Transcript Chapter 7 in Bell

chapter seven
Natural Resources and
Environmental Sustainability
McGraw-Hill/Irwin
International Business, 11/e
Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved.
Learning Objectives
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Describe the role of location, topography, climate, and natural
resources as factor conditions in Porter’s diamond model
Explain how surface features contribute to economic, cultural,
political, and social differences among nations and among
regions of a single country
Comprehend the importance of inland waterways and outlets to
the sea
Recognize that climate exerts a broad influence on business
Understand the options available for nonrenewable and
renewable energy sources
Explain how factor conditions can impact innovation
Describe environmental sustainability and its characteristics
Draw on the stakeholder theory as a framework for environmental
sustainability
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Why Switzerland Makes Watches
• Good Case Study of How Environment
Infuences Trade
• Mostly mountainous
• Close to populated lowlands of Western
Europe
• Transportation across mountains expensive
• Has no mineral resources
• Thus, it has to produce high-valued products
like watches, cheese and chocolate
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Natural Resources
Using the Swiss example, we see that a
number of natural resource factors are
important in determining trade
• Location
• Topography
• Climate
• Sources of Energy
• Non-fuel Minerals
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Location
 Political Relationships
 Austria took advantage of its location to
 Increase trade with the East.
 Become the principal financial intermediary between
Western and Eastern Europe.
 Strengthen its role as the regional headquarters for
international businesses operating in Eastern
Europe.
 Passive processing: sending partially made products
to Eastern Europe for finishing and then r-importation
to Austria
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Trade Relationships
 Geographical proximity
Often the major reason for trade
between nations.
Delivery faster, freight costs lower
Major factor in formation of trade
groups such as EU, EFTA, and
NAFTA
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Topography
 The surface features of a region
 Differences in topography may require
products to be altered
 Cake mixes
 Internal combustion engines
 Includes
 Mountains and Plains
 Deserts and Tropical Forests
 Bodies of Water
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Mountains and Plains
 Mountains Divide
Markets in
 Spain
 Switzerland
 China
 Colombia
 Population
Concentration
 Mountains also
create
concentrations of
population
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Deserts and Tropical Plains
 Deserts and
Tropical Forests
 Separate markets
Increase the
cost of
transportation
Create
concentration
s of
population
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Deserts
 Australia
Continent the size of the U.S. but with
only 19 million inhabitants.
Population concentrated
Along the coastal areas in and
around the state capitals.
In the southeastern fifth of the
nation
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Tropical Forests
 Tropical Rain Forests
 Brazilian Amazon basin
Occupies one-half of Brazil
Four percent of population
 Canadian Shield
A massive area of bedrock covering
one-half of Canada’s land mass
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Bodies of Water
• Attracts people and facilitates
transportation
• Inland waterways
– Provide inexpensive access to markets
– Rhine Waterway
• Main transportation artery of Europe
• Carries a greater volume of goods than
do the combined railways that run parallel
to it
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Bodies of Water
 Other Significant Waterways
 The Amazon River in South America
 The Tigris-Euphrates (Iraq), the Ganges
(India), and the Indus (India) Rivers is
Asia.
 The Great Lakes--St. Lawrence and the
Mississippi River in the United States.
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Outlets to the Sea
• Permit low-cost transportation of
goods and people from a country’s
coast to its interior
• Africa has 14 of world’s landlocked
developing countries
– Must construct costly, long truck routes and extensive
feeder networks
– Port countries exert considerable political influence
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Climate
 Climate (temperature, precipitation, and
wind)
 the most important element of physical
forces
 Sets the limits on what people can do both
physically and economically
• Climate has some influence on economic
development
• Climate can impede distribution
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Natural Resources
 Anything supplied by nature on which
people depend.
Principal types of natural resources
important to businesspeople include
Energy
Non-fuel minerals
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Sustainable Business
• An economic state in which the
demands placed upon the
environment by people and commerce
can be met without reducing capacity
of environment for future generations
• Three characteristics of sustainable
business practices
– Limits
– Interdependence
– Equity in distribution
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Stakeholder Based View
Insert Fig 7-16
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The Company in a Societal Context
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