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Competing in the Global Marketplace

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and the University of Arkansas at Little Rock. Dr. Hult holds visiting professorships in
the International Business group of his native Uppsala University, Sweden (since 2013)
and the International Business division of Leeds University, UK (since 2010). Michigan
State, Uppsala, and Leeds are all ranked in the top 10 in the world in international
business research.
Several studies have ranked Professor Hult as one of the most cited scholars in the
world in business and management. He served as editor of Journal of the Academy of
Marketing Science, a Financial Times Top-50 business journal, and has published more
than 70 articles in premier business journals, including Journal of International Business
Studies, Academy of Management Journal, Strategic Management Journal, Journal of
Management, Journal of Marketing, Journal of the Academy of Marketing Science, Journal
of Retailing, Journal of Operations Management, Decision Sciences, and IEEE. He has also
published several textbooks including International Business (McGraw-Hill) and Global
Business Today (McGraw-Hill). Dr. Hult’s other books include Second Shift: The Inside
Story of the Keep GM Movement, Global Supply Chain Management, Total Global Strategy,
and Extending the Supply Chain. He is a regular contributor of op-ed and articles in the
popular press (e.g., Time, Fortune, World Economic Forum, The Conversation).
Professor Hult is a well-known keynote speaker on international business, interna-
tional marketing, global supply chain management, global strategy, and marketing strat-
egy. He teaches in doctoral, master’s, and undergraduate programs at Michigan State
University. He also teaches frequently in executive development programs and has
developed a large clientele of the world’s top multinational corporations (e.g., ABB,
Albertsons, Avon, BG, Bechtel, Bosch, BP, Defense Logistics Agency, Domino’s, FedEx,
Ford, FreshDirect, General Motors, GroceryGateway, HSBC, IBM, Michigan Economic
Development Corporation, Masco, NASA, Raytheon, Shell, Siemens, State Farm, Steelcase,
Tech Data, and Xerox).
Tomas Hult is an elected Fellow of the Academy of International Business (AIB),
one of only about 90 scholars worldwide receiving this honor, and serves as the executive
director and foundation president of AIB. He also serves on the U.S. District Export
Council and holds board member positions on the International Trade Center of
Mid-Michigan and the Sheth Foundation.
Tomas enjoys tennis, golf, and traveling as his favorite recreational activities.

vii
 brief CONTENTS
part one Introduction and Overview
Chapter 1 Globalization 2

part two National Differences

Chapter 2 National Differences in Political, Economic, and
Legal Systems 38
Chapter 3 National Differences in Economic Development 62
Chapter 4 Differences in Culture 90
Chapter 5 Ethics, Corporate Social Responsibility, and
Sustainability 128

part three The Global Trade and Investment Environment

Chapter 6 International Trade Theory 158
Chapter 7 Government Policy and International Trade 192
Chapter 8 Foreign Direct Investment 222
Chapter 9 Regional Economic Integration 252

part four The Global Monetary System

Chapter 10 The Foreign Exchange Market 286
Chapter 11 The International Monetary System 312
Chapter 12 The Global Capital Market 340

part five The Strategy and Structure of International

Business
Chapter 13 The Strategy of International Business 362
Chapter 14 The Organization of International Business 392
Chapter 15 Entry Strategy and Strategic Alliances 430

part six International Business Functions

Chapter 16 Exporting, Importing, and Countertrade 460
Chapter 17 Global Production and Supply Chain
Management 486
Chapter 18 Global Marketing and R&D 516
Chapter 19 Global Human Resource Management 552
Chapter 20 Accounting and Finance in the International
Business 582

viii
part seven Integrative Cases
Global Medical Tourism 609
Venezuela under Hugo Chávez and Beyond 611
Political and Economic Reform in Myanmar 612
Will China Continue to Be a Growth Marketplace? 613
Lead in Toys and Drinking Water 614
Creating the World’s Biggest Free Trade Zone 616
Sugar Subsidies Drive Candy Makers Abroad 617
Volkswagen in Russia 618
The NAFTA Tomato Wars 619
Subaru’s Sales Boom Thanks to the Weaker Yen 620
The IMF and Ukraine’s Economic Crisis 621
The Global Financial Crisis and Its Aftermath: Declining
Cross-Border Capital Flows 622
Ford’s Global Platform Strategy 624
Philips’ Global Restructuring 625
General Motors and Chinese Joint Ventures 626
Exporting Desserts by a Hispanic Entrepreneur 627
Apple: The Best Supply Chains in the World? 628
Domino’s Global Marketing 630
Siemens and Global Competitiveness 632
Microsoft and Its Foreign Cash Holdings 633

Glossary 635
Organization Index 645
Name Index 650
Subject Index 652

ix
 THE PROVEN CHOICE FOR
INTERNATIONAL BUSINESS
RELEVANT. PRACTICAL. INTEGRATED. and they will be expected to understand the implications
of international business for their organization’s strategy,
It is now more than a quarter of a century since work be- structure, and functions in the context of the global mar-
gan on the first edition of International Business: Compet- ketplace. We are proud and delighted to have put together
ing in the Global Marketplace. By the third edition the this international business learning experience for the
book was the most widely used international business text leaders of tomorrow.
in the world. Since then its market share has only in- Over the years, and through now 12 editions,
creased. The success of the book can be attributed to a Dr. Charles Hill has worked hard to adhere to these goals.
number of unique features. Specifically, for the twelfth Since Global Business Today 9e (2015), and International
edition we have developed a learning program that Business 11e (2017), Charles’s co-author, Dr. Tomas Hult,
∙ Is comprehensive, state of the art, and timely. follows the same approach. As a team, we have been
guided not only by our own reading, teaching, and re-
∙ Is theoretically sound and practically relevant. search but also by the invaluable feedback we received
∙ Focuses on applications of international business from professors and students around the world, from re-
concepts. viewers, and from the editorial staff at McGraw-Hill Edu-
∙ Tightly integrates the chapter topics throughout. cation. Our thanks go out to all of them.
∙ Is fully integrated with results-driven technology.
∙ Takes full and integrative advantage of RELEVANT AND COMPREHENSIVE
­globalEDGE.msu.edu—the Google-ranked #1 web To be relevant and comprehensive, an international busi-
resource for “international business resources.” ness package must
International Business, now in its twelfth edition, co-­authored ∙ Explain how and why the world’s cultures, coun-
by Charles W. L. Hill and G. Tomas M. Hult, is a compre- tries, and regions differ.
hensive and case-oriented version of our text that lends
itself to the core course in international business for those
∙ Cover economics and politics of international
trade and investment.
courses that want a deeper focus on the global monetary
system, structure of international business, international ∙ Tackle international issues related to ethics, corpo-
accounting, and international finance. We cover more rate social responsibility, and sustainability.
and integrated cases in International Business 12e and we ∙ Explain the functions and form of the global mon-
provide a deeper treatment of the global capital market, etary system.
the organization of an international business, interna- ∙ Examine the strategies and structures of interna-
tional accounting, and international finance—topics that tional businesses.
are allocated chapters in International Business 12e but
are not attended to in the shorter treatment of IB in
∙ Assess the special roles of an international busi-
ness’s various functions.
Global Business Today 10e.
Like our shorter text, Global Business Today 10e (2017), This text has always endeavored to be relevant, practical,
International Business 12e, focuses on being current, rele- and integrated. Too many other products have paid insuf-
vant, application rich, accessible, and student focused. ficient attention to some portion of the topics mentioned,
Our goal has always been to cover macro and micro is- being skewed toward a particular portion of international
sues equally and in a relevant, practical, accessible, and business.
student focused approach. We believe that anything short Relevance and comprehensiveness also require cover-
of such a breadth and depth of coverage is a serious defi- age of the major theories. It has always been a goal to
ciency. Many of the students in these international busi- ­incorporate the insights gleaned from recent academic
ness courses will soon be working in global businesses, scholarship into the book. Consistent with this goal,

x
i­nsights from the following research, as a sample of What’s New in the Twelfth Edition
­t heoretical streams used in the book, have been
The world continued to become more global. Several
incorporated:
Asian economies, most notably China and India, contin-
∙ New trade theory and strategic trade policy. ued to grow their economies at a rapid rate. New multina-
∙ The work of Nobel Prize–winning economist tionals continued to emerge from developing nations
Amartya Sen on economic development. in addition to the world’s established industrial powers.
Increasingly, the globalization of the world economy
∙ Samuel Huntington’s influential thesis on the
affected a wide range of firms of all sizes, from the very
“clash of civilizations.”
large to the very small.
∙ Growth theory of economic development champi- And unfortunately, global terrorism and the attendant
oned by Paul Romer and Gene Grossman. geopolitical risks keep emerging in various places glob-
∙ Empirical work by Jeffrey Sachs and others on ally, many new and inconceivable just a decade ago.
the relationship between international trade and These represent a threat to global economic integration
economic growth. and activity. Plus, with the avenue of the United Kingdom
∙ Michael Porter’s theory of the competitive advan- opting to vote to leave the European Union, the election
tage of nations. of President Donald Trump in the United States, and
several elections around the world, the globe—in many
∙ Robert Reich’s work on national competitive
ways—has paid more attention to nationalistic issues over
advantage.
trade. These topics and much more are integrated into
∙ The work of Nobel Prize–winner Douglass North this text for maximum learning opportunities.
and others on national institutional structures and The success of the first eleven editions of International
the protection of property rights. Business was based in part on the incorporation of leading-
∙ The market imperfections approach to foreign edge research into the text, the use of the up-to-date ex-
direct investment that has grown out of Ronald amples and statistics to illustrate global trends and
Coase and Oliver Williamson’s work on transac- enterprise strategy, and the discussion of current events
tion cost economics. within the context of the appropriate theory. Building
∙ Bartlett and Ghoshal’s research on the transna- on these strengths, our goals for the twelfth edition have
tional corporation. focused on the following:
∙ The writings of C. K. Prahalad and Gary Hamel 1. Incorporate new insights from scholarly research.
on core competencies, global competition, and 2. Make sure the content covers all appropriate
global strategic alliances. issues.
∙ Insights for international business strategy that can 3. Make sure the text is up-to-date with events, statis-
be derived from the resource-based view of the tics, and examples.
firm and complementary theories.
4. Add new and insightful opening and closing
∙ Paul Samuelson’s critique of free trade theory. cases.
∙ Conceptual and empirical work on global supply 5. Incorporate value-added globalEDGE features in
chain management—logistics, purchasing (sourcing), every chapter.
operations, and marketing channels.
6. Connect every chapter to a focus on managerial
In addition to including leading-edge theory, in light of implications.
the fast-changing nature of the international business 7. Provide 20 new integrated cases that can be used
environment we have made every effort to ensure that as additional cases for specific chapters but, more
this product was as up-to-date as possible when it went importantly, as learning vehicles across multiple
to press. A significant amount has happened in the chapters.
world since we began revisions of this book. By 2018,
more than $4 trillion per day was flowing across na- As part of the overall revision process, changes have been
tional borders and, as we will see in Chapter 1, trade made to every chapter in the book. All statistics have
across borders has almost exponentially increased in been updated to incorporate the most recently available
the last 15 years. The size of such flows fueled concern data. As before, we are the only text in International Busi-
about the ability of short-term speculative shifts in ness that ensures that all material is up-to-date on virtu-
global capital markets to destabilize the world ally a daily basis. The copyright for the book is 2019 but
economy. you are likely using the text in 2018, 2019, or 2020—we

xi
keep it updated to each semester you use the text in your Chapter 4: Differences in Culture
course! We are able to do this by integrating globalEDGE ∙ New opening case: The Swatch Group and Cultural
features in every chapter. Specifically, the Google Uniqueness
­number-one-ranked globaledge.msu.edu site (for “interna-
tional business resources”) is used in each chapter to add ∙ New management focus: China and Its Guanxi
value to the chapter material and provide up-to-date data ∙ Deeper treatment of culture, values, and norms
and information. This keeps chapter material constantly ∙ Worked with the foundation that most religions are
and dynamically updated for teachers who want to infuse now pro-business
globalEDGE material into the chapter topics, and it ∙ Updated the Hofstede culture framework with new
keeps students abreast of current developments in inter- research
national business.
In addition to updating all statistics, figures, and maps ∙ New closing case: The Emirates Group and
to incorporate the most recently published data, a Employee Diversity
­chapter-by-chapter selection of changes for the eleventh
edition include the following:
Chapter 5: Ethics, Corporate Social
Chapter 1: Globalization Responsibility, and Sustainability
∙ New opening case: Globalization of BMW,
∙ New opening case: Woolworths Group’s Corporate
Responsibility Strategy 2020
­Rolls-Royce, and the MINI
∙ New materials on international trade, trade agree-
∙ New management focus: “Emissionsgate” at
Volkswagen
ments, world production, and world population
∙ Explanations of differences in cross-border trade
∙ Deeper focus on corporate social responsibility
and sustainability at the country, company, and
and in-country production; the value of trade
customer levels
agreements; and population implications related to
resource constraints ∙ New closing case: UNCTAD Sustainable Develop-
ment Goals
∙ New closing case: Uber: Going Global from Day
One

Chapter 6: International Trade Theory

Chapter 2: National Differences in Political,
Economic, and Legal Systems
∙ New opening case: Donald Trump on Trade
∙ Added discussion of Donald Trump’s views on
∙ New opening case: The Decline of Zimbabwe trade at appropriate points in the chapter.
∙ Updated section on Pseudo-Democracies ∙ Expanded discussion of David Autor’s important
∙ Updated data and figure on corruption research on trade and employment in U.S. counties
∙ New country focus: Corruption in Brazil impacted by trade with China.
∙ New closing case: Economic Transformation in ∙ New closing case: The Trans Pacific Partnership
Vietnam (TPP)

Chapter 3: National Differences in Chapter 7: Government Policy and

Economic Development International Trade
∙ New opening case: Economic Development in ∙ New opening case: Boeing and Airbus Are in a
Bangladesh Dogfight over Illegal Subsidies
∙ Updated data, maps and discussion on Differences ∙ New section, The World Trading System under
in Economic Development Threat, discussing the possible implications of
∙ Updated data, maps and discussion on the spread BREXIT and the election of Donald Trump (who
of democracy and market-based economic systems. appears to hold mercantilist views on trade).
∙ New closing case: The Political and Economic ∙ New closing case: Is China Dumping Excess Steel
Evolution of Indonesia Production?
xii
Chapter 8: Foreign Direct Investment ∙ Revised Management Focus: Walmart
∙ New opening case: Foreign Direct Investment in International
Retailing in India ∙ Revised Management Focus: Lincoln Electric and
∙ Updated data and discussion on FDI trends on the Culture
world economy. ∙ New closing case: Organizational Architecture
∙ New closing case: Burberry Shifts Its Strategy in at P&G
Japan
Chapter 15: Entry Strategy and Strategic
Chapter 9: Regional Economic Integration Alliances
∙ New opening case: Renegotiating NAFTA
∙ New opening case: Gazprom and Global Strategic
Alliances
∙ New section discussing the implications of
BREXIT for Britain and the European Union
∙ Deeper treatment of entry modes and global
strategic alliances
∙ New section on the future of NAFTA in light of
Donald Trump’s election as president
∙ Revised closing case: Starbucks’ Foreign Entry
Strategy
∙ New closing case: The Push toward Free Trade in
Africa
Chapter 16: Exporting, Importing, and
Countertrade
Chapter 10: The Foreign Exchange Market
∙ New opening case: Tata Motors and Exporting
∙ New opening case: The Mexican Peso, the Japanese
∙ globalEDGE-related material on company readi-
Yen, and Pokemon Go
ness to export and company readiness to import
∙ New closing case: Apple’s Earnings Hit by Strong material
Dollar
∙ Revised management focus: Ambient Technologies
and the Panama Canal
Chapter 11: The International Monetary ∙ New and revised material on globalEDGE
System Diagnostic Tools; focusing on CORE-Company
∙ New opening case: Egypt and the IMF Readiness to Export
∙ Updated discussion of exchange rates since 1973 to ∙ New closing case: Embraer and Brazilian
reflect recent exchange rate movements. Importing
∙ New closing case: China’s Exchange Rate Regime
Chapter 17: Global Production and Supply
Chain Management
Chapter 12: The Global Capital Market
∙ New opening case: Alibaba and Global Supply
∙ New opening case: Saudi Aramco Chains
∙ New closing case: Alibaba’s Record-Setting IPO ∙ Revised and new material on global logistics,
global purchasing, and global operations.
Chapter 13: The Strategy of International ∙ Revised sections on Strategic Roles for Production
Business Facilities, Make-or-Buy Decisions, and Global
Supply Chain Functions
∙ New opening case: Sony’s Global Strategy
∙ Deeper discussion of the rise of regionalism
∙ New text for the sections on Role of Information
Technology, Coordination in Global Supply
∙ Integration of global strategy thoughts Chains, and Interorganizational Relationships
∙ New closing case: IKEA’s Global Strategy ∙ New closing case: Amazon’s Global Supply
Chains
Chapter 14: The Organization of
International Business Chapter 18: Global Marketing and R&D
∙ Revised opening case: Unilever’s Global ∙ New opening case: ACSI and Satisfying Global
Organization Customers
xiii
 ∙ Revised sections on Globalization of Markets and ∙ Political and Economic Reform in Myanmar
Brands, Configuring the Marketing Mix (with a ∙ Will China Continue to be a Growth Marketplace
great summary table and sample measures), and ∙ Lead in Toys and Drinking Water
International Market Research
∙ ∙ Creating the World’s Biggest Free Trade Zone
Revised positioning of the Product Development
section ∙ Sugar Subsidies Drive Candy Makers Abroad
∙ New closing case: Global Branding, Marvel Studios, ∙ Volkswagen in Russia
and Walt Disney Company ∙ The NAFTA Tomato Wars
∙ Subaru’s Sales Boom Thanks to the Weaker Yen
Chapter 19: Global Human Resource ∙ The IMF and Ukraine’s Economic Crisis
Management
∙ The Global Financial Crisis and Its Aftermath:
∙ New opening case: Building a Global Diverse Declining Cross-Border Capital Flows
Workforce at Sodexo ∙ Ford’s Global Platform Strategy
∙ New section: Building a Diverse Global Workforce ∙ Philips’ Global Restructuring
∙ New closing case: AstraZeneca ∙ General Motors and Chinese Joint Ventures
∙ Exporting Desserts by a Hispanic Entrepreneur
Chapter 20: Accounting and Finance in the
International Business
∙ Apple: The Best Supply Chains in the World?
∙ Domino’s Global Marketing
∙ Revised opening case: Shoprite—Financial Success
∙ Siemens and Global Competitiveness
of a Food Retailer in Africa
∙ Revised materials on global accounting standards
∙ Microsoft and Its Foreign Cash Holdings
and organizations
∙ Revised closing case: Tesla, Inc.—Subsidizing Tesla Beyond Uncritical Presentation and
Automobiles Globally Shallow Explanation
Many issues in international business are complex and
Integrated Cases thus necessitate considerations of pros and cons. To dem-
All of the 20 integrated cases are new for International onstrate this to students, we have adopted a critical ap-
Business 12e. Many of these cases build on previous open- proach that presents the arguments for and against
ing and closing chapter cases that have been revised, up- economic theories, government policies, business strate-
dated, and oftentimes adopted a new angle or focus. A gies, organizational structures, and so on.
unique feature of the opening and closing cases for the Related to this, we have attempted to explain the com-
chapters as well as the integrated cases at the back-end of plexities of the many theories and phenomena unique to
the text is that we cover all continents of the world and international business so the student might fully compre-
we do so with regional or country issues and large, me- hend the statements of a theory or the reasons a phenom-
dium, and small company scenarios. This makes the 60 enon is the way it is. We believe that these theories and
total cases we have included in International Business 12e phenomena are explained in more depth in this work
remarkable wealthy as a learning program. As a heads up than they are in the competition, which seem to use the
for teachers (and students), the Domino’s case is the rationale that a shallow explanation is little better than no
lengthiest and most in-depth in the twelfth edition. explanation. In international business, a little knowledge
is indeed a dangerous thing.
∙ Global Medical Tourism
∙ Venezuela under Hugo Chávez and Beyond

xiv
 National Differences in Political, Economic, and Legal Systems Chapter 2 57

PRODUCT SAFETY AND PRODUCT LIABILITY

Product safety laws set certain safety standards to which a product must adhere. Prod-
uct liability involves holding a firm and its officers responsible when a product causes in-
jury, death, or damage. Product liability can be much greater if a product does not conform
to required safety standards. Both civil and criminal product liability laws exist. Civil laws

Practical and
call for payment and monetary damages. Criminal liability laws result in fines or imprison-
ment. Both civil and criminal liability laws are probably more extensive in the United
States than in any other country, although many other Western nations also have compre-
hensive liability laws. Liability laws are typically the least extensive in less developed na-
tions. A boom in product liability suits and awards in the United States resulted in a
dramatic increase in the cost of liability insurance. Many business executives argue that

Rich Applications
the high costs of liability insurance make American businesses less competitive in the
global marketplace.
In addition to the competitiveness issue, country differences in product safety and lia- TEST PREP
bility laws raise an important ethical issue for firms doing business abroad. When product Use SmartBook to help retain
safety laws are tougher in a firm’s home country than in a foreign country or when liability what you have learned.
laws are more lax, should a firm doing business in that foreign country follow the more Access your instructor’s
relaxed local standards or should it adhere to the standards of its home country? While the Connect course to check out
ethical thing to do is undoubtedly to adhere to home-country standards, firms have been SmartBook or go to
known to take advantage of lax safety and liability laws to do business in a manner that learnsmartadvantage.com
would not be allowed at home. for help.

We have always believed FO CUS O N MANAGERIAL IMPLICATIO NS

that it is important to show THE MACRO ENVIRONMENT INFLUENCES MARKET

ATTRACTIVENESS LO 2-4

students how the material

The material discussed in this chapter has two broad implications for international Explain the implications for
business. First, the political, economic, and legal systems of a country raise impor- management practice of
tant ethical issues that have implications for the practice of international business. national differences in
For example, what ethical implications are associated with doing business in political economy.

covered in the text is rele- totalitarian countries where citizens are denied basic human rights, corruption is
rampant, and bribes are necessary to gain permission to do business? Is it right to oper-
ate in such a setting? A full discussion of the ethical implications of country differences in

vant to the actual practice

political economy is reserved for Chapter 5, where we explore ethics in international
business in much greater depth.
Second, the political, economic, and legal environments of a country clearly influence the
attractiveness of that country as a market or investment site. The benefits, costs, and risks

of international business. This is explicit in the later chapters of the book, associated with doing business in a country are a function of that country’s political, eco-
nomic, and legal systems. The overall attractiveness of a country as a market or investment
site depends on balancing the likely long-term benefits of doing business in that country

which focus on the practice of international business, but it is not always ob-
against the likely costs and risks. Because this chapter is the first of two dealing with issues
of political economy, we will delay a detailed discussion of how political economy impacts
the benefits, costs, and risks of doing business in different nation-states until the end of the
next chapter, when we have a full grasp of all the relevant variables that are important for

vious in the first half of the book, which considers many macroeconomic and assessing benefits, costs, and risks.
For now, other things being equal, a nation with democratic political institutions, a market-
based economic system, and strong legal system that protects property rights and limits
corruption is clearly more attractive as a place in which to do business than a nation that
political issues, from international trade theory and foreign direct investment lacks democratic institutions, where economic activity is heavily regulated by the state, and
where corruption is rampant and the rule of law is not respected. On this basis, for example,

flows to the IMF and the influence of inflation rates on foreign exchange quo-
tations. Accordingly, at the end of each chapter in Parts Two, Three, and hiL29442_ch02_038-061.indd 57 12/29/17 11:48 AM

Four—where the focus is on the environment of international business, as

opposed to particular firms—there is a section titled Focus on Managerial
Implications. In this section, the managerial implications of the material
discussed in the chapter are clearly explained.

Another tool that we have used

M AN AGEM EN T FO CUS to focus on managerial implica-
Did Walmart Violate the Foreign Corrupt Practices Act? tions is the Management
In the early 2000s, Walmart wanted to build a new store in populated neighborhoods without a construction license,
San Juan Teotihuacan, Mexico, barely a mile from ancient
pyramids that drew tourists from around the world. The ­Focus box. Most chapters have
an environmental permit, an urban impact assessment, or
even a traffic permit. Similarly, thanks to nine bribe pay-
owner of the land was happy to sell to Walmart, but one ments totaling $765,000, Walmart built a vast refrigerated

These prohibited commercial development in the historic at least one Management

thing stood in the way of a deal: the city’s new zoning laws.

area. Not to be denied, executives at the headquarters of

distribution center in an environmentally fragile flood basin
north of Mexico City, in an area where electricity was so
scarce that many smaller developers were turned away.

­Focus. Like the opening cases,

Walmart de Mexico found a way around the problem: They Walmart responded to The New York Times article by
paid a $52,000 bribe to a local official to redraw the zon- ramping up a second internal investigation into bribery that
ing area so that the property Walmart wanted to purchase it had initiated in 2011. By mid-2015, there were reportedly
was placed outside the commercial-free zone. Walmart more than 300 outside lawyers working on the investiga-

opposition, opening it in late 2004.

the purpose of these boxes is
then went ahead and built the store, despite vigorous local tion, and it had cost more than $612 million in fees. In addi-
tion, the U.S. Department of Justice and the Securities and
A former lawyer for Walmart de Mexico subsequently Exchange Commission both announced that they had

to illustrate the relevance of chapter material for the practice of international

contacted Walmart executives at the company’s corporate
headquarters in Bentonville, Arkansas. He told them that
started investigations into Walmart’s practices. In Novem-
ber 2012, Walmart reported that its own investigation into
Walmart de Mexico routinely resorted to bribery, citing the violations had extended beyond Mexico to include China

business.
altered zoning map as just one example. Alarmed, execu-
tives at Walmart started their own investigation. Faced with
growing evidence of corruption in Mexico, top Walmart
and India. Among other things, it was looking into the alle-
gations by the Times that top executives at Walmart, includ-
ing former CEO Lee Scott Jr., had deliberately squashed
executives decided to engage in damage control, rather earlier investigations. While the investigations are still on-
than coming clean. Walmart’s top lawyer shipped the case going, in late 2016 people familiar with the matter stated
files back to Mexico and handed over responsibility for the that the federal investigation had not uncovered evidence
investigation to the general council of Walmart de Mexico. of widespread bribery. Nevertheless, the company was ap-
This was an interesting choice as the very same general parently negotiating a settlement with the U.S. government
council was alleged to have authorized bribes. The gen- that was estimated to be at least $600 million.
eral council quickly exonerated fellow Mexican executives, Sources: David Barstow, “Vast Mexican Bribery Case Hushed Up by
and the internal investigation was closed in 2006. Wal-Mart after Top Level Struggle,” The New York Times, April 21,
2012; Stephanie Clifford and David Barstow, “Wal-Mart Inquiry Reflects
For several years nothing more happened; then, in April
Alarm on Corruption,” The New York Times, November 15, 2012;
2012, The New York Times published an article detailing Nathan Vardi, “Why Justice Department Could Hit Wal-Mart Hard over
bribery by Walmart. The Times cited the changed zoning Mexican Bribery Allegations,” Forbes, April 22, 2012; Phil
map and several other examples of bribery by Walmart: for Wahba,”Walmart Bribery Probe by Feds Finds No Major Misconduct in

example, eight bribes totaling $341,000 enabled Walmart

Mexico,” Fortune, October 18, 2015; T. Schoenberg and M. Robinson,
“Wal-Mart Balks at Paying $600 Million in Bribery Case,” Bloomberg, xv
to build a Sam’s Club in one of Mexico City’s most densely October 6, 2016.

international trade) to keep detailed records that would reveal whether a violation of the
act has occurred. In 2012, evidence emerged that in its eagerness to expand in Mexico,
Walmart may have run afoul of the FCPA (for details, see the Management Focus feature).
In 1997, trade and finance ministers from the member states of the Organisation for
 part two National Differences

National Differences in
Economic Development 3 In addition, each chapter begins
LEARNING OBJECTIVES with an opening case that sets the
After reading this chapter, you will be able to:

LO3-1
LO3-2
Explain what determines the level of economic development of a nation.

Identify the macropolitical and macroeconomic changes occurring worldwide.

stage for the chapter content and Globalization Chapter 1 35

LO3-3
LO3-4
Describe how transition economies are moving toward market-based systems.

Explain the implications for management practice of national difference in political economy.
familiarizes
research task students with how real
globaledge.msu.edu

complete the following exercises: international companies conduct

Use the globalEDGETM website (globaledge.msu.edu) to 2. You are working for a company that is consider-
ing investing in a foreign country. Investing in
countries with different traditions is an impor-
1. As the drivers of globalization continue to pres-
business.
sure both the globalization of markets and the
globalization of production, we continue to see
tant element of your company’s long-term strate-
gic goals. As such, management has requested a
report regarding the attractiveness of alternative
the impact of greater globalization on worldwide
countries based on the potential return of FDI.
trade patterns. HSBC, a large global bank, ana-
Accordingly, the ranking of the top 25 countries
lyzes these pressures and trends to identify op-
in terms of FDI attractiveness is a crucial ingre-
portunities across markets and sectors through
dient for your report. A colleague mentioned a
its trade forecasts. Visit the HSBC Global Con-
potentially useful tool called the Foreign Direct
nections site and use the trade forecast tool to
Investment (FDI) Confidence Index. The FDI
identify which export routes are forecasted to see
Confidence Index is a regular survey of global
the greatest growth over the next 15 to 20 years.
executives conducted by A.T. Kearney. Find this
What patterns do you see? What types of coun-
index and provide additional information regard-
tries dominate these routes?
ing how the index is constructed.

C LO S I N G C A S E
Uber: Going Global from Day One
Uber, the controversial San Francisco–based ride-for-hire Historically, taxi markets around the globe have been
service, has made a virtue out of disrupting the estab- tightly regulated by metropolitan authorities. The stated
©Shafiqul Alam/Corbis News/Getty Images
lished taxi business. From a standing start in 2009, the purpose of these regulations has often included (1) limit-
company has spread across the globe like wildfire. Uber’s ing the supply of taxis in order to boost demand for other
strategy has been to focus on major metropolitan areas forms of public transportation, (2) limiting the supply of
around the world. This strategy has so far taken Uber into taxis in order to reduce traffic congestion, (3) ensuring
about 600 cities in more than 80 countries. The privately the safety of riders by only allowing licensed taxis to offer
held company is rumored to be generating annual reve- rides, (4) ensuring that the prices charged are “fair,” and
hiL29442_ch03_062-089.indd 62 12/30/17 1:37 PM
nues of around $10 billion. (5) guaranteeing a reasonable rate of return to the owners
At the core of Uber’s business is a smartphone app that of taxi licenses.
allows customers to hail a ride from the comfort of their In practice, widespread restrictions on the supply of taxi

A closing case to each chapter own home, a restaurant, or a bar stool. The app shows cars
in the area, notifies the rider when a car is on the way, and
tracks the progress of the car on screen using GPS map-
licenses have created shortages in many cities, making it dif-
ficult to find a taxi, particularly at busy periods. In New
York, the number of licenses barely increased from 11,787
ping technology. The rider pays via the app using a credit in 1945 to 13,587 in 2017, even though the population ex-
is designed to illustrate the rele- card, so no cash changes hands. The driver takes 80 per-
cent of the fee and Uber 20 percent. The price for the ride
panded significantly. In Paris, the number of licenses was
14,000 in 1937 and had only increased to 17,137 by 2017,
is determined by Uber using an algorithm that sets prices even though both the population and the number of visitors

vance of chapter material for the in order to match the demand for rides with the supply of
cars on the road. Thus, if demand exceeds supply, the price
to the city had surged. The number of taxis in Milan was
frozen between 1974 and 2014, despite Milan having a ratio
for a ride will rise, inducing drivers to get on the road. Uber of taxis to inhabitants that was one of the lowest for any

practice of international busi- does not own any cars. Its drivers are independent contrac-
tors with their own vehicles. The company is, in effect, a
twenty-first-century version of an old-style radio taxi dis-
major city. Whenever metropolitan authorities have tried to
increase the number of taxis in a city, they have often been
meet by strong resistance from established taxi companies.
patch company. Interestingly, Uber’s founders got their When the French tried to increase the number of taxis in
ness and provide continued in- idea for the app-based service one snowy night in Paris
when they were unable to find a taxi.
Paris in 2007, a strike among transportation workers shut
down the city and forced the government to back off.

sight into how real companies

handle those issues.
hiL29442_ch01_002-037.indd 35 12/30/17 1:35 PM

part seven cases

The Part Seven Integrated Cases are
somewhat longer, allowing a more in-
Integrative Cases
depth study of international companies. For International Business, 12e, we have again included a set of 20 cases as value-
added materials at the end of the text in addition to the 40 cases—opening and clos-

These cases can be used as stand-alone

ing cases—that appear in the 20 chapters. We started this practice of including short
but integrative cases in the 11th edition to provide instructors and students with a bet-
ter platform for learning across chapters.
The end-of-the-book cases fill strategically aligned objectives for the core features of In-

cases, in conjunction with a specific chap- ternational Business 12e. Specifically, we are able to build on and enhance the worldwide
market leadership of our text and its focus on current, application-rich, relevant, and

ter, and also as integrated cases covering

m

Bus ucture
yste
w

s
rvie

ines
men

relevant and practical material from several chapters. The introduction to the Part
ess
ry S
E nv e a n d

tr
O ve

ns l Busin
atio nd S
iron
nce

eta
d
an d

fere

tern gy a
M on
stm l Tra

nal

a
n

The Three

Fun rnation
l Dif

of In Strate
ent
Inve Globa
ctio

bal

The Five
ary

Seven section discusses and lays out topics covered in each case.
Th e F o u r
Intr One

Inte Six
Nati Two
ona

ctio
ary

Glo
ond

o du

Part

Part

Part
Part

Part

Part
Prim

Sec

Case
Global Medical Tourism 1 4, 5 X X

xvi Venezuela under Hugo Chávez and Beyond

Political and Economic Reform in Myanmar
2
3
3, 6
6, 7
X
X
X
X
X
X
Will China Continue to Be a Growth Marketplace? 4 7, 8 X X X
Lead in Toys and Drinking Water 5 4, 13 X X X
Creating the World’s Biggest Free Trade Zone 6 7, 8, 9 X X
Sugar Subsidies Drive Candy Makers Abroad 7 2, 3, 6 X X X
Volkswagen in Russia 8 7, 17 X X X
The NAFTA Tomato Wars 9 4, 6, 7 X X X
Subaru’s Sales Boom Thanks to the Weaker Yen 10 11, 12 X X
To help students go a step further in expanding their macro focus to a micro focus at this stage of the book.
­application-level understanding of international business, We examine strategies and structures that firms adopt
each chapter incorporates two globalEDGE research to compete effectively in the international business
tasks designed and written by Tomas Hult, Tunga Kiyak, environment.
and the team at Michigan State University’s International
Business Center and their globaledge.msu.edu site. The Part Six
exercises dovetail with the content just covered.
In Chapters 16 through 20 the focus narrows further to
investigate business functions and related operations.
INTEGRATED PROGRESSION OF TOPICS
These chapters explain how firms can perform their key
A weakness of many texts is that they lack a tight, inte- functions—exporting, importing, and countertrade;
grated flow of topics from chapter to chapter. This book global production; global supply chain management;
explains to students in Chapter 1 how the book’s topics global marketing; global research and development
are related to each other. Integration has been achieved (R&D); human resource management; accounting; and
by organizing the material so that each chapter builds on finance—to compete and succeed in the international
the material of the previous ones in a logical fashion. business environment.
Throughout the book, the relationship of new material
Part One to topics discussed in earlier chapters is pointed out to
the students to reinforce their understanding of how
Chapter 1 provides an overview of the key issues to be the material comprises an integrated whole. We deliber-
addressed and explains the plan of the book. Globaliza- ately bring a management focus to the macro chapters
tion of markets and globalization of production is the (Chapters 1 through 12). We also integrate macro themes
core focus. in covering the micro chapters (Chapters 13 through 20).
Part Seven with its integrated cases also provides a great
Part Two learning vehicle to better understand macro and micro
Chapters 2 through 4 focus on country differences in issues.
­political economy and culture, and Chapter 5 on ethics,
corporate social responsibility, and sustainability issues ACCESSIBLE AND INTERESTING
in international business. Most international business The international business arena is fascinating and excit-
textbooks place this material at a later point, but we ing, and we have tried to communicate our enthusiasm
­believe it is vital to discuss national differences first. After for it to the student. Learning is easier and better if the
all, many of the central issues in international trade and subject matter is communicated in an interesting, infor-
investment, the global monetary system, international mative, and accessible manner. One technique we have
business strategy and structure, and international busi- used to achieve this is weaving interesting anecdotes into
ness functions arise out of national differences in politi- the narrative of the text, that is, stories that illustrate
cal economy and culture. theory.
Most chapters also have a Country Focus box that pro-
Part Three vides background on the political, economic, social, or
Chapters 6 through 9 investigate the political economy of cultural aspects of countries grappling with an interna-
global trade and investment. The purpose of this part is tional business issue.
to describe and explain the trade and investment environ-
ment in which international business occurs. McGRAW-HILL CONNECT
INTERNATIONAL BUSINESS
Part Four
Applied
Chapters 10 through 12 describe and explain the global
monetary system, laying out in detail the monetary frame- Application Exercises
work in which international business transactions are A variety of interactive assignments within Connect re-
conducted. quire students to apply what they have learned in a real-
world scenario. These online exercises help students assess
their understanding of the concepts at a higher level. Exer-
Part Five
cises include video cases, decision-making scenarios/cases
In Chapters 13 through 15 attention shifts from the envi- from real-world companies, case analysis exercises, busi-
ronment to the firm. In other words, we move from a ness models, processes, and problem-solving cases.
xvii
TEACHING SUPPORT the knowledge retention, business decision making, and
teamwork skills of students.
Within the Connect International Business’ Instructor Re-
sources you can find a complete package to prepare you
for your course. CREATE
∙ Instructor’s Manual. The Instructor’s Manual is a Instructors can now tailor
comprehensive resource designed to support you their teaching resources to
in effectively teaching your course. It includes match the way they teach!
course outlines; chapter overviews and outlines, With McGraw-Hill Create, www.mcgrawhillcreate.com,
teaching suggestions, chapter objectives, teaching instructors can easily rearrange chapters, combine mate-
suggestions for opening cases, lecture outlines, rial from other content sources, and quickly upload and
answers to critical discussion questions, teaching integrate their own content, such as course syllabi or
suggestions for the closing case, and two student teaching notes. Find the right content in Create by search-
activities; and video notes with discussion ques- ing through thousands of leading McGraw-Hill textbooks.
tions for each video. The answers to globalEDGE Arrange the material to fit your teaching style. Order a
research tasks are included. Create book and receive a complimentary print review
∙ Test Bank. Approximately 100 true-false, multiple- copy in three to five business days or a complimentary
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bank questions with Bloom’s Taxonomy and
AACSB guidelines, tagging each question accord- TEGRITY CAMPUS
ing to its knowledge and skill areas. Each test bank
question also maps to a specific chapter learning Tegrity makes class time
objective listed in the text. available 24/7 by automati-
∙ PowerPoint Presentations. The PowerPoint pro- cally capturing every lecture
gram consists of one set of slides for every chapter, in a searchable format for students to review when they
which include key text figures, tables, and maps. study and complete assignments. With a simple one-click
Quiz questions to keep students on their toes start-and-stop process, you capture all computer screens
during classroom presentations are also included, and corresponding audio. Students can replay any part of
along with instructor notes. any class with easy-to-use browser-based viewing on a PC
or Mac. Educators know that the more students can see,
∙ International Business Video Program. McGraw-Hill hear, and experience class resources, the better they
offers the most comprehensive, diverse, and current learn. In fact, studies prove it. With patented Tegrity
video support for the International Business class- “search anything” technology, students instantly recall
room. Updated monthly, our video program is the key class moments for replay online or on iPods and mo-
most current on the market. Additionally, video-based bile devices. Instructors can help turn all their students’
application exercises are assignable within Connect. study time into learning moments immediately supported
by their lecture. To learn more about Tegrity, watch a two-
COURSE DESIGN AND DELIVERY minute Flash demo at http://tegritycampus.mhhe.com.
cesim GlobalChallenge Simulation
BLACKBOARD® PARTNERSHIP
cesim is an international
business simulation designed McGraw-Hill Education and
to develop student under- Blackboard have teamed up to
standing of the interaction and complexity of various simplify your life. Now you and
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research and innovation, and marketing. cesim improves mhcampus.html.
xviii
McGRAW-HILL CAMPUS™ banks, PowerPoint slides, animations, learning objectives,
etc.), allowing them to browse, search, and use any in-
McGraw-Hill Campus is a structor ancillary content in our vast library at no addi-
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stant access to teaching materials (e.g., eTextbooks, test

xix
 McGraw-Hill Connect® is a highly reliable, easy-to-
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 CONTENTS
part one Critical Thinking and Discussion Questions 34

