2. Natural Resources and Environmental Sustainability McGraw-Hill/Irwin International Business, 11/e Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved. chapter seven

3. 7-3 Learning Objectives  Appreciate the relevance of four elements of geography  Understand the importance of a country’s location in political and trade relationships  Comprehend the importance of inland waterways  Recognize that climate exerts a broad influence on business  Understand why managers must monitor changes in the discovery and the use of energy sources and changes in a nation’s infrastructure  Appreciate the impact of industrial disasters  Describe major issues of the relationship between environmental sustainability and international business  Develop a working definition of a environmentally sustainable business

4. 7-4 Why Switzerland Makes Watches Mostly mountainous Close to populated lowlands of Western Europe Transportation across mountains expensive Has no mineral resources

5. 7-5 Natural Resources Location Topography Climate Sources of Energy Non-fuel Minerals Environmental sustainability

6. 7-6 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

7. 7-7 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

8. 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

9. 7-9 Mountains and Plains  Mountains Divide Markets in  Spain  Switzerland  China  Colombia  Population Concentration  Mountains also create concentrations of population

10. 7-10 Deserts and Tropical Plains  Deserts and Tropical Forests  Separate markets  Increase the cost of transportation  Create concentration s of population

11. 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

12. 7-12 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

13. 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 7-11

14. 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.

15. 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

16. 7-16 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

17. 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

18. 7-18 Energy Renewable –Hydroelectric –Solar –Wind –Geothermal –Waves –Tides –Biomass (ethanol) –Ocean thermal energy Non – Renewable –Petroleum –Nuclear Power –Coal –Natural Gas

19. 7-19 Energy  Petroleum  Conventional sources - Oil  Estimates of reserves change because  New 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.

20. 7-20 Energy The World – Evolution from 1971 to 2003 of world Total Primary Energy Supply* by Fuel (Mtoe)

21. 7-21 Energy  Petroleum  Unconventional sources  Oil sands  Located primarily in Athabasca, Alberta, Canada.  Oil-bearing shale  Largest source is in Utah, Colorado, and Wyoming.  Coal  Used primarily in South Africa

22. 7-22 Energy  Natural gas  Has been fastest growing source of energy  Nuclear Power  Generates little pollution in the normal process

23. 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

24. 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

25. 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

26. 7-26 Stakeholder Based View Insert Fig 7-16

27. 7-27 The Company in a Societal Context