The automobile industry has long captured America’s imagination. Not only are cars an iconic part of national culture, but they are also essential for moving around – unless you happen to live in New York City.

The auto industry is dominated by a handful of large firms. Toyota, Volkswagen, Daimler, