment, NGOs, and MNEs 350 Storage 401
Introduction 351 Different kinds of global production systems 401
Developing effective strategies 352 Strategic management and production strategy 402
Going where the action is 352 Technology and production design 402
■ International Business Strategy in Action Continuous improvement 403
3M 354 Alliances and acquisitions 403
International business research frameworks 355 Key points 409
Theories of international business 355 Key terms 410
Practical applications of the theory 356 Review and discussion questions 410
The five partners business network framework 356 ■ Real Cases
Forging new business networks 356 Flextronics 411
Coping with changing environments 358 Nike 413
Political environment 358 Notes 414
Economic environment 360 Bibliography 414
The trade and investment framework 362
Environment and MNEs 365
Chapter 13
■ International Business Strategy in Action
Marketing Strategy 416
Is The Body Shop an ethical business? 365
The pattern of MNE responses 368 Objectives of the chapter 416
Key points 370 ■ Active Learning Case
Key terms 370 Adidas: promoting a global sports brand 417
Review and discussion questions 371 Introduction 419
■ Real Cases International market assessment 420
Dell: B2C 371 Initial screening: basic need and potential 420
Maersk Group 372 Second screening: financial and economic
Notes 375 conditions 420
Bibliography 375 Third screening: political and legal forces 421
 Contents in detail xi

Fourth screening: socio-cultural forces 421 Common elements in an international

Fifth screening: competitive environment 422 compensation package 457
Final selection 422 Compensation trends and comparisons 459
Product strategies 423 Labor relations 460
Little or no modification 423 Labor relations practices 462
Moderate to high modification 423 ■ International Business Strategy in Action
■ International Business Strategy in Action Primark: putting global stakeholders first 463
Weeby buys Tappy 426 Industrial democracy 465
Promotion 427 Industrial democracy in action 465
Nature of the product 427 Strategic management and IHRM strategies 466
Advertising 428 Language training 466
■ International Business Strategy in Action Cultural adaptation 468
IKEA in international markets 428 Competitive compensation 468
Personal selling 430 Specially designed HRM programs 469
Pricing 431 Key points 470
Government controls 431 Key terms 471
Market diversity 431 Review and discussion questions 471
Currency fluctuations 432 ■ Real Cases
Price escalation forces 432 Offshoring to India 472
Place 433 Executive search firms 473
Different distribution systems 433 Notes 474
Choosing the best distribution system 434 Bibliography 475
Strategic management and marketing
strategy 434 Chapter 15
Ongoing market assessment 434 Political Risk and Negotiation
Internet marketing and “open innovation” 438 Strategy 477
Key points 439
Key terms 440 Objectives of the chapter 477
Review and discussion questions 440 ■ Active Learning Case
■ Real Cases Nestlé in Nigeria 478
Bang & Olufsen 441 Introduction 479
Mirum—never lose your sense of wonder! 443 Generic PEST analysis 479
Notes 444 Political risk 481
Bibliography 444 Deregulation and political risk 482
The nature of political risk 483
Chapter 14 Sources of political risk 484
Country analysis and political risk assessment 485
Human Resource Management
Online risk information resources 485
Strategy 447 Quantifying risk vulnerability 486
Objectives of the chapter 447 Accounting for country risk 489
■ Active Learning Case Negotiation strategies 490
The Coca-Cola Company thinks local 448 Behavioral characteristics of the participants
Introduction 449 in negotiations 492
Selection and repatriation 450 ■ International Business Strategy in Action
International screening criteria and selection Political risk for De Beers 493
procedures 450 ■ International Business Strategy in Action
Repatriation of expats 452 Intel effect 494
Training and development 454 Transparency and corruption: politically
Types of training 454 sensitive political risk 497
■ International Business Strategy in Action Strategic management and political risk 500
The glass ceiling 455 Use of integrative and protective/defensive
Compensation 457 techniques 500
 xii Contents in detail

Key points 503 ■ Real Cases

Key terms 504 Skandia 542
Review and discussion questions 504 Ford and Volvo 543
■ Real Cases
Notes 545
Yukos and the Russian oligarchs 505 Bibliography 545
Problems with ports 506
Notes 508
Bibliography 509 Part Five
www resources 510 Regional Strategies

Chapter 16 Chapter 17
International Financial European Union 549
Management 511 Objectives of the chapter 549
Objectives of the chapter 511 ■ Active Learning Case
■ Active Learning Case The future is Orange 550
Financial transparency at Siemens 512 The EU environment 551
Introduction 513 Emergence of a Single European
Determining parent–subsidiary relationships 515 Market 553
Polycentric solution 515 The competitive status of the EU 556
Ethnocentric solution 515 Conducting a strategic analysis 559
Geocentric solution 515 Using competitive intelligence 559
Managing global cash flows 516 ■ International Business Strategy in Action
Internal funds flows 516 VW scandal 560
Funds positioning techniques 517 Evaluating locations 562
Multilateral netting 520 Strategy issues 562
■ International Business Strategy in Action Overall strategic analysis for the EU 564
Worldwide tax havens 522 Exporting 565
Managing cash 524 Strategic acquisitions and alliances 567
■ International Business Strategy in Action
Marketing considerations 568
Sovereign wealth funds 525 ■ International Business Strategy in Action
Exchange risk management 527 Deutsche Bahn: more than a railroad 568
Transaction risk 527 Manufacturing considerations 570
Translation risk 527 Management considerations 572
Economic risk 528 Barriers to EU market access 573
An example of exchange risk management 529 Key points 574
Developing forecasting and reporting Key terms 575
systems 531 Review and discussion questions 575
Capital budgeting in the MNE 532 ■ Real Cases
Use of NPV 534 Accor budget hotels 576
Institutional features 535 Carrefour 578
International financing in the MNE 536 Notes 579
Financial structure 537 Bibliography 580
Control: identifying objectives, evaluating affiliate
performance, and making performance consistent Chapter 18
with goals 538 Japan 582
Strategic international finance 539
Establishing overseas operations 539 Objectives of the chapter 582
Reducing financial risk 540 ■ Active Learning Case
Key points 540 Doing business in Japan 583
Key terms 541 Introduction 585
Review and discussion questions 541 Political, social, and cultural characteristics 585
 Contents in detail xiii

A traditionally strong government role in the Business opportunities in Canada 632

economy 585 Franchising 634
Distinctive cultural characteristics 586 Mexico 634
Economic characteristics 587 Mexico’s economy 634
Japan and China: the new Asian powerhouse? 592 Mexico and NAFTA 635
Business characteristics 593 Regional trade agreements 636
Manufacturing strengths 593 Doing business in Mexico 636
Strong applied R&D 593 ■ International Business Strategy in Action
Keiretsu 594 Mexico and NAFTA 637
■ International Business Strategy in Action Key points 641
Kirin Beer goes international 597 Key terms 642
Distribution, retailing, and customer Review and discussion questions 642
orientation 598 ■ Real Cases
Japanese corporations 598 Jumex of Mexico 643
A changing nation 601 GlaxoSmithKline in the United States 644
Restructuring capital markets 601 Notes 645
Deregulation, increased M&A, and inward FDI 602 Bibliography 646
■ International Business Strategy in Action
Wal-Mart takes Seiyu 604 Chapter 20
Restructuring corporations 605 Emerging Economies 648
The decline of manufacturing and distribution
Objectives of the chapter 648
keiretsu 606
The growth of outward FDI and offshore ■ Active Learning Case
manufacturing 606 Acer Taiwan goes international 649
The decline of lifetime employment Introduction 650
and changing HRM practices 607 Triad firms and emerging economy firms:
Diversification strategies 607 why the mutual interest? 651
Conclusions 608 An overview of emerging economies,
Key points 609 by region 652
Key terms 610 Asia–Pacific and the Middle East 655
Review and discussion questions 610 Central and eastern Europe 659
Latin America and the Caribbean 659
■ Real Cases
Africa 660
Renault and Nissan: no pain, no gain 610
Sony: diversifying into the automobile industry? 613 ■ International Business Strategy in Action
Notes 615 From Oserian to Tesco: the Kenyan cut flower
Bibliography 616 industry 661
www resources 618 Shifting patterns of comparative and competitive
advantage 663
Flying Geese model 664
Chapter 19
Emerging economies as sources of innovation 667
North America 619 Market access to the triad 669
Objectives of the chapter 619 ■ International Business Strategy in Action
■ Active Learning Case Korean chaebols: Hyundai and Samsung 669
NAFTA 620 Key points 672
Introduction 622 Key terms 673
Canada 622 Review and discussion questions 673
Canada’s economy 623 ■ Real Cases
Differences in the business environment 624 The Indian IT, software, and services industry 673
■ International Business Strategy in Action Bumrungrad International in Thailand 676
Bombardier 625 Notes 678
Canada’s multinationals 630 Bibliography 679
Multilateral agreement on investment (MAI) 631 www resources 681
 xiv Contents in detail

Chapter 21 ■ International Business Strategy in Action

China 682 Haier goes global 701
Key points 704
Objectives of the chapter 682 Key terms 704
■ Active Learning Case Review and discussion questions 705
Oxford Instruments in China 683 ■ Real Cases
Introduction 684 Citigroup in China 705
Unprecedented scale, scope, and speed of growth 685 Nanjing Auto makes the MG 707
The role of government 688 Notes 708
MNE investment into China 689 Bibliography 710
■ International Business Strategy in Action www resources 712
Airbus in China 690
Foreign R&D investment 693 Glossary 713
Getting into China 695 Index 723
Outward investment and the new
multinationals from China 698

Supporting resources
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For instructors
■ Instructor’s Manual
■ PowerPoints

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List of Figures and Tables

Figures
1 The multiple, interacting levels and lenses of 4.1 The European Union’s institutions 140
international business studies xxxii 4.2 Bombardier: revenue, 2008–14 149
2 The internationalization roadmap: decision 4.3 Embraer: revenue, 2008–14 149
stages for global expansion xxxiv 5.1 Cross-cultural business contexts 156
3 The structure of this book xxxvi 5.2 Hofstede’s power distance against
1.1 The consequences of globalization 7 individualism for 20 countries 161
1.2 The dynamics of globalization 11 5.3 Excerpts from Trompenaars’ cultural
1.3 Estimated stock of outward FDI by country attitudes survey 166
of origin, 1914 23 5.4 Management dimensions of culture 168
1.4 Estimated stock of accumulated FDI by country 5.5 Shared characteristics stemming from
of origin, 1938 25 common cultural influences 175
1.5 FDI outward stock from selected developing 6.1 The international product life cycle 190
economies as a percentage of the world’s FDI 6.2 Microsoft: revenues by geographic segment 193
outward stock 31 6.3 Impacts of a tariff 196
2.1 Classes of FSAs or ownership (O) advantages 44 6.4 The US current account balance
2.2 Cost of shipping a 40 ft container to the and its components, 2007–15 203
American East Coast 49 7.1 Foreign exchange market for euros in New York 222
2.3 The OLI framework: a decision model 51 7.2 US foreign exchange markets 223
2.4 The strategic management process in action 53 7.3 Exchange rate determination 229
2.5 The basic components of international business 54 7.4 Change in the Shanghai Composite Index,
2.6 The FSA–CSA matrix 55 June–August 2015 232
2.7 The motives of internationalization: a decision model 58 7.5 Change in Japan’s TOPIX Index,
2.8 The internationalization process of the firm 59 September 2014–July 2015 232
2.9 Entry modes: benefits and drawbacks 65 7.6 Change in Hong Kong’s Hang Seng Index,
2.10 Organizational modes of cooperative agreements: September 2014–July 2015 232
horizontal versus vertical cooperation 66 7.7 Change in Taiwan’s TAIEX Index, March–August
2.11 Risk vs. reward: country market attractiveness 2015 233
for SME managers 73 7.8 Change in the Brent oil price, August
2.12 Foreign market selection criteria 2014–August 2015 233
for international and non-international SMEs 74 7.9 Change in the copper price, 2011–15 233
3.1 Output of high-tech manufacturing industries 7.10 History of the LIBOR rates, January 1,
for selected economies, 1997–2012 93 1999–December 31, 2010 239
3.2 Global R&D expenditures by region, 2015 94 7.11 IMF special drawing rights
3.3 USPTO patents granted, by location of inventor, (February 21, 2014) 244
2003–12 95 8.1 The five forces of industry competitiveness 263
3.4 The share of the largest emerging economies in 8.2 The five-forces model applied
US patenting 95 to the semiconductor industry 265
3.5 The top 15 US patent recipients during the 8.3 A basic value chain 268
period 2010–14 96 8.4 Generic strategies in worldwide
3.6 The VRIO framework: a decision-making process 99 shipbuilding 269
3.7 The conventional model of an innovation system 106 8.5 The control and evaluation process 275
3.8 International dimensions of innovation 107 8A Multinationality and performance 284
3.9 MNE headquarters linked through its affiliates 9.1 An export department structure 294
in other countries to the innovation systems 9.2 Use of subsidiaries during the early
of other countries 108 stages of internationalization 294
3.10 Structural, strategic, and organization 9.3 An international division structure 296
dilemmas for the innovative multinational firm 110 9.4 A global product structure 297
3.11 Global MNE structures for managing innovation 110 9.5 A global area structure 299

xv
xvi List of Figures and Tables

9.6 A global functional structure 300 16.1 Financial management in the MNE 514
9.7 A geographic matrix structure 300 16.2 Common examples of internal sources
9.8 A multinational matrix structure 301 and flows of funds 517
9.9 A mixed structure 303 16.3 World’s top tax havens based on Secrecy
9.10 A transnational network structure 304 Index value, 2015 520
9.11 Organizational epigrams 309 16.4 Multilateral dollar flows between subsidiaries 521
10.1 Porter’s single-diamond framework 321 16.5 Centralized netting process in action 521
10.2 The four stages of national development 17.1 The European Union 552
and the historical position of select nations 323 17.2 Hourly compensation costs in manufacturing,
10.3 The single-diamond view 325 2010 and 2013 557
10.4 Canadian–US double diamond 326 17.3 Productivity: increase in output per hour,
10.5 The shape of North America 331 1979–2010 558
10.6 Integration and national responsiveness 333 17.4 Business strategies for the EU 564
11.1 Network linkage and the changing shape of 17.5 Competition and shelter-based strategies 574
international distribution systems 357 18.1 Japan’s foreign trade by country/region, 2014 590
11.2 Network linkages for successful MNEs 358 18.2 Japan’s major export and import
11.3 FDI and NAFTA 363 commodities, 2014 591
11.4 NAFTA and the EU 364 18.3 Japan, 2014 592
11.5 Different perceptions of the WTO 367 18.4 The Fuyo keiretsu group before restructuring 595
11.6 Institutional alternatives for trade and investment 368 18.5 Bank group consolidation in Japan 603
11.7 MNE strategies and civil society 368 18.6 Cross-border M&A activity in Japan 603
11.8 Segmentation of the Maersk Group activities 374 18.7 Top 10 Renault and Nissan
12.1 Global R&D: markets and hierarchies 385 alliance markets, 2015 612
12.2 Where Starbucks gets its coffee 395 18.8 Top 10 Renault and Nissan markets 612
12.3 Product- and service-dominated businesses 397 19.1 North America, 2014 623
12.4 Global production systems: where 20.1 What is the attraction for triad
is the value added? 401 and non-triad firms investing in each
13.1 Selected examples of product modification other’s home regions? 651
in the international arena 423 20.2 Flying Geese model: changing national-level
13.2 Product life cycles: two different approaches 427 specialization 664
14.1 The management of multinational enterprises 449 20.3 Flying Geese model: the shifting location
14.2 Cost of expatriate managers 459 of industrial production 665
14.3 Trade union density, 2012 461 20.4 Flying Geese model: the pattern of shifting
14.4 Primark’s key stakeholders 463 comparative advantage 665
15.1 PEST framework for country analysis 480 20.5 Accelerated structural transformation
15.2 Types and levels of political risk 483 (are the geese flying faster?) 666
15.3 FDI drivers: the strategic objectives of MNEs, 20.6 Firm-specific advantages (FSAs) for the
host-country attractiveness, and host- new multinationals 667
government requirements 491 20.7 India’s IT industry: rapid growth in
15.4 FDI flows in Costa Rica, 1984–2004 495 the early years 674
15.5 Costa Rica: imports and exports, 1995–2003 495 20.8 The growth of the Indian IT market:
15.6 Zones of acceptance in the negotiating process 497 local and global 675
15.7 Select examples of the use of integrative and 20.9 How the IT sector impacts India 675
protective/defensive techniques 501 21.1 South and East Asia  685

Tables
1.1 Measures of institutions between countries 14
1.2 FDI outward stock by countries, 1980–2014 27 2.3 Growth in annual salary costs within
1.3 FDI inward stock by countries, 1980–2014 28 the automotive OEM workforce,
1.4 Internationalization statistics of the 100 2009–14 50
largest non-financial MNEs 32 2.4 Internationalization motives 56
1.5 Key figures of cross-border non-equity mode 2.5 Types of international SMEs by trade
activity, selected industries, 2010 34 and FDI up and down the value chain 70
1A Top 25 importers in the world, 2014 38 2.6 SMEs’ internationalization strategies 71
1B Top 25 exporters in the world, 2014 39 2.7 Changes in SBF-DP SME Index in all
2.1 A classification of L advantages 47 four quarters of 2015 72
2.2 China’s and Mexico’s market share in the 2A The 25 largest global MNEs, 2015 ranking 82
global automotive industry, 2005–13 49 2B The 25 largest US MNEs, 2015 ranking 82
 List of Figures and Tables xvii

2C The 25 largest European MNEs, 2015 ranking 83 13.3 International market penetration:
2D The 25 largest Japanese MNEs, 2015 ranking 83 location of subsidiaries, holdings, and
2E The 25 largest Chinese MNEs, 2015 ranking 84 joint ventures 435
2F The 25 largest MNEs from emerging markets, 14.1 Employer incentive practices around
2015 ranking 84 the world 460
2G The world’s top 100 non-financial TNCs, 14.2 Ratio between CEO and average worker
ranked by foreign assets, 2013 85 pay, 2014 461
3.1 Firm-specific resources and capabilities 97 14.3 Cost of living in select cities, 2015 469
3.2 Top ten patent recipients, 2014 112 14.4 Top executive search firms, 2014 473
3.3 IBM’s research labs 113 15.1 Changes in national regulations on
5.1 World population percentages in terms FDI, 2000–13 482
of home region, language, and religion 155 15.2 Political risk: sources, agents, and effects 484
5.2 Average and intra-country ranking of 15.3 The Weighted Country Risk Assessment Model 487
work goals: a seven-nation comparison 167 15.4 Twelve examples of the differences in verbal
5.3 Organization types reflecting cultural behaviors among Japanese, American,
predispositions 171 and Brazilian negotiators 498
6.1 China’s share of the world’s market for 16.1 Shifting profits by transfer pricing 518
exports of manufactures, 2000–13 184 16.2 Transfer pricing through tax havens 519
6.2 The triad’s share of world merchandise 16.3 Net cash positions of subsidiaries 520
exports, 1993–2013 184 16.4 The world’s top tax havens, 2015 523
6.3 OPEC exports 195 16.5 Largest sovereign wealth funds by
6.4 Common non-tariff barriers to trade 200 assets under management, 2015 527
6.5 Outsourcing and job losses in the 16.6 Exchange risk hedging techniques 529
United States, third quarter of 2010 208 16.7 International sources of credit (including
6A Balance of payments: IMF presentation 212 markets and intrafirm transfers) 536
6B US international transactions, 2014 216 16.8 Ford and its brands, 2014 544
6C US merchandise trade, 2014 216 17.1 Economic profile of the big three, 2015 552
7.1 The Barclays Group’s structural currency 17.2 The world’s most competitive economies 558
exposures as at December 31, 2014 219 17.3 Comparison of location factors 563
7.2 Analysis of loans and advances to customers 17.4 Direction of EU trade 566
as at December 31, 2014 220 17.5 EU anti-dumping cases investigated
7.3 Exchange rates in the interbank market, by sector, 2006–14 573
October 29, 2015 224 17.6 Accor Hotel portfolio by region, 2014 577
7.4 Currency futures contract specifications 18.1 Economic and trade data for Japan, 2009–14 588
at the Chicago Mercantile Exchange 226 18.2 Japan’s FDI imbalance, 2008–14 588
8.1 Typical strategic orientations of MNEs 260 18.3 Japan: FDI by country/region, 2010–14 589
8.2 The Big Four 261 18.4 The 25 largest Japanese MNEs, 2015 ranking 600
8.3 Typical goals of an MNE 270 19.1 Direction of US trade, 1999–2014 621
9.1 World’s ten largest pharmaceutical 19.2 Direction of Canada’s trade, 1999–2014 621
companies, 2014 (based on revenue) 295 19.3 Direction of Mexico’s trade, 1999–2014 621
9.2 Factors that encourage centralization or 19.4 The largest 25 Canadian-based firms,
decentralization of decision making in 2014 ranking 630
multinational operations 307 19.5 The largest 15 foreign-owned companies
10.1 FDI positions by Canada, the United States, in Canada, 2014 ranking 631
and Mexico, 2003–14 330 20.1 FDI inflows, by host region and economy,
10.2 AD and CVD orders by product category, 2014 338 1995–2014 653
10.3 Largest worldwide brewers, 2009 343 20.2 FDI from developing countries, 2000–13 654
11.1 The world’s most admired companies, 2015 350 20.3 The top 50 non-financial TNCs from developing
11.2 The world’s major trade agreements 361 economies ranked by foreign assets, 2013 656
11.3 Top six container shipping companies 20.4 Comparing the international costs of medical
in order of TEU capacity, February 25, 2011 373 procedures 677
12.1 The cost of arriving late to market 21.1 China: key economic indicators, 2009–14 686
(and still being on budget) 387 21.2 China: key trade indicators, 2014 687
12.2 Gap Inc. number of store locations, by region, 21.3 China: direct investment flows, outward
January 2015 390 and inward, 2011–14 687
12.3 The Mitsubishi and Mitsui keiretsu in Japan 404 21.4 Common examples of synergies between
13.1 Adidas’s marketing objectives and foreign multinationals and local Chinese firms 697
measurements 418 21.5 Top 25 Chinese (mainland) firms in the
13.2 The effect of MNE pricing on final “Forbes 2000” list, 2015 ranking 699
consumer costs 432 21.6 Haier goes global 702
Preface
Dedication
The seventh edition of International Business is dedi-
cated to the memory of Alan Rugman, who began this
textbook series over 30 years ago and invited me to join
him as co-author for the fourth edition published in 2006.
Our writing partnership began when I was a visiting pro-
fessor at the Kelley School, University of Indiana in
2004 and I reflect on our collaboration in a volume dedi-
cated to Alan, edited by Rob Van Tulder, Alain Verbeke
and Rian Drogendijk (Collinson, 2015).1 He was a great
scholar and a much-missed mentor. For Alan this book
series represented a lifelong project to continually
improve the way we teach international business and
engage people in a subject he was passionate about.
Alan would be extremely pleased to know that his
colleague and friend, Rajneesh Narula has joined me to
co-author this, the latest edition of his book. Alan’s
ideas and insights remain at the core of this book, but
we have thoroughly revised and updated the text in step
with the ever-changing world of international business.
A brief biography of Alan can be found on page xxi.
Simon Collinson
The seventh edition of International Business
With a new co-author, Rajneesh Narula, we have three
completely new chapters (Chapters 1–3) to open the
book. As shown in these new chapters, we have signifi-
cantly restructured the book to place a much greater
emphasis on: (1) technology and innovation, as key
drivers of international competitiveness; (2) institutions
as mediators and moderators of MNE (multinational
enterprise) activities; (3) small and medium-sized
enterprises as important global players; and (4) how
MNEs can be responsible businesses, taking a broader,
more ethical stakeholder approach, rather than a nar-
rowly profit-oriented shareholder approach.
1 Collinson, Simon (2015). “Dedication: Yin and Yang: Integrating Disparate Perspectives for International Business Research and Teach-
ing”, in Rob Van Tulder, Alain Verbeke, and Rian Drogendijk (ed.) The Future of Global Organizing (Progress in International Business
Research, Volume 10) Emerald Group Publishing Limited, pp. 27–35.
xviii
The structure of the book has also changed, although
we have kept the five main sections and made them
more distinctive. A new introduction: “Frameworks for
this Book: Our Approach to the Study of International
Business” appears just before the start of Part One and
the main chapters. It provides an overview of our
approach and the structure of the book as well as the
standard sections of each chapter. Figure 3 provides the
new outline, linked to a description of how the book is
organized.
The themes covered in the previous Chapter 11 have
now been integrated into the new Chapter 3. Chapter 22
has been thoroughly revised and sits in Part Three, as
the new Chapter 11. This leaves Part Five to focus on
the five key countries and regions (Chapters 17–21).
Within the chapters the structure should be familiar
to those who have used the book before. We have kept
five case studies in each chapter (except Chapter 1,
which introduces the field of international business).
We have 100 case studies and almost one-quarter of
these are entirely new. Most of the rest have been com-
pletely updated or rewritten. Every chapter has been
thoroughly updated, with new data, trends, and refer-
ences. A revised bibliography appears at the end of
each chapter.
Acknowledgements
Our lead researcher on this project was Amir Qamar, a
Ph.D. student at Birmingham Business School, the
University of Birmingham, who deserves huge thanks
for coordinating the revision process and updating large
parts of the book. He also provided 12 of the new case
studies and helped shaped the new emphasis described
above. He was lead author on US manufacturing: from
China to Mexico (Ch. 2); Worrying times for
Singapore’s SMEs (Ch. 2); R&D at Hewlett-Packard
(Ch. 3); Greece: third (bailout) time lucky (Ch. 4); The

collective culture of the John Lewis Partnership (Ch. 5);
China 2015: the start of the next global economic melt-
down? (Ch. 7); End of an era: the Goodyear plant clo-
sure (Ch. 12); Adidas: promoting a global sports brand
(Ch. 13); Primark: putting global stakeholders first (Ch.
14); Intel Effect (Ch. 15); Financial transparency at
Siemens (Ch. 16); and VW scandal (Ch. 17). He is also
the author for the Instructor’s Manual.
Thanks also go to Dev K. (Roshan) Boojihawon, a
Senior Lecturer in IB at the University of Birmingham,
and another of our Ph.D. students, Emma C. Gardner,
who also both provided excellent new case studies for
Preface xix
the book. Dev led on Floreal Knitwear (Ch. 10) and
Mirum (Ch. 13). Emma was lead author for: Tesco at
home and abroad (Ch. 2); The Big Four (Ch. 8); Glass
ceiling (Ch.14); and Sony-diversifying into the auto-
mobile industry? (Ch. 18). Support for Rajneesh Narula
was provided by Karim Kirollos, Teaching Fellow in
International Business at Aston University, who helped
edit and update the text and cases associated with
Chapters 1–3. Further assistance was provided by
Jong Min Lee and Maite Alvez Bezerra, doctoral
researchers at Henley Business School, University of
Reading.
About the Authors
Dr Simon Collinson is Dean of Birmingham Business
School and Professor of International Business and
Innovation at the University of Birmingham. He is also
Chair of the Chartered Association of Business Schools
(CABS), a member of the UK Economic and Social
Research Council (ESRC) and the Council of the
Greater Birmingham Chamber of Commerce, and a
Fellow of the Royal Society (FRSA).
Previous roles include Professor of International
Business at Henley Business School, University of
Reading and Deputy Dean and Professor of International
Business at Warwick Business School, University of
Warwick (UK), where he was also Head of the
Marketing and Strategic Management Group. He was
an Academic Associate at the Centre for International
Business and Management (CIBAM), Judge Business
School, Cambridge, and a Research Associate at the
Centre for Competitive Advantage in the Global
Economy (CAGE) at Warwick University. During his
time at Warwick he held the role of Lead Ghoshal
Fellow (and then sat on the Board of Directors) in the
Research Council UK- (RCUK-)funded Advanced
Institute of Management (AIM) initiative. Prior to
Warwick he was Lecturer and Senior Research Fellow
at Edinburgh University Management School and the
Assistant Director of the Japanese–European
Technology Studies (JETS) Institute for seven years.
Simon has held visiting positions at Zhejiang
University, the Australian Graduate School of
Management (AGSM) in Sydney, the Kelley School of
Business, Indiana University, Hitotsubashi University
and the National Institute of Science and Technology
Policy (NISTEP) in Tokyo, and the John Dunning
Centre for International Business, Henley Business
School, University of Reading. Following a Joint BA
(Hons.) in Geography and Sociology at Leeds
University and an MA in Human Geography at the
University of Florida, Gainesville, Simon was awarded
his D.Phil. from the Science Policy Research Unit
(SPRU) at Sussex University in 1991.
His original research was on technology transfer
and indigenous technological capabilities in Kenyan
manufacturing firms. Since then projects and papers
have focused on global innovation strategies, R&D,
xx
knowledge, and intellectual asset management in mul-
tinational firms; the competitiveness of international
UK firms; national systems of innovation and emerg-
ing economies; high-technology entrepreneurship,
small-firm networks, and regional development; Japan
and China: local business practices and cross-cultural
management, foreign direct investment, and economic
change. Simon has received research funding awards
from the UK ESRC and the Engineering and Physical
Sciences Research Council (EPSRC), the UK govern-
ment’s Department of Trade and Industry, Japan’s
Science and Technology Agency, the British Royal
Society, and European Commission Director General
(/Directorate) XII (DGXII) of the European Union.
He has research, consulting, and executive teaching
experience with a wide range of multinational firms.
He has published a range of books and articles in refer-
eed journals including Journal of International
Business Studies, Organization Studies, Business
History, Research Policy, Multinational Business
Review, International Journal of Technology
Management, European Management Journal, R&D
Management, Organization Dynamics, and Technology
Analysis & Strategic Management. His research has
also featured in the Independent, The Times, The
Sunday Times, BBC Radio 4, the New Statesman and
the U.S. News & World Report.
While continuing to publish on China, innovation,
and the evolving competitiveness of emerging econo-
mies, he has recently focused on two areas of research.
First, the performance effects of organizational com-
plexity. His most recent book, From Complexity to
Simplicity was shortlisted for the Chartered
Management Institute (CMI) business book of the year
prize. Second, as joint-lead of City-REDI, the City-
Region Economic Development Institute at
Birmingham Business School, he has been working
with regional policy-makers to accelerate local innova-
tion and economic growth.
Dr Rajneesh Narula is the John H. Dunning Chair of
International Business Regulation at the Henley
Business School, University of Reading, UK. He has
previously held positions at Copenhagen Business

School, the BI Norwegian Business School, the
University of Oslo, and the University of Maastricht.
He currently holds honorary appointments at UNU-
MERIT, Norwegian Business School, and Oxford
University.
His research and consulting have focused on the
role of multinational firms in development, innovation
and industrial policy, R&D alliances, and outsourcing.
He has published over a hundred articles and chapters
in books on these themes. He was Editor-in-Chief of
Multinational Business Review from 2014 to 2016, and
is currently Area Editor in development and interna-
tional business for the Journal of International
Business Studies (2016–20). He was Editor-in-Chief of
The European Journal of Development Research from
2009 to 2013.
He regularly acts as a consultant and advisor to the
European Commission, United Nations Industrial
Development Organization (UNIDO), United Nations
Conference on Trade and Development (UNCTAD),
the Organization for Economic Co-operation and
Development (OECD), and a variety of other interna-
tional organizations. He has travelled widely, having
undertaken research and consultancy projects or taught
in Tanzania, Uganda, Thailand, China, Vietnam,
Russia, India, Qatar, UAE, Colombia, Australia, Japan,
Mauritius, Senegal, and Pakistan, in addition to almost
all the countries of the EU.
He is listed as one of the top 20 most cited academic
authors worldwide in the fields of international busi-
ness, emerging markets, economics of innovation, and
economic development. His publications with John
Dunning and Sanjaya Lall on FDI-assisted development
are especially well-cited contributions on the subject.
He is the author or editor of ten books, including
Globalization & Technology (Polity Press, 2003),
Multinationals and Industrial Competitiveness (with
John Dunning, Edward Elgar, 2004), Understanding
FDI-assisted Economic Development (with Sanjaya
Lall, Routledge, 2004), and Multinationals on the
Periphery (with Gabriel Benito, Palgrave, 2007). His
publications have appeared in leading journals, includ-
ing the Journal of International Business Studies,
Oxford Development Studies, Research Policy, Journal
of Management Studies, Journal of World Business,
and Management International Review. His 2003 book
Globalization and Technology has been translated and
published in Chinese and Arabic.
He obtained his B.Eng. (Electrical Engineering, with
Hons.) from Ahmadu Bello University, Zaria Nigeria,
his MBA from Rutgers University and his Doctorate in
About the Authors xxi
International Business and Economics from Rutgers
University, US. Before academia, Professor Narula
worked as an Engineer in Nigeria, and later as a
Planning Analyst at IBM Asia/Pacific Headquarters in
Hong Kong.
Until his untimely death in July 2014, Dr Alan M.
Rugman was Professor of International Business at the
Henley Business School and Head of School,
International Business and Strategy at the University of
Reading, UK. Previously he was L. Leslie Waters Chair
of International Business at the Kelley School of
Business, Indiana University, from 2002 to 2009. He
was Thames Water Fellow in Strategic Management at
Templeton College, University of Oxford, from 1998 to
2001 and an Associate Fellow of Green Templeton
College. Previously, he was Professor of International
Business at the University of Toronto, Dalhousie
University, and the University of Winnipeg. He was
also a visiting professor at Columbia Business School,
London Business School, Harvard University, UCLA,
MIT, Warwick Business School, the University of
Paris–La Sorbonne, University of Sydney, Saint Louis
University, and the University of Lyon.
He earned his BA in economics from Leeds
University in 1966, his M.Sc. in economic develop-
ment from London University’s School of Oriental and
African Studies (SOAS) in 1967, and his Ph.D. in eco-
nomics from Simon Fraser University in 1974. He was
elected to an MA (Oxon) in 1998.
Dr Rugman published over 300 articles dealing with
the economic, managerial, and strategic aspects of mul-
tinational enterprises and with trade and investment
policy. These have appeared in such leading refereed
journals as: Journal of International Business Studies,
Management International Review, The American
Economic Review, Strategic Management Journal,
Journal of Management Studies, and Journal of
Business Ethics. He is recognized as one of the ten
most-cited scholars in the field of international business
worldwide. (His Google Scholar Citations count is over
21,000 and his h-index 67.)
His books include: Inside the Multinationals
(Columbia University Press, 1981 and Palgrave, 2006);
International Business (McGraw-Hill, 1995);
Environmental Regulations and Corporate Strategy
(Oxford University Press, 1999); Multinationals as
Flagship Firms (Oxford University Press, 2000); The
End of Globalization (Random House, 2000); The
Oxford Handbook of International Business (Oxford
University Press, 2001, 2009); The Regional
Multinationals (Cambridge University Press, 2005);
 xxii About the Authors
Regional Aspects of Multinationality and Performance
(Elsevier, 2007); Rugman Reviews International
Business (Palgrave Macmillan, 2009); and
Multinationals and Development (Yale University
Press, 2009).
As a leading authority in international business, Dr
Rugman served as President of the Academy of
International Business from 2004 to 2006, was elected
a Fellow of the Academy in 1991, and served as Dean
of the Fellows. He was also a Fellow of the Royal
Society of Arts, elected 1998. He served on the Editorial
Board of the Journal of International Business Studies
and was the Editor-in-Chief of the Multinational
Business Review.
In 2004 he received the Booz Allen Hamilton Award
as Eminent Scholar in International Management,
1 Narula, R., and Verbeke, A. (2015). Making internalization theory good for practice: The essence of Alan Rugman’s contributions to inter-
national business. Journal of World Business, 50(4), 612–22.
Academy of Management. He was also honored at a
special plenary session of the European International
Business Association annual meetings, Slovenia,
December 2004 for the 25th Anniversary of his 1979
book, International Diversification and the
Multinational Enterprise. In 2011, he received the
Simon Fraser University Outstanding Alumni Award
for Academic Achievement. His final plenary was at
the Academy of International Business (AIB) confer-
ence in Vancouver, June 2014, fittingly an AIB Fellows
Plenary with his peer group. A number of special issues
of journals have been published in his honor, most
recently a special section in Journal of World Business,
edited by Rajneesh Narula and Alain Verbeke. 1
http://henley.ac.uk/news/news-item/in-memoriam-
professor-alan-rugman/
Guide to the Case Studies

COUNTRY/ NEW/
CHAPTER TYPE OF CASE ORGANIZATION/INDUSTRY REGION REVISED PAGE

Chapter 1 (n/a)
An Introduction
to International
Business

Chapter 2 ■ Active Learning Case Starbucks: a global “coffee US Revised 42

General culture”
Frameworks in
International ■ International Business US manufacturing: from China to US/Emerging New 49
Business Strategy in Action Mexico Economies:
China/Mexico

■ International Business Worrying times for Singapore’s Singapore New 71

Strategy in Action SMEs

■ Real Case Toys “R” Us US/EU/Japan Revised 76

■ Real Case Tesco at home and abroad US/Japan/UK New 78

Chapter 3 ■ Active Learning Case GE Healthcare in India: locally US/Asia 91

Multinational driven innovation
Enterprises,
Innovation, and ■ International Business Spreadshirt: open innovation EU Revised 103
Competitiveness Strategy in Action

■ International Business Innovation networks at IBM US Revised 112

Strategy in Action

■ Real Case Canon Group Japan Revised 115

■ Real Case R&D at Hewlett-Packard US New 117

Chapter 4 ■ Active Learning Case How risky is foreign investment in Emerging Revised 124
International Russia? Economies
Politics
■ International Business Greece: third (bailout) time lucky Greece New 129
Strategy in Action

■ International Business Non-governmental organizations US/EU 136

Strategy in Action and political power

■ Real Case How environmental regulations US/Emerging 147

can be used as trade barriers Economies

■ Real Case Embraer vs. Bombardier Canada/ Revised 148

Emerging
Economies:
Brazil

xxiii
xxiv Guide to the Case Studies

COUNTRY/ NEW/
CHAPTER TYPE OF CASE ORGANIZATION/INDUSTRY REGION REVISED PAGE

Chapter 5 ■ Active Learning Case Cultures clash as big pharma gets EU: Sweden Revised 153
International bigger and Italy/US
Culture
■ International Business McDonald’s US Revised 158
Strategy in Action

■ International Business The collective culture of the John UK New 173

Strategy in Action Lewis Partnership

■ Real Case Do not throw your meishi! EU: UK/Japan 178

■ Real Case Sport can be local and global: EU/US/Asia Revised 179
Manchester United

Chapter 6 ■ Active Learning Case Trade of the triad and China US/EU/Japan/ Revised 184
International Emerging
Trade Economies:
China

■ International Business Microsoft shows the world US/EU Revised 192

Strategy in Action is not flat

■ International Business Boeing versus Airbus US/EU Revised 197

Strategy in Action

■ Real Case Job losses and offshoring US/Emerging 207

to China Economies:
China

■ Real Case Dumping on trade complaints Canada/US 208

Chapter 7 ■ Active Learning Case Barclays Bank international EU: UK Revised 219
International financial dealings
Financial Markets
and Institutions ■ International Business China 2015: the start of the next China New 231
Strategy in Action global economic meltdown?

■ International Business AngloGold Ashanti Emerging Revised 241

Strategy in Action Economies:
South Africa

■ Real Case HSBC EU: UK Revised 248

■ Real Case Rigging LIBOR UK New 249

Chapter 8 ■ Active Learning Case Vodafone and the triad telecom EU Revised 256
Multinational market
Strategy

■ International Business The Big Four UK New 261

Strategy in Action
 Guide to the Case Studies xxv

COUNTRY/ NEW/
CHAPTER TYPE OF CASE ORGANIZATION/INDUSTRY REGION REVISED PAGE

■ International Business Fuji Xerox and Xerox US/Japan Revised 271

Strategy in Action

■ Real Case Mountain Equipment Co-op: Canada Revised 278

a small business

■ Real Case Benetton EU: Italy Revised 279

Chapter 9 ■ Active Learning Case Procter & Gamble US Revised 291

Organizing
Strategy ■ International Business Sanofi-Aventis EU: France/ Revised 295
Strategy in Action Germany

■ International Business Making the matrix work EU/US/Japan 302

Strategy in Action

■ Real Case LVMH: organizing luxury products EU: France Revised 312
in the international arena

■ Real Case Command Alkon: small but US 313

increasingly global

Chapter 10 ■ Active Learning Case Worldwide operations and local EU Revised 319
Corporate strategies of ABB
Strategy and
National ■ International Business Nokia and Ericsson: moving EU Revised 328
Competitiveness Strategy in Action beyond mobiles

■ International Business Renewed advantage through Asia New 334

Strategy in Action vertical integration at Floreal
Knitwear

■ Real Case There is no global beer, only local US/EU 342

■ Real Case IBM US/EU Revised 344

Chapter 11 ■ Active Learning Case The environment, NGOs, EU/US Revised 350
Multinational and MNEs
Enterprises as
Responsible ■ International Business 3M US Revised 354
Stakeholders Strategy in Action

■ International Business Is The Body Shop an ethical EU: UK Revised 365

Strategy in Action business?

■ Real Case Dell: B2C US/Emerging 371

Economies:
China

■ Real Case Maersk Group EU: Denmark/ 372

US/Asia
xxvi Guide to the Case Studies

COUNTRY/ NEW/
CHAPTER TYPE OF CASE ORGANIZATION/INDUSTRY REGION REVISED PAGE

Chapter 12 ■ Active Learning Case GE production: from Six Sigma to US Revised 382
Production the GE Store
Strategy
■ International Business Gap Inc.: a successful “hollow EU/US Revised 389
Strategy in Action corporation”

■ International Business End of an era: the Goodyear plant UK New 391

Strategy in Action closure

■ Real Case Flextronics Emerging Revised 411

Economies:
Singapore

■ Real Case Nike US Revised 413

Chapter 13 ■ Active Learning Case Adidas: promoting a global sports UK/Brazil New 417
Marketing brand
Strategy
■ International Business Weeby buys Tappy US/Emerging New 426
Strategy in Action Economies:
Vietnam

■ International Business IKEA in international markets EU: Sweden Revised 428

Strategy in Action

■ Real Case Bang & Olufsen EU: Denmark/ Revised 441

US

■ Real Case Mirum—never lose your sense of US New 443

wonder!

Chapter 14 ■ Active Learning Case The Coca-Cola Company thinks US Revised 448
Human Resource local
Management
Strategy ■ International Business The glass ceiling UK New 455
Strategy in Action

■ International Business Primark: putting global UK New 463

Strategy in Action stakeholders first

■ Real Case Offshoring to India US/Emerging 472

Economies:
India

■ Real Case Executive search firms EU Revised 473

Chapter 15 ■ Active Learning Case Nestlé in Nigeria Emerging New 478

Political Risk and Economies:
Negotiation Nigeria
Strategy
 Guide to the Case Studies xxvii

COUNTRY/ NEW/
CHAPTER TYPE OF CASE ORGANIZATION/INDUSTRY REGION REVISED PAGE

■ International Business Political risk for De Beers Emerging Revised 493

Strategy in Action Economies:
South Africa

■ International Business Intel effect Emerging New 494

Strategy in Action Economies:
Costa Rica

■ Real Case Yukos and the Russian oligarchs Emerging Revised 505
Economies:
Russia

■ Real Case Problems with ports Japan/ Revised 506

Emerging
Economies:
Kenya

Chapter 16 ■ Active Learning Case Financial transparency at EU: UK/US New 512
International Siemens
Financial
Management ■ International Business Worldwide tax havens Emerging Revised 522
Strategy in Action Economies

■ International Business Sovereign wealth funds Middle East/ Revised 525

Strategy in Action US/EU

■ Real Case Skandia EU: Sweden Revised 542

■ Real Case Ford and Volvo US/EU: Revised 543

Sweden

Chapter 17 ■ Active Learning Case The future is Orange EU: France Revised 550
European Union
■ International Business VW diesel dispute US/EU New 560
Strategy in Action

■ International Business Deutsche Bahn: more than a EU: Germany/ Revised 568
Strategy in Action railroad US

■ Real Case Accor budget hotels EU: France Revised 576

■ Real Case Carrefour EU: France Revised 578

Chapter 18 ■ Active Learning Case Doing business in Japan Japan Revised 583
Japan
■ International Business Kirin Beer goes international Japan Revised 597
Strategy in Action

■ International Business Wal-Mart takes Seiyu US/Japan Revised 604

Strategy in Action
xxviii Guide to the Case Studies

COUNTRY/ NEW/
CHAPTER TYPE OF CASE ORGANIZATION/INDUSTRY REGION REVISED PAGE

■ Real Case Renault and Nissan: no pain, Japan/EU: Revised 610

no gain France

■ Real Case Sony: diversifying into the Japan New 613

automobile industry?

Chapter 19 ■ Active Learning Case NAFTA US/Emerging Revised 620

North America Economies:
Mexico and
Canada

■ International Business Bombardier Canada/ Revised 625

Strategy in Action Emerging
Economies:
Brazil

■ International Business Mexico and NAFTA US/Emerging Revised 637

Strategy in Action Economies:
Mexico

■ Real Case Jumex of Mexico Emerging Revised 643

Economies:
Mexico

■ Real Case GlaxoSmithKline in the United UK/US Revised 644

States

Chapter 20 ■ Active Learning Case Acer Taiwan goes international Emerging Revised 649
Emerging Economies:
Economies Taiwan

■ International Business From Oserian to Tesco: the Emerging Revised 661

Strategy in Action Kenyan cut flower industry Economies:
Kenya

■ International Business Korean chaebols: Hyundai and Emerging Revised 669

Strategy in Action Samsung Economies: S.
Korea

■ Real Case The Indian IT, software, and Emerging Revised 673
services industry Economies:
India

■ Real Case Bumrungrad International in Emerging Revised 676

Thailand Economies:
Thailand
Another random document with
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"I was born in the East Indies, though at what place I do not now
remember, and the very first thing I recollect is a dead tiger."

The scholar started as he heard these words, and turned his chair so
as to bring him a great deal nearer to Agatha. He looked at her
earnestly as she proceeded, and seemed deeply interested.

"I do not know how the tiger came to be dead, or how he came there
at all," continued Agatha; "but he lay upon the ground in front of my
father's house, and my mamma was persuading me to go near and
look at him, telling me that he was quite dead and would never kill
anybody again. I was dreadfully afraid at first, especially when my
brother, who was a great deal older than I, got astride of the tiger's
back and sat down; but after a while I let him take me on his knee.
He made me look at the tiger's teeth and claws, and stroke the fur on
his head, which was very soft and glossy; and I asked him to get me
a little tiger to play with. By-and-by they took him away, and his skin
was afterwards spread out on our floor."

"I remember having a Persian kitten with a bushy tail, and a beautiful
black bird which could talk and whistle, and would swear dreadfully
sometimes in spite of everything we could do to him; and I remember
a great lizard which lived on a tree planted in a tub and covered with
net-work. There were a good many colored servants about the
house, but lighter and having straight hair, who dressed very neatly
in white muslin. One of these belonged to me particularly. I used to
call him my bearer. He was very good to me. He used to carry me
about and do all sorts of things to amuse me, and I loved him dearly.
But it is very curious that, try as I will, I never can remember his
name, though I am sure I should know it in a minute, if I heard it
spoken."

"Was it Cashirim?" asked the scholar.

"That was it! That was it!" exclaimed Agatha. "How did you know it?"

"Never mind now. Go on with your story."

All the rest of the party looked at the scholar in surprise, for he was
very pale, and his eyes were fixed upon Agatha as if he would look
her through. He took no notice of them, however, and again begged
Agatha to go on with her story.

"I do not remember my father so very distinctly," continued Agatha,

"and I think he must have been away from home a great deal; but I
seem to see my mamma's face whenever I try to think of her. I never
saw any one who looked the least like her. She had rather delicate
health, and did not go out a great deal when my father was away.
She used to teach me my lessons every morning. I was very happy
in those days, and the first trouble I remember came from my
brother's going away. He was quite a grown-up young man then, and
he was always very kind to me, telling me stories and letting me ride
out with him, for I could ride on my pony when I was a very little girl."

"A gentleman came to our house about that time, whom I was told
was my mamma's brother, who had come all the way from America
to see her. He was very lively and pleasant, and I liked him very
much till he went away, and took Charley with him. Mamma told me
that Charley had gone to America to be educated, and would come
back to us after a while, but I never saw him again."

"Not a great while after my brother went away—I do not know exactly
how long—came a very sad time. My father was an officer, and I
used dearly to love to see him on horseback and dressed in his
uniform. His men were Indians—irregular horse, I know they were
called—and splendid, fine-looking men some of them were; but they
were all very good to me, and much pleased when I chattered to
them in their own language, of which I know a good deal."

"One day my father came home looking very much excited, and
called my mother aside. What he said to her I don't know, but she
gave a little scream and threw her arms round his neck. He kissed
her, and I heard him say: 'Try to be calm, dear Julia, for my sake.'"

"After that she was very quiet, and went about giving orders, and
seeing papa's things packed, as if he were only going away for a
day's shooting. When he had kissed us and bade us good-by, and
we could not see him any longer from the veranda, mamma led me
into her room and took me on her lap, where she cried and sobbed
over me for a long time. Then she told me that papa was going to
battle, and that we must pray to God to send him safe home again;
and so we did, but he never came back any more. Two or three days
after he went away, my father's orderly came galloping up to the
house. He dismounted, and spoke two or three words to the servants
as he passed through the veranda, at which they all broke out into
loud lamentations. I knew what he said, for, as I told you, I had
learned a good deal of the language. He said, 'Your master is killed!'"

"Mamma was lying on the couch in the inner room, with the blinds all
drawn down, for it was very hot, and she was not well. I ran in to her,
crying: 'Oh, mamma, my papa is killed!'"

"'What do you mean, Agatha?' she asked, rising and looking very
pale. 'Have you been dreaming? Who has heard anything of Papa?'"

"At that moment Jones came to the door, and as soon as mamma
saw him she guessed what had happened."

"'Is my husband dead, Jones?' she asked, as quietly as though it had

been an ordinary question."

"'I am sorry to say it is too true, ma'am,' he replied; and then he gave
her some letters to read, and turned away, brushing the tears from
his eyes, for all my papa's men loved him. My mamma read the
letters quite calmly, and then calling Jones' wife, who waited on her,
and giving me into her charge, she went away into her own room,
and shut the door. By that time the news was known all through the
cantonment, and several of the ladies came to see my mother, but
they could not do her any good. She just sat still in her chair, and did
not speak or seem to hear one word that was said to her."

"'This will never do,' said the doctor, who had come with the rest.
'She must be made to weep, or she will die.'"
"'Go to your mamma and talk to her about papa, my dear Agatha,'
said the chaplain's wife to me. I did as I was told, though I felt rather
afraid. At first she did not seem to notice me, but by-and-by she
burst into tears and cried bitterly for a long time. All the ladies
seemed glad, and I thought this very strange. It seemed cruel to me
that they should want my mamma to cry, but the chaplain's wife
explained to me that they thought she would feel better after it. She
was better, especially after the chaplain himself came and read to
her and prayed with her. He was a kind, good man, and that night,
he took me on his knee and talked to me a long time about dear
papa. He told me what a brave soldier and what a good man he had
been, and that he had no doubt of his being in heaven, where I
should some time see him if I loved my Saviour as he had done. All
this comforted me very much, and I have always remembered it."

"After this there was a great confusion, packing up, and selling off all
our things. I was told we were going to England to see my father's
relations, about whom I had never heard a great deal, for, when
mamma talked about my uncle, she always meant my uncle in
America, who had taken Charley."

"'Cannot we go to America, where Charley is?' I asked."

"'I hope we shall do so by-and-by,' she replied; 'but we must go to

England first.'"

"We went a long, long journey in palanquins and on horseback, and

down the river to Calcutta, where a great many people were very
kind to us, for papa had distinguished himself very much in the battle
where he was killed. Before long we set sail for England, leaving
behind us all the servants except Jones, who was going home to see
her relations. Oh, how I cried at parting with my poor bearer! I do not
remember much about the voyage, except that it seemed very long. I
thought only of mamma, who was very ill all the time, and grew
worse and worse, till just a week before we reached England she
died, and was buried in the sea. How dreadful it was to see my dear,
dear mamma's body thrown into the deep water! It seemed so much
worse than seeing her buried in the ground. I knew that she was in
heaven just the same, but still it has always been a grief to me that I
could never know exactly where my father and mother lay, for papa
was buried on the battle-field, and mamma lies in the ocean. They
were all very kind to me on the ship, but I was very sad, and cried all
the time; and Jones thought I would die too."

"Well, we arrived in London at last, and Jones took me to my uncle's

house, which was a very fine one in a grand square."

"The drawing-room in which my aunt sat was the handsomest I had

ever seen, but somehow it never looked pleasant to me. My aunt
received me very kindly, kissing me a great many times, and telling
me that she hoped I would be happy with her, but I could not help
thinking that she did not look very happy herself. I grieved sadly at
parting from Jones, but I was a little comforted by her promising to
come and see me as often as she could. When she was gone, my
aunt took me on her lap, called me her dear little girl, and asked me
a great many questions about papa and mamma, and my brother
Charles. It made me cry to talk of them, and before I had got over my
tears my uncle came home. He was a big man with a red face and
grizzled features, and I noticed that my aunt seemed frightened
when she heard his step, and hastily wiped her eyes."

"'Hallo. What does all this mean?' he asked, as he entered the room
and saw me sitting there."

"'This is my brother's little girl, from India, my dear,' she answered, in

a timid, submissive tone."

"'Umph! And what is she crying for? We want no cry babies here,
little miss. Quite enough of that sort of thing already.'"

"This was all the welcome he gave me. I felt as though I should
choke, and heartily wished myself back in the ship. By-and-by we
were called to dinner, which was splendidly set out in a beautiful
dining room, hung with pictures. My uncle did not speak a word all
through dinner, except to give an order or find fault about something;
and my aunt hardly spoke except to ask what I would have. Even
then my uncle contradicted her, and said I was to take what was
given me and not to choose for myself. It was plain even to me that
he was in very bad humor about something. Presently my uncle said
it was time for me to go to bed. So we left him drinking his wine all
alone, and my aunt took me up to my room, where I was to sleep."

"It was small, but very pleasant, and there was a picture of a pretty
little boy over the mantel-piece, which she told me was a portrait of
my father, painted when he was young. Aunt undressed me herself,
and heard me say my prayers, and after I was in bed, she sat down
and talked to me in a very affectionate manner for some time. She
told me she had no children of her own, and she would try to be a
mother to me. She told me also that I must be very good, and try to
please my uncle, who was very particular; and I promised to do my
best."

"Try as I might, I never could succeed. He never had a kind word for
me, end it seemed as if he were angry at my being in the house at
all. My aunt petted me a great deal when he was away, but if she did
so before him, he scolded her, and told her that she made a fool of
me—that I should have to work for my bread when I grew up, and
she was not to make me into a useless fine lady, like herself. Fool
was his favorite word, and he applied it to my aunt oftener than to
any one else. What made his conduct seem worse, was that before
company, he treated us both with the greatest kindness and
politeness; so that many people thought him the best of men. Indeed
I heard a lady say as she went away from one of our dinner parties—
my uncle often gave dinner parties—'What a pity it is that Mr. Morley
has such a dull, cross-looking wife! He seems such an admirable
man!'"

"I knew my aunt loved me, or I really believe I should have died of a
broken heart. But she could show her love to me only when we were
alone together. I had never seen Jones but once since she left me,
when she had come to tell me of the loss of her husband, who died
within a week of her leaving him. We were crying together over this
sad news—for I loved all my dear father's men, and Jones had been
a special favorite—when my uncle happened to come in, and seeing
me in tears, he ordered the servants never to admit that woman
again, declaring that she made me a worse baby than I was without
her. I tried to tell him what we were crying about, but it was of no use
—he never would listen to any explanation. My aunt taught me my
lessons, and I took great pains to please her, but I could hardly help
hating my uncle, and I dreaded to see him come into the house."

"One day, however, he actually came home in a good humor, and eat
his dinner without finding fault with anything. He spoke to me quite
kindly several times, helped me plentifully to sweetmeats, and after
he came into the drawing-room, he called me to him and made me
sit on his knee, a thing which he had never done before since I came
into the house. My aunt looked surprised and almost frightened, but
presently she ventured to say:"

"'Agatha has been a very good girl to-day.'"

"'Has she?' said my uncle, 'I am glad to hear it;' and he actually put
his hand in his pocket and pulled out a guinea."

"'Keep that and show it to your Yankee relations,' said he."

"'What do you menu, Mr. Morley?' said my aunt, turning pale."

"'I mean that I am going to send the child to her father's relations in
America,' he replied. 'That woman Jones, of whom she is so fond, is
going out to her daughter in New York, and she will take charge of
her. So you have nothing to do but to get her ready as fast as you
can. Let her have good clothes and plenty of them. I don't want the
Yankees to think that she has been neglected: and mind, madam, I
will have no whimpering about the matter. You can see plainly that
the child is glad enough to go.'"

"I believe I was pleased at the prospect of going to America, for I

thought I should see my kind uncle Hamblin and Charley again. But I
began to moderate my joy when I saw how unhappy my aunt was at
the thought of parting with me. She kissed me and cried over me that
night, calling me her only comfort; but when I said I would stay with
her if she wished it, she told me that there was no use in talking
about it—my uncle had made up his mind and would have his own
way. Jones came to see us the next day, and had a long private
conversation with my aunt, and so the matter was settled. All my old
clothes were laid aside, and I had a complete outfit of new ones; and
my aunt gave me five guineas in a little purse and bade me take
good care of it. My uncle paid my passage and gave Jones money
for my travelling expenses, after I should get to America; and my
aunt made her promise not to leave me till I was in my uncle's
hands."

"It seemed as though I was always to be unfortunate in my sea-

voyages, for before we were half-way across, the cholera broke out
in the ship. We were in the steerage. My uncle had told my aunt that
he had paid for a cabin passage for Jones and me, but it was not
true. The surgeon as well as the captain and other officers did all in
their power for the poor passengers, but many of them died, and
among the number my poor dear nurse."

"There was a poor widow, named Mrs. Mix, who had been very kind
to us all the way over, and Jones gave me into her charge, together
with the money my uncle had given her, begging her to put me in the
way of getting to my friends, which she promised to do. But it
seemed as though I were to have nothing but trouble in my travels.
In the bustle and confusion of our arrival in New York, my trunk was
lost or stolen, and I never saw it again. This was all the worse,
because all my money and my uncle's direction were in it. Mrs. Mix
had the direction from my nurse, but she had forgotten it, and I did
not know it at all. Mrs. Mix had expected her friends to meet her in
Now York, but they did not come, and after a few days, she received
a letter from them, telling her how to find them. They lived in
Greenbriar, and thither she went, taking me with her."

"The surgeon offered to get me into an asylum in New York, but this
she would not hear of: so I went with her into her little house, and
used to help her carry home the washing which she took from the
school. We thus became acquainted with Dr. and Mrs. Bower and
told them my story; and Mrs. Bower adopted me for her own
daughter. I have lived with them for three years, and been very
happy all the time. That is the end of my story."

The scholar had been listening silently, never taking his eyes from
Agatha's face for the whole time, As she closed her narrative, he
took from his breast a miniature case, opened it, and handed it to
Agatha without a word.

"My papa and mamma! My own dear papa, and mamma!" almost
screamed Agatha. "Oh, where did you get them? Did you know my
mamma? Do you know my brother?"

"Agatha!" said the scholar. "Do you remember that not very long
before Charles went away, he was thrown from his horse and got a
scar on his forehead?"

"Yes!" answered Agatha, breathlessly. "Why?"

The scholar pushed back his thick hair, and showed her a scar upon
the right side of his forehead, asking, "Do you remember me now?"

"Charley! Oh, Charley!"

In another moment, Agatha was in her brother's arms. I will not

undertake to describe the scene which followed. Presently the
scholar rose, and taking Agatha by the hand, led her into the room
and closed the door behind them.

"How strange!" said the old lady. "It seems as though there was a
Providence in it; your coming out of the way as you did, and even in
your being snowed up, since if it had not been for your stopping here
and our telling stories, they might not have found each other out after
all."
"There is a Providence in all things," observed the doctor, taking off
his spectacles and wiping them; "'All things work together for good to
them that love God,' though we do not always see the working so
plainly as in this particular instance."

"Agatha noticed her brother when we first came on the cars,"

remarked Herbert. "She said she was sure she remembered him,
though she could not tell where she had seen him: and I observed
that he took a great deal of notice of her. He kept looking at her all
the time he kept talking to me. I hope he won't want to take her away
from us! I don't know what my father would do without her, especially
now, that—" Herbert stopped abruptly and turned away his head.

"I would not worry about that, my dear," said the old lady, kindly. "I
dare say the matter will be managed, somehow. I guessed
something when he asked her if that was not the servant's name."

"And so Agatha has really found her brother, that she talks so much
about," said Frank. "What a fine-looking man he is! I wonder if he is
rich?"

"I hope not, and then he won't want to take Agatha away," said
Edward.

"O Ned, that would be selfish!" replied Herbert. "Her brother has the
best right to her, of course; though—but we won't borrow trouble
about that. How glad I am, Frank, that we came this way. Only for
your mistake, Agatha might not have found her brother at all."

"No thanks to me, though!" said Frank, laughing.

The conversation was now interrupted by the return of the scholar

and Agatha. They had both shed some tears, but they looked as
though they were perfectly happy in each other. The scholar sat
down, still keeping his arm round Agatha, as though afraid of losing
her again.
"You will be glad, no doubt, to hear a little farther explanation of my
sister's story," said he, after they had received the congratulations of
the party.

"I should!" said Edward. "I want to hear who your father was, and
how you came to leave him, and all about it."

The scholar smiled. "My father was an English officer," said he.
"When he was very young man, and in Canada, with his regiment,
he married a young lady, the daughter of an American sea captain. I
have understood that his family were very much displeased with the
match, and, his father dying soon after, left the whole of his property
to his step-daughter, a lady much older than my father, who had
married a London merchant. My father was very fond of this sister,
but her husband, as well as my grandfather, professed great
displeasure at the match my father had made, and would not allow
my aunt to see her brother, though they were permitted occasionally
to correspond."

"Captain Goldwin accompanied his regiment to India when I was

fourteen years old, and there Agatha was born. My father had no
income but his pay, and his expenses being necessarily great, he
found himself unable to send me to England for education, so I grew
up without any except what he was able to give me in the intervals of
military duty, and what I got from the resident chaplain. Still I had a
great fondness for study, and employed my time to pretty good
purpose."

"I was eighteen years old when my uncle came to India, partly on
business and partly to visit his sister. He proposed to my father that I
should return with him to America, finish my studies at one of the
colleges in New England, and then, if it were thought desirable,
return to India. The offer was a very advantageous one to me, and
my father allowed me to accept it. Before I left, my mother gave me
the miniatures I have just showed Agatha, and I have never parted
from them."
"In the course of two or three years, I heard of the death of my
father, who fell in battle, as Agatha told us, and learned that my
mother had set out for England, intending to come to her friends in
America. Hearing nothing more for a long time, I wrote to my aunt in
London. Her husband answered the letter, saying that my mother
died before reaching England; that he had sent the child—meaning
Agatha—to her friends in America, under such and such an escort,
and supposed she had reached her destination."

"I went at once to New York and made every inquiry, but my efforts
resulted only in disappointment. At last I learned that the cholera had
broken out in the ship and that a great many of the passengers had
died,—among them a woman named Jones and her little girl. This
account seemed to render the matter hopeless, and I gave up all
further inquiries. Agatha's face interested me at once from her
resemblance to my mother, but supposing, as I did, that my sister
was dead long ago, I should not have pursued the matter had not
her story awakened my long dead hopes."

"The mention of the dead tiger struck me like an electric shock, for I
remembered the incident directly and how hard I had begged to be
allowed to go with the party that killed him. He was a famous man-
eater, as they are called—that is to say a tiger which, having
acquired an appetite for human flesh, will eat no other. Such animals
are frequently found in the neighborhood of East Indian villages, a
great terror and pest to the inhabitants, and, in this case, the officers
stationed near had made a hunting party to kill him. As Agatha went
on, I felt certain that she must be my lost sister, and her instant
recognition of the miniatures would have confirmed me, had I by that
time entertained any doubt. My great desire is now to see Dr. Bower
and thank him for his kind care of my little darling."

"It grows late," remarked the squire, after a little pause, and looking
at his watch. "We have had a very pleasant evening and it has come
to a most happy conclusion. We will now have prayers, if the good
doctor will be so kind as to read them."
 CHAPTER VII.
CONCLUSION.

EARLY the next morning the whole household was astir at Cedar
Hill. The children were up and dressed before daylight, wishing
everybody "Merry Christmas," and running all over the house, except
into the dining room, where the old lady allowed no one to set foot
but herself. By-and-by they had prayers in the parlor and the children
sung two or three Christmas carols, accompanied by Miss Hope on
the piano.

Then the dining room door was opened and they marched in
procession to the table. It was set out in great state, and there,
before every one's place, was a mysterious pile, carefully covered by
a white napkin. Grace was said, and then the piles were all
uncovered.
What wonders were disclosed! Books and toys for the children, all
sorts of pretty and useful things for everybody. Not one of the
strangers was forgotten, but each received a nice present, all the
nicer from being wholly unexpected. Abundance of presents had
been provided for the grandchildren of the family, besides those
which the doctor had in his trunk for his own little flock; and Harry,
May and Annie were only too glad to divide with their new friends.

A man had been sent over to the railroad station early in the
morning. He returned with the news that no train could possibly get
through before next morning. So it was decided that the big lumber
sleigh should be got out once more to take the whole party to church
in the village, about a mile off. Before church time, there were
several private conversations held in the house. Agatha, with Herbert
and her brother, sat in a corner of the parlor talking of their family
affairs. Miss Hope was closeted with the old lady in her room, and
Frank, with some embarrassment, requested to speak with the
doctor in the library.

"I wanted to ask you, sir," said he, looking down, "if you thought it
would be wrong for me to go to the communion this morning? I am to
be confirmed at Easter, at any rate, and—I am so thankful for the
way everything has turned out—and—I know I am not good enough,
doctor, but I want to be a better boy, and I do love Him!"

"You know, Frank, what is said in the Prayer-book," said the doctor,
kindly. "I say nothing of the Rubric, because you have just told me
that you are 'ready and desirous to be confirmed;' but here is the
invitation. Examine yourself by it. Do you truly and earnestly repent
you of your sins?"

"Yes sir, I hope so."

"And are you in love and charity with your neighbors?"

"I believe so," said Frank. "I hav'n't any enemies that I know of, so I
hav'n't anything to forgive, and I should be very wicked indeed if I did
not feel kindly towards every one this morning, after God has been
so good to me."

"And do you intend to lead a new life, following the commandments

of God, and walking from henceforth in His holy ways? Think well
before you speak."

"I have been trying to do so this long time, doctor," said Frank. "I get
discouraged a great many times, but I have not left off trying."

The doctor asked Frank a good many more questions, tending to

test his knowledge of Christian doctrine and of his own heart. Frank
had been carefully instructed, especially since his residence with
Doctor Bower, and the doctor, who was accustomed to dealing with
young people, was quite satisfied with his answers.

"Well, my son," said he, at last, "from all that you tell me I can see no
reason why you should not draw near with faith and take your part in
the feast of love. In the sense of sin-lessness no one is worthy, but
any one who repents and believes, placing all his hopes of salvation
upon the great atoning sacrifice of Christ our Lord, may safely take
this holy sacrament, to his comfort. But how is it with your
companions?"

"Oh, Herbert has been a communicant these two years, and Agatha
since last Easter. She was so little and looked so young that the
bishop was in doubt about her; but he examined her himself and was
quite satisfied."

"I am glad to hear it," said the doctor. "I advise you, Frank, to spend
the hour between this and church time in prayer and rending."

The doctor marked certain chapters for him, and Frank remained
alone in the library till all were called to go to church.

"Isn't it nice?" said Annie to Agatha, as they sat together in the

sleigh, coming home. "Grandmamma has been talking with Miss
Hope, and she is to stay and be my governess! You see, it is too far
for me to go to school in the village, especially in winter, and there is
no one to teach me music or French. But grandmamma has found
out that she used to know Miss Hope's mother at school, and—oh, I
can't tell you all about it, only Miss Hope has no home now, and no
money, and she was going to try for a place in a public school. But
now she is going to live with us. That will be a great deal nicer for
her, won't it?"

"Yes, indeed!" said Agatha, hastily; "and nicer for you, too. Miss
Hope seems such a pleasant young lady. I liked her the very first
minute I saw her."

"And she will be company for grandmamma too, you know,"

continued Annie. "Oh, how glad I am you got snowed up and came
to our house!"

"And so am I," replied Agatha, smiling.

In the evening the sleigh was again put in requisition, and all the
young party went down to the village to attend the Sunday-school
festival. Agatha's story had already become known, and she
received a great deal of attention, almost enough to turn the head of
a little girl of thirteen: but her brother, who watched her closely, was
delighted to see that she preserved through all the quiet and lady-
like demeanor which had so pleased him from the first.

Herbert could not but feel sad at even the distant and uncertain
prospect of losing the sister he had learned to love so much; but he,
tried hard not to be selfish, and to rejoice in her joy. As for Frank and
Ned, they were ready to be pleased with everything. Ned found a
congenial playmate in the clergyman's son, a frank, manly boy of his
own age, who was expecting to go to Doctor Bower's school after
the Christmas holidays. Frank was graver than usual, but his face
wore a look of subdued happiness very pleasant to see.

The next morning early came a message from the station-master

that the train had been telegraphed and would be through in less
than an hour. All was bustle directly. The old lady filled a famous
basket with cakes, cold chicken and other good things, lest the
children should be hungry on the road. All the children from Cedar
Hill accompanied the guests to the station, and bidding good-by to
their kind entertainers, the children and the doctor were soon in the
cars and on their way to their homes.

At J—, Agatha expected to separate from her brother for a little

while. Mr. Goldwin intended to follow Doctor Bower to New York, and
Herbert gave him a letter of introduction to his father, with some
account of their meeting. It was hard for Agatha to separate from her
brother even for a few days, but she tried to submit cheerfully,
exacting from him a promise to write to her directly, and somewhat
comforted by the miniatures of her father and mother which were left
in her care.

To the joyful surprise of Frank and Edward, the very first person they
met on stopping from the train at J— was their father. The non-arrival
of the children, together with the appearance of their trunks, caused
great surprise at home, and Judge Landon telegraphed at once to
Greenbrier to find out the cause of their delay. Ascertaining, after
considerable trouble, that they had taken the wrong train and were
probably snowed up somewhere on the road, he came over to J— in
hope of further intelligence, and arrived half an hour before the train
came in. Of course the whole story of the mistake had to be gone
over, and I am happy to say that Frank bore the laughter of his
friends with perfect good humor. Indeed, as it turned out, he could
afford to do so, though, as he justly observed, there were no thanks
due to him.

Herbert and Agatha passed their Christmas holidays very pleasantly

at Judge Landon's, and towards the end of them they were
agreeably surprised by the appearance of Doctor Bower and Mr.
Goldwin.

Agatha was perfectly happy at seeing her father and brother

together. She had made up her mind, as she said, "they would suit
each other exactly," nor was she disappointed in her expectation.
Her mind had nevertheless been a good deal disturbed by the
thought that she must be separated from one or the other of them.
She felt that she could not live apart from her brother, and yet she
did not know how to leave the kind doctor, who had been a father to
her when she was left alone in a strange land. This consideration
had caused her a good deal of anxiety, which was destined soon to
be set at rest.

"Good news, Agatha!" cried Herbert, one morning, after the doctor
and Mr. Goldwin had been closeted together for some hours. "It is all
settled! Father has just told me all about it. You are not to go away
from us, and yet you are to live with your brother, too. Isn't that
splendid?"

"But how, Herbert?" asked Agatha. "I don't understand."

"Why, you know my father has been wanting a partner."

"I did not know it. But never mind. What then?"

"He says the entire charge of the school is rather too much for him,"
continued Herbert. "He is not so young as he has been, and he
wants time to study and to work at the big book he is writing. It was
partly that which took him to New York. He wished to see a
gentleman who was recommended to him. But when he came to see
the gentleman, he found that they could not agree at all, and he was
just considering what to do when your brother arrived. You know, I
told you that they had been at the same college, and when they
came to compare notes, they found that they knew a great many of
the same people. Father wrote to some of the professors about your
brother, and they all agreed in saying that he was exactly the man he
wanted for the place. So they have been talking the matter over
again this morning, and it is all settled."

"But, Herbert, I don't quite understand yet."

"Why, Mr. Goldwin goes into partnership with my father in the school,
and will take most of his classes off his hands. So, of course, he will
have to live with us."
"I see!" said Agatha. "How glad I am! You don't know how I have
been worrying about it all these holidays."

"Yes, I do," returned Herbert. "I have seen it all, and I felt just so, but
I could not help hoping it would all come right, somehow. I am so
glad! You know mamma wanted father to have a partner."

"Oh, I do wish she was here to see Charley!" said Agatha. "Would
she not be glad, if she knew?"

"Perhaps she does," replied Herbert, in a low voice. "At any rate she
will know, some day."

When our young friends returned home Mr. Goldwin accompanied

them. Doctor Bower found his labors greatly lightened by his new
assistant, who fell in with all his plans and methods for the
improvement of his pupils, and the boys were delighted with their
new master, who, though sufficiently dignified and strict in school,
was a famous ball player and gymnast, and was a perfect magazine
of stories and plays for rainy days.

Miss Hope remained at Cedar Hill as governess to little Annie and

companion to her grandmother, and enjoyed the double pleasure of
finding a happy home in her loneliness and making herself useful to
the dear old lady, who was much alone, now that all her daughters
were married.

The doctor is well, and is at present looking forward to the pleasure

of having all his young friends together at his own house for the next
Christmas.

Hoping that these same holidays may prove as pleasant to my

young readers as they are likely to do to the children of whom I have
been writing, I wish them a merry Christmas and a happy New-Year,
and bid them a kindly farewell.