Introduction and Overview Research Task 35

Closing Case
C HA PTE R 1 Uber: Going Global from Day One 35
Globalization 2 Endnotes 36
Opening Case
Globalization of BMW, Rolls-Royce, and
the MINI 3
part two
Introduction 4
National Differences
What Is Globalization? 6
The Globalization of Markets 6
The Globalization of Production 8 CHAPTER 2
National Differences in Political, Economic,
Management Focus
Boeing’s Global Production System 9
and Legal Systems 38
Opening Case
The Emergence of Global Institutions 10
The Decline of Zimbabwe 39
Drivers of Globalization 11
Introduction 40
Declining Trade and Investment Barriers 11
Role of Technological Change 15 Political Systems 41
Collectivism and Individualism 41
The Changing Demographics of the Global
Democracy and Totalitarianism 43
Economy 17
The Changing World Output and World Trade Country Focus
Picture 17 Putin’s Russia 44
The Changing Foreign Direct Investment Picture 18
Economic Systems 46
Country Focus Market Economy 46
India’s Software Sector 19 Command Economy 47
The Changing Nature of the Multinational Mixed Economy 48
Enterprise 20
Legal Systems 48
Management Focus Different Legal Systems 49
Wanda Group 22 Differences in Contract Law 50
The Changing World Order 22 Property Rights and Corruption 50
Global Economy of the Twenty-First Century 23
Country Focus
The Globalization Debate 24 Corruption in Brazil 53
Antiglobalization Protests 24
Management Focus
Globalization, Jobs, and Income 25
Did Walmart Violate the Foreign Corrupt
Country Focus Practices Act? 54
Protesting Globalization in France 26 The Protection of Intellectual Property 55
Globalization, Labor Policies, and the Environment 28
Management Focus
Globalization and National Sovereignty 29
Starbucks Wins Key Trademark Case in China 56
Globalization and the World’s Poor 30
Product Safety and Product Liability 57
Managing in the Global Marketplace 31
Focus on Managerial Implications: The Macro Environment
Chapter Summary 33 Influences Market Attractiveness 57
xxii
Chapter Summary 58 Focus on Managerial Implications: Benefits, Costs, Risks, and
Overall Attractiveness of Doing Business Internationally 82
Critical Thinking and Discussion Questions 59
Chapter Summary 86
Research Task 59
Critical Thinking and Discussion Questions 86
Closing Case
Economic Transformation in Vietnam 59 Research Task 87
Endnotes 61 Closing Case
The Political and Economic Evolution of Indonesia 87

CH APTER 3 Endnotes 89
National Differences in Economic
Development 62
CHAPTER 4
Opening Case
Economic Development in Bangladesh 63 Differences in Culture 90
Introduction 64 Opening Case
The Swatch Group and Cultural Uniqueness 91
Differences in Economic Development 64
Introduction 92
Map 3.1 GNI per capita, 2016 65
Map 3.2 GNI PPP per capita, 2016 66 What Is Culture? 93
Map 3.3 Average annual growth rate in GDP (%), Values and Norms 93
2007–2016 67 Culture, Society, and the Nation-State 95
Broader Conceptions of Development: Determinants of Culture 96
Amartya Sen 68 Social Structure 96
Map 3.4 Human Development Index, 2015 69 Individuals and Groups 97
Social Stratification 99
Political Economy and Economic Progress 69
Innovation and Entrepreneurship Are the Country Focus
Engines of Growth 69 India and Its Caste System 100
Innovation and Entrepreneurship Require a
Religious and Ethical Systems 102
Market Economy 70
Innovation and Entrepreneurship Require Strong Map 4.1 World Religions 103
Property Rights 70 Christianity 103
The Required Political System 71 Islam 104

Country Focus Country Focus

Emerging Property Rights in China 72 Secularism in Turkey 107
Economic Progress Begets Democracy 72 Hinduism 108
Geography, Education, and Economic Development 72 Buddhism 109
Confusianism 110
States in Transition 73
The Spread of Democracy 73 Management Focus
China and Its Guanxi 111
Map 3.5 Freedom in the world, 2017 74
The New World Order and Global Terrorism 76 Language 112
The Spread of Market-Based Systems 77 Spoken Language 112
Map 3.6 Index of economic freedom, 2017 78 Unspoken Language 113

The Nature of Economic Transformation 78 Education 113

Deregulation 78
Culture and Business 114
Privatization 79
Cultural Change 117
Country Focus
India’s Economic Transformation 80 Focus on Managerial Implications: Cultural Literacy and
Legal Systems 81 Competitive Advantage 119

Implications of Changing Political Economy 81 Chapter Summary 121

xxiii
Critical Thinking and Discussion Questions 122
part three
Research Task 123
The Global Trade and Investment
Closing Case
The Emirates Group and Employee Diversity 123
Environment
Endnotes 124

CHAPTER 6
C HA PTE R 5 International Trade Theory 158
Ethics, Corporate Social Responsibility, and Opening Case
Sustainability 128 Donald Trump on Trade 159
Opening Case Introduction 160
Woolworths Group’s Corporate Responsibility
An Overview of Trade Theory 160
Strategy 2020 129
The Benefits of Trade 161
Introduction 130 The Pattern of International Trade 162
Trade Theory and Government Policy 162
Ethics and International Business 131
Employment Practices 131 Mercantilism 163
Management Focus Country Focus
“Emissionsgate” at Volkswagen 132 Is China Manipulating Its Currency in Pursuit of a
Human Rights 133 Neo-Mercantilist Policy? 164
Environmental Pollution 134
Absolute Advantage 164
Corruption 135
Comparative Advantage 166
Ethical Dilemmas 136
The Gains from Trade 167
Roots of Unethical Behavior 137 Qualifications and Assumptions 168
Personal Ethics 137 Extensions of the Ricardian Model 169
Decision-Making Processes 138
Country Focus
Organizational Culture 139
Moving U.S. White-Collar Jobs Offshore 173
Unrealistic Performance Goals 139
Leadership 139 Heckscher–Ohlin Theory 174
Societal Culture 140 The Leontief Paradox 175
Philosophical Approaches to Ethics 140 The Product Life-Cycle Theory 176
Straw Men 140 Product Life-Cycle Theory in the Twenty-First
Utilitarian and Kantian Ethics 142 Century 176
Rights Theories 143
New Trade Theory 177
Justice Theories 144
Increasing Product Variety and Reducing
Focus on Managerial Implications: Making Ethical Costs 177
Decisions Internationally 145 Economies of Scale, First-Mover Advantages, and the
Pattern of Trade 178
Management Focus
Implications of New Trade Theory 179
Corporate Social Responsibility at Stora Enso 150
National Competitive Advantage: Porter’s
Chapter Summary 152
Diamond 180
Critical Thinking and Discussion Questions 153 Factor Endowments 181
Demand Conditions 181
Research Task 154
Related and Supporting Industries 181
Closing Case Firm Strategy, Structure, and Rivalry 182
UNCTAD Sustainable Development Evaluating Porter’s Theory 182
Goals 154
Focus on Managerial Implications: Location, First-Mover
Endnotes 155 Advantages, and Government Policy 183
xxiv
Another random document with
no related content on Scribd:
 VEAL CUTLETS, OR COLLOPS, À LA FRANÇAISE. (ENTRÉE.)

Cut the veal into small, thin, round collops of equal size, arrange
them evenly in a sauté-pan, or in a small frying-pan, and sprinkle a
little fine salt, white pepper, and grated nutmeg on them. Clarify, or
merely dissolve in a clean saucepan with a gentle degree of heat, an
ounce or two of good butter, and pour it equally over the meat. Set
the pan aside until the dinner-hour, then fry the collops over a clear
fire, and when they are lightly browned, which will be in from four to
five minutes, lift them into a hot dish, and sauce them with a little
Espagnole, or with a gravy made quickly in the pan, and flavoured
with lemon-juice and cayenne. They are excellent even without any
sauce.
3 to 4 minutes.
 SCOTCH COLLOPS. (ENTRÉE.)

Prepare the veal as for the preceding receipt, but dip the collops
into beaten egg and seasoned bread-crumbs, and fry them directly in
good butter, over a moderate fire, of a light golden brown; drain them
well in lifting them from the pan, and sauce them like the collops à la
Française.
 VEAL CUTLETS À LA MODE DE LONDRES, OR, LONDON
FASHION. (ENTRÉE.)

Raise the flesh entire from the upper side of the best end of a neck
of veal, free it from the skin, and from the greater portion of the fat,
slice it equally into cutlets little more than a quarter of an inch thick,
brush them with egg, strew them with fine bread-crumbs, and fry
them of a light brown. Toast, or fry apart as many small slices of
bacon as there are cutlets, and let them be trimmed nearly to the
same shape; place them alternately on their edges round the inside
of a hot dish (so as to form a sort of chain), and pour into the middle
some rich gravy made in the pan, and very slightly flavoured with
eschalot; or substitute for this some good brown mushroom sauce.
Savoury herbs, grated lemon-rind, nutmeg or mace, salt, and white
pepper or cayenne, should be mixed with the bread-crumbs, in the
proportions directed at page 213, for cutlets of calf’s head; or they
may be varied at pleasure. A cheek of bacon is best adapted to this
dish.
 SWEETBREADS SIMPLY DRESSED. (ENTRÉE.)

