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Natural Resources and Environmental Sustainability
McGraw-Hill/IrwinInternational Business, 11/e Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved.
chapter seven
7-3
Learning Objectives
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
7-4
Why Switzerland Makes Watches
• Mostly mountainous• Close to populated lowlands of
Western Europe• Transportation across mountains
expensive• Has no mineral resources
7-5
Natural Resources
Location• Topography• Climate• Sources of Energy • Non-fuel Minerals• Environmental sustainability
7-6
Location
Political RelationshipsAustria 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
7-7
Trade Relationships
Geographical proximityOften the major reason for trade
between nations.Delivery faster, freight costs lowerMajor factor in formation of trade
groups such as EU, EFTA, and NAFTA
7-8
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
7-9
Mountains and Plains
Mountains Divide Markets in Spain Switzerland China Colombia
Population Concentration
Mountains also create concentrations of population
7-10
Deserts and Tropical Plains
Deserts and Tropical ForestsSeparate markets
Increase the cost of transportation
Create concentrations of population
7-11
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
7-12
Tropical Forests
Tropical Rain ForestsBrazilian Amazon basin
Occupies one-half of Brazil
Four percent of population
Canadian ShieldA massive area of bedrock covering
one-half of Canada’s land mass
7-13
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
7-14
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.
7-15
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
7-16
Climate
Climate (temperature, precipitation, and wind) the most important element of physical
forcesSets the limits on what people can do both
physically and economically
• Climate has some influence on economic development
• Climate can impede distribution
7-17
Natural Resources
Anything supplied by nature on which people depend.
Principal types of natural resources important to businesspeople include
Energy
Non-fuel minerals
7-18
Energy
• Renewable– Hydroelectric
– Solar
– Wind
– Geothermal
– Waves
– Tides
– Biomass (ethanol)
– Ocean thermal energy
• Non – Renewable
– Petroleum
– Nuclear Power
– Coal
– Natural Gas
7-19
Energy
PetroleumConventional sources - Oil
Estimates of reserves change becauseNew discoveries continue to be made in proven
fields.
Governments open up their countries to exploration and production.
New techniques enable producers to obtain greater output from wells already in operation.
Automated, less expensive equipment lowers drilling costs.
7-20
Energy
• The World – Evolution from 1971 to 2003 of world Total Primary Energy Supply* by Fuel (Mtoe)
7-21
Energy
Petroleum Unconventional sources
Oil sandsLocated primarily in Athabasca,
Alberta, Canada.Oil-bearing shale
Largest source is in Utah, Colorado, and Wyoming.
CoalUsed primarily in South Africa
7-22
Energy
Natural gas
Has been fastest growing source of energy
Nuclear Power Generates little pollution in the
normal process
7-23
Energy
Sources of Renewable Energy
Of the eight types, hydroelectric has had an extensive application (7% of total energy consumption in the world).
– Improved technology has resulted in new support for wind and solar energy
– Solar energy fastest-growing energy technology in the world
7-24
Non-fuel Minerals
Nearly all of the world’s chrome, manganese, platinum, and vanadium are produced by South Africa and the former Soviet Union
7-25
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
7-26
Stakeholder Based View
Insert Fig 7-16
7-27
The Company in a Societal Context