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International Business : The Challenge of Global Competition, 8/e
Donald Ball
Wendell H. McCulloch, California State University Long Beach
Paul L. Frantz, California State University Long Beach
Michael Geringer, California Polytechnic State University
Michael S. Minor, University of Texas Pan American
Physical and Environmental Forces

E Learning Session

  1. Why Switzerland Makes Watches PowerPoint (37.0K)
    1. Political relationships
      • Physical location plays in important part in determining political roles
      • Austria and Finland are examples of countries prospering because of location
    2. Trade relationships
      • Geographic proximity is often a reason for trade between nations
      • Usually deliveries are faster and less expensive for shippers
  2. Topography PowerPoint (28.0K)
    1. Mountains and plains (Concept Check: Mountains server as a barrier or separator to isolate markets in all of the following countries except (a) Colombia (b) Switzerland (c) China (d) Spain (e) Egypt ) Concept Check
      • Mountains divide markets
        1. Serve as barrier to separate or isolate markets
        2. Division may be to divide countries or to divide segments of countries
        3. Spain is an example of a country divided by mountains resulting in separate cultures as well as separate markets
        4. Switzerland has distinctive segments more closely related to external countries than to each other
        5. China has dozens of dialects or languages separating population clusters
        6. Colombia is similar to Switzerland where mountains separate markets
        7. In addition to market separation, Colombia also is an example of a country where segments are separated by climate conditions because of the various mountainous regions within the country
      • Population concentration
        1. Mountains can create concentrations of population
        2. Climatic conditions may be more favorable
    2. Deserts and topical forests
      • Deserts
        1. More than one-third of the earth's surface is arid or semi-arid land
        2. Because of the need for water to exists, these areas or sparsely populated
        3. Australia is a good example of a country (continent) comprised of mostly desert climate
        4. The desert conditions cause concentration of populations
      • Tropical rain forests
        1. Dense vegetation can be a barrier to population expansion
        2. Serves to deter transportation from one part of a country to another
      • Canadian shield
        1. Not a desert or topical forest, it none-the-less is a deterrent to population of central parts of Canada
        2. An outcrop of bedrock close to the surface that creates poor soil typically swept by arctic weather.
    3. Bodies of water (Concept Check: Which of the following is NOT a barrier to population expansion? (a) Inland waterways (b) Canadian Shield (c) Tropical rainforest (d) Deserts (e) All of the above are barriers to population expansion Concept Check
      • Inland waterways
        1. A surface feature that influence population and transportation patterns
        2. Water transport is relatively cost effective for bulk products
        3. Rhine waterway in Europe serves as a main transportation artery in Europe
      • Other waterways
        1. Every continent except Australia has inland waterways
        2. Inland waterways in South America and China are important to economic development
        3. China is in the process of damming some major waterways for flood control, a major killer of Chinese populations
      • Outlets to the sea
        1. Some countries have no access to the sea to create a trading pathway.
        2. In Africa, 14 of the world's 20 landlocked countries have no access to sea or inland waterways of significance.
        3. Development is impaired by the need to build expensive infrastructure to overcome this shortcoming
      • Bolivia demands an outlet to the sea
        1. A century-long struggle by Bolivia to regain from Chile a waterway that provided sea access
        2. Bolivia has built the 192-Kilometer Export Corridor to carry goods at great expense
  3. Climate
    1. Climate and development
      • Climate is probably the most important element of the physical forces
      • Climate is not deterministic, it allows things to happen, but it doesn't cause them
      • Non-climate factors such as raw materials have a greater import on trade development (Concept Check: Factors such as raw materials have a greater impact on trade development than climate. (a) True (b) False) Concept Check
      • People have used climate differences as a basis for explaining differences among human and economic development
      • Marketers should not be taken in by this reasoning
      • It is true, however, that climate has an effect on development
        1. A World Bank study suggests that developing nations with hot arid climates have been subject to weeds and pests that are not killed by cold periods.
        2. The result has been a reduced amount of production and development
        3. New control methods help overcome this limitation
    2. Climate implications
      • Differences in climates in a firm's markets can have considerable effect on the product mix
      • Divergent climate could have implication on packaging, inventory processes, even product design
  4. Natural resources-anything supplied by nature on which people depend (Concept Check: Anything supplied by nature on which people depend is (a) a natural phenomenon (b) a renewable resource (c) a natural resource (d) a geographic resource (e) none of the above) Concept Check
    1. Energy PowerPoint (28.0K)
      • Petroleum
        1. In 1974 oil-producing countries used petroleum as a weapon against developed nations
          1. These and other events remind government and industry of the need to continually search for alternatives
        2. Conventional sources
          1. Opinion differs on how fast we are using up nature's store
          2. New petroleum fields, improved technology, and automation are assisting in extending known reserves
        3. Unconventional sources
          1. Oil sands
            • Located principally in Canada
            • Crude, tar-like substance
            • Increase production as technology improves
            • Steam-assisted gravity drainage will help to access reserves too deep in the Earth to be reached with standard production methods
          2. Oil-bearing shale
            • A fine-grained sedimentary rock that holds hydrocarbons
            • Mainly located in the states of Utah, Colorado, Wyoming
            • Canadian reserves are being extracted with new technology that crease little waste and requires no chemicals for the process
          3. Coal
            • South Africa has led the development of oil production from coal
            • Uses a low-grade coal for which there is no other practical use
          4. Natural gas
            • Convert gas to a liquid makes it easier to transport to markets
            • Isolated reserves can now be economically tapped
            • Many developing nations will benefit from the new process technologies
        4. Coal and nuclear power
          1. Concerns about nuclear power safety and disposal of waste materials have resulted in reduced market share
          2. Coal remains a major fuel source although is has lost market share to petroleum, natural gas, and nuclear power generation
        5. Natural gas
          1. Fast grown share of energy consumption.
          2. Use is expected to double from 1997 to 2020
          3. Asia and Latin America are areas of greatest growth
        6. Sources of renewable energy
          1. Believed to be the eventual replacement for fossil fuels
          2. At least eight types of renewable energy are currently in development
            • Hydroelectric
            • Solar
            • Wind
            • Geothermal
            • Waves
            • Tides
            • Biomass
            • Ocean thermal energy conversion
          3. Improved technology has resulted in a spread of Wind and Solar production
    2. Non-fuel minerals
      • Other strategic minerals are scarce as well as fuel resources
      • Interdependence of countries for needs is growing
      • Bleak situation
        1. Although the picture of material acquisition seems bleak, the discussion focuses primarily on known reserves.
        2. Great areas of some raw material producing countries have been explored
        3. New technologies make finding and extracting natural resources more effective and efficient
      • Ocean mining-the last frontier
        1. Undersea reserves see to promise large quantities of natural resources
        2. 1997 saw first claim by commercial firm to undersea mineral rights
        3. Large diamond producers are already searching for diamonds offshore
    3. Changes make monitoring necessary
      • Mineral resources
        1. Discoveries of new deposits and development of technology for substitute materials is changing our dependence on natural resources from specific countries are areas of the world
      • Other changing physical resources
        1. Minerals are not the only physical forces to change
        2. Infrastructure changes are occurring almost daily
        3. Population shift occurs with the spread of infrastructure
    4. Destruction of natural resources
      • The Bophal disaster
        1. Occurred in 1984
        2. Toxic chemical released from Union Carbide Plant
        3. Killed more than 7,000 people
        4. Aftermath included criminal charges against the company and its CEO
      • Chernobyl: The world's worse nuclear disaster
        1. In 1986 an explosion at the Chernobyl nuclear power generating plant in the Republic of Belarus
        2. People affected in Belarus, Ukraine and Russia (more than 120,000 deaths)
        3. Power generation was replaced by new nuclear plants
      • Alaskan oil spill
        1. In 1989, an Exxon tanker ran aground in Prince William Sound near Valdez, Alaska
        2. Spilled 10 million gallons of crude oil
        3. Exxon spent more than $2.5 billion to clean up
      • Eco-terrorism in the Gulf war
        1. Retreating Iraqi army set fire to oil wells in Kuwait
        2. 732 wells sabotaged
        3. Spilled oil turned beaches into asphalt runways
      • Biggest ecological disaster since Chernobyl
        1. January 2000 saw the collapse of a wall at the Aurul mine in Romania
        2. 100,000 cubic meters of water mixed with cyanide washed into the Tisa river




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