In whatever way sweetbreads are dressed, they should first be

well soaked in lukewarm water, then thrown into boiling water to
blanch them, as it is called, and to render them firm. If lifted out after
they have boiled from five to ten minutes according to their size, and
laid immediately into fresh spring water to cool, their colour will be
the better preserved. They may then be gently stewed for three
quarters of an hour in veal gravy, which with the usual additions of
cream, lemon, and egg-yolks, may be converted into a fricassee
sauce for them when they are done; or they may be lifted from it,
glazed, and served with good Spanish gravy; or, the glazing being
omitted, they may be sauced with the sharp Maître d’Hôtel sauce of
page 117. They may also be simply floured, and roasted in a Dutch
oven, being often basted with butter, and frequently turned. A full
sized sweetbread, after having been blanched, will require quite
three quarters of an hour to dress it.
Blanched 5 to 10 minutes. Stewed 3/4 hour or more.
 SWEETBREAD CUTLETS. (ENTRÉE.)

Boil the sweetbreads for half an hour in water or veal broth, and
when they are perfectly cold, cut them into slices of equal thickness,
brush them with yolk of egg, and dip them into very fine bread-
crumbs seasoned with salt, cayenne, grated lemon-rind, and mace;
fry them in butter of a fine light brown, arrange them in a dish placing
them high in the centre, and pour under them a gravy made in the
pan, thickened with mushroom powder and flavoured with lemon-
juice; or, in lieu of this, sauce them with some rich brown gravy, to
which a glass of sherry or Madeira has been added. When it can be
done conveniently, take as many slices of a cold boiled tongue as
there are sweetbread cutlets; pare the rind from them, trim them into
good shape, and dress them with the sweetbreads, after they have
been egged and seasoned in the same way; and place each cutlet
upon a slice of tongue when they are dished. For variety, substitute
croutons of fried bread stamped out to the size of the cutlets with a
round or fluted paste or cake cutter. The crumb of a stale loaf, very
evenly sliced, is best for the purpose.
 STEWED CALF’S FEET.

(Cheap and Good.)

This is an excellent family dish, highly nutritious, and often very
inexpensive, as the feet during the summer are usually sold at a low
rate. Wash them with nicety, divide them at the joint, and split the
claws; arrange them closely in a thick stewpan or saucepan, and
pour in as much cold water as will cover them about half an inch:
three pints will be sufficient for a couple of large feet. When broth or
stock is at hand, it is good economy to substitute it for the water, as
by this means a portion of strong and well-flavoured jellied gravy will
be obtained for general use, the full quantity not being needed as
sauce for the feet. The whole preparation will be much improved by
laying a thick slice of the lean of an unboiled ham, knuckle of bacon,
hung beef, or the end of a dried tongue, at the bottom of the pan,
before the other ingredients are added; or, when none of these are at
hand, by supplying the deficiency with a few bits of lean beef or veal:
the feet being of themselves insipid, will be much more palatable
with one or the other of these additions. Throw in from half to three
quarters of a teaspoonful of salt when they begin to boil, and after
the scum has been all cleared off, add a few branches of parsley, a
little celery, one small onion or more, stuck with half a dozen cloves,
a carrot or two, a large blade of mace, and twenty corns of whole
pepper; stew them softly until the flesh will part entirely from the
bones; take it from them, strain part of the gravy, and skim off all the
fat, flavour it with catsup or any other store sauce, and thicken it,
when it boils, with arrow-root or flour and butter; put in the flesh of
the feet, and serve the dish as soon as the whole is very hot. A glass
of wine, a little lemon juice, and a few forcemeat balls, will convert
this into a very superior stew; a handful of mushroom-buttons also
simmered in it for half an hour before it is dished, will vary it
agreeably.
Calf’s feet (large), 2; water, 3 pints; salt, 1/2 to 1/3 teaspoonful;
onions, 1 to 3; cloves, 6; peppercorns, 20; mace, large blade; little
celery and parsley; carrots, 1 or 2: stewed softly, 2-1/2 to 3-1/4
hours. Mushroom catsup, 1 tablespoonful; flour, or arrow-root, 1
large teaspoonful; butter, 1 to 2 oz. Cayenne, to taste.
 CALF’S LIVER STOVED, OR STEWED.

From three to four pounds of the best part of the liver will be
sufficient for a dish of moderate size. First lard it quite through by the
directions of page 181, with large lardoons, rolled in a seasoning of
spice, and of savoury herbs very finely minced; then lay it into a
stewpan or saucepan just fitted to its size, and pour in about half a
pint of broth or gravy; heat it very gently, and throw in, when it begins
to simmer, a sliced carrot, a small onion cut in two, a small bunch of
parsley, and a blade of mace; stew the liver as softly as possible
over a very slow fire from two hours and a half to three hours;
thicken the gravy with a little brown roux (see page 107), or with a
dessertspoonful of browned flour; add a couple of glasses of white
wine, and a little spice if needed, and serve it very hot, after having
taken out the herbs and vegetable.
The liver may be stewed without being larded; it may likewise be
browned all over in a carefully made roux, before the gravy is poured
to it: this must then be made to boil, and be added in small portions,
the stewpan being well shaken round as each is thrown in. The wine
can be altogether omitted; or a wineglassful of port mixed with a little
lemon-juice, may take the place of sherry. After the liver has been
wiped very dry, minced herbs may be strewed thickly over it before it
is laid into the stewpan; and it may be served in its own gravy, or
with a sauce piquante.
Liver, 3 to 4 lbs: 2 to 3 hours.
 TO ROAST CALF’S LIVER.

Take the whole or part of a fine white sound liver, and either lard it
as a fricandeau upon the surface, or with large strips of highly-
seasoned bacon in the inside (see Larding, page 181); or should
either of these modes be objected to, merely wrap it in a well
buttered paper, and roast it from an hour to an hour and a quarter at
a moderate distance from a clear fire, keeping it constantly basted.
Remove the paper, and froth the liver well from ten to fifteen minutes
before it is done. It should be served with a sauce of some piquancy,
such as a poivrade, or brown eschalot, in addition to some good
gravy. French cooks steep the liver over-night in vinegar, with a
sliced onion and branches of savoury herbs laid over it: this whitens
and renders it firm. As an economical mode, some small bits of the
liver may be trimmed off, floured, and lightly fried with a sliced onion,
and stewed down for gravy in three quarters of a pint of water which
has been poured into the pan, with the addition of a few
peppercorns, and a small bunch of herbs. A seasoning of salt must
not be forgotten, and a little lemon pickle, or juice, would generally
be considered an improvement.
1 to 1-1/4 hour.
 BLANQUETTE OF VEAL OR LAMB, WITH MUSHROOMS.

(ENTRÉE.)
Slice very thin the white part of some cold veal, divide and trim it
into scallops not larger than a shilling, and lay it into a clean
saucepan or stewpan. Wipe with a bit of new flannel and a few
grains of salt, from a quarter to half a pint of mushroom-buttons, and
slice them into a little butter which just begins to simmer; stew them
in it from twelve to fifteen minutes, without allowing them to take the
slightest colour; then lift them out and lay them on the veal. Pour
boiling to them a pint of sauce tournée (see page 108); let the
blanquette remain near, but not close to the fire for awhile: bring it
nearer, heat it slowly, and when it is on the point of boiling mix a
spoonful or two of the sauce from it with the well beaten yolks of four
fresh eggs; stir them to the remainder; add the strained juice of half a
small lemon; shake the saucepan above the fire until the sauce is
just set, and serve the blanquette instantly.
Cold veal, 3/4 lb.; mushrooms, 1/4 to 1/2 pint: stewed in 1-1/2 oz.
butter, 12 to 15 minutes. Sauce tournée, or thickened veal gravy, 1
pint; yolks of eggs, 4; lemon-juice, 1 tablespoonful.
Obs.—Any white meat may be served en blanquette. The
mushrooms are not indispensable for it, but they are always a great
improvement. White sauce substituted for the thickened veal gravy
will at once convert this dish into an inexpensive English fricassee.
Mace, salt, and cayenne, must be added to either preparation,
should it require seasoning.
 MINCED VEAL.

When there is neither gravy nor broth at hand, the bones and
trimmings of the meat must be boiled down to furnish what is
required for the mince. As cold meat is very light in weight, a pound
of the white part of the veal will be sufficient for a dish, and for this
quantity a pint of gravy will be needed. Break down the bones of the
joint well, add the trimmings of the meat, a small bunch of savoury
herbs, a slice or two of carrot or of celery, a blade of mace, a few
white peppercorns, and a bit or two of lean ham, boiled, or unboiled
if it can be had, as either will improve the flavour of the mince. Pour
to these a pint and a half of water, and stew them gently for a couple
of hours; then strain off the gravy, let it cool, and clear it entirely from
the fat. Cut the white part of the veal small with a very sharp knife,
after all the gristle and brown edges have been trimmed away. Some
persons like a portion of fat minced with it, others object to the
addition altogether. Thicken the gravy with a teaspoonful and a half
of flour smoothly mixed with a small slice of butter, season the veal
with a saltspoonful or more of salt, and half as much white pepper
and grated nutmeg, or pounded mace; add the lightly-grated rind of
half a small lemon; mix the whole well, put it into the gravy, and heat
it thoroughly by the side of the fire without allowing it to boil; serve it
with pale toasted sippets in and round the dish. A spoonful or two of
cream is always an improvement to this mince.
 MINCED VEAL AND OYSTERS.

The most elegant mode of preparing this dish is to mince about a

pound of the whitest part of the inside of a cold roast fillet or loin of
veal, to heat it without allowing it to boil, in a pint of rich white sauce,
or béchamel, and to mix with it at the moment of serving, three
dozens of small oysters ready bearded, and plumped in their own
strained liquor, which is also to be added to the mince; the requisite
quantity of salt, cayenne, and mace should be sprinkled over the
veal before it is put into the sauce. Garnish the dash with pale fried
sippets of bread, or with fleurons[77] of brioche, or of puff-paste.
Nearly half a pint of mushrooms minced, and stewed white in a little
butter, may be mixed with the veal instead of the oysters; or should
they be very small they may be added to it whole: from ten to twelve
minutes will be sufficient to make them tender. Balls of delicately
fried oyster-forcemeat laid round the dish will give another good
variety of it.
77. Fleurons, flowers, or flower-like figures, cut out with tin shapes.
Veal minced, 1 lb.; white sauce, 1 pint; oysters, 3 dozen, with their
liquor; or mushrooms, 1/2 pint, stewed in butter 10 to 12 minutes.
 VEAL-SYDNEY. (GOOD.)

Pour boiling on an ounce and a half of fine bread-crumbs nearly

half a pint of good veal stock or gravy, and let them stand till cool;
mix with them then, two ounces of beef-suet shred very small, half a
pound of cold roast veal carefully trimmed from the brown edges,
skin, and fat, and finely minced; the grated rind of half a lemon,
nearly a teaspoonful of salt, a little cayenne, the third of a
teaspoonful of mace or nutmeg, and four well-beaten eggs. Whisk up
the whole well together, put it into a buttered dish, and bake it from
three quarters of an hour to an hour. Cream may be used instead of
gravy when more convenient, but this last will give the better flavour.
A little clarified butter put into the dish before the other ingredients
are poured in will be an improvement.
Bread-crumbs, 1-1/2 oz.; gravy or cream, nearly 1/2 pint; beef-
suet, 2 oz.; cold veal, 1/2 lb.; rind of 1/2 lemon; salt, small
teaspoonful; third as much mace and nutmeg; little cayenne; eggs, 4
large or 5 small: 3/4 to 1 hour.
 FRICASSEED VEAL.

Divide into small, thick, handsome slices of equal size, about a

couple of pounds of veal, quite free from fat, bone, and skin; dissolve
a couple of ounces of butter in a wide stewpan, and just as it begins
to boil lay in the veal, and shake it over the fire until it is quite firm on
both sides, but do not allow it to take the slightest colour. Stir in a
tablespoonful of flour, and when it is well mixed with the cutlets, pour
gradually to them, shaking the pan often, sufficient boiling veal gravy
to almost cover them. Stew them gently from fifteen to sixteen
minutes, or longer should they not be perfectly tender. Add a
flavouring of mace, some salt, a quarter-pint of rich cream, a couple
of egg-yolks, and a little lemon-juice, observing, when the last are
added, the directions given for a blanquette of veal, page 229. Strips
of lemon-rind can be stewed in the gravy at pleasure. Two or three
dozens of mushroom-buttons, added twenty minutes before it is
served, will much improve this fricassée.
 SMALL ENTRÉES OF SWEETBREADS, CALF’S BRAINS AND
EARS, &c. &c.

For tables of which the service consists rather of a great variety of

light dishes (entrées) than of substantial English fare, the ears,
brains, sweetbreads, gristles or tendrons, and the tail of a calf, may
be dressed in many different ways to supply them; but they require a
really good style of cookery, and many adjuncts to render them
available for the purpose, as they do not possess much decided
natural flavour, and their insipidity would be apt to tire if it were not
relieved by the mode of preparing them. We shall give some few
especial receipts for them in the chapter on Foreign Cookery, should
sufficient space remain open for us to admit them; and insert here
only such slight general directions as may suffice for preparing some
of them in a simple form; as they are not in reality of first-rate
importance. All of them may be served with good curried, or highly-
flavoured tomato-sauce, after having been stewed in strong broth or
gravy. The brains and sweetbreads cut into small dice or scallops,
and mixed with béchamel, or with common white sauce, may be
used to fill small vol-au-vents, or patty cases. The ears are usually
filled in part with forcemeat, or a preparation of the brains, and
placed upright when dished; and the upper part is cut into narrow
fringe-like strips. For “Tendrons de Veau,” and “Breast of veal rolled
and stewed,” the reader is referred to Chapter XXXIV.
 CHAPTER XII.

Mutton.

No.
1. Leg.
2. Best End of Loin.
3. Chump End of Loin.
4. Neck, Best End.
5. Neck, Scrag End.
6. Shoulder.
7. Breast.
A Saddle is the Two Loins.
A Chine, the Two Necks.

Mutton is best suited for table in autumn, winter, and early spring. It is not
considered quite so good when grass-lamb is in full season, nor during the sultry
months of summer.
 TO CHOOSE MUTTON.

The best mutton is small-boned, plump, finely-grained, and short-

legged; the lean of a dark, rather than of a bright hue, and the fat
white and clear: when this is yellow, the meat is rank, and of bad
quality. Mutton is not considered by experienced judges to be in
perfection until it is nearly or quite five years old; but to avoid the
additional expense of feeding the animal so long, it is commonly
brought into the market at three years old. The leg and the loin are
the superior joints; and the preference would probably be given more
frequently to the latter, but for the superabundance of its fat, which
renders it a not very economical dish. The haunch consists of the leg
and the part of the loin adjoining it; the saddle, of the two loins
together, or of the undivided back of the sheep: these last are always
roasted, and are served usually at good tables, or for company-
dinners, instead of the smaller joints. The shoulder, dressed in the
ordinary way, is not very highly esteemed, but when boned, rolled,
and filled with forcemeat, it is of more presentable appearance, and
to many tastes, far better eating; though some persons prefer it in its
natural form, accompanied by stewed onions. It is occasionally
boiled or stewed, and covered with rich onion sauce. The flesh of
that part of the neck which is commonly called the “best end,” or the
back ribs, and which adjoins the loin, is the most succulent and
tender portion of the sheep, and makes an excellent small roast, and
is extremely good served as cutlets, after being divested of the
superabundant fat. It is likewise very frequently boiled; but so cooked
it makes but an unsightly and insipid dish, though an idea prevails in
this country that it is a very wholesome one. Cutlets (or chops, as the
butchers term them) are commonly taken from the loin, and are
generally charged at a higher rate than joints of mutton, in
consequence, probably, of the constant demand for them. They may
likewise be cut from the saddle, but will then be very large, and of no
better quality than when the two loins which form the saddle are
divided in the usual way, though a certain degree of fashion has of
late been accorded to them.[78] The scrag, or that part of it which
joins the head, is seldom used for any other purpose than making
broth, and should be taken off before the joint is dressed. Cutlets
from the thick end of the loin are commonly preferred to any others,
but they are frequently taken likewise from the best end of the neck
(sometimes called the back-ribs) and from the middle of the leg.
Mutton kidneys are dressed in various ways, and are excellent in
many. The trotters and the head of a sheep may be converted into
very good dishes, but they are scarcely worth the trouble which is
required to render them palatable. The loin and the leg are
occasionally cured and smoked like hams or bacon.
78. Many years since, these “saddle-back” cutlets were supplied to us by a
country butcher, and though of very fine South Down mutton, had no
particular importance attached to them, nor were they considered as
remarkably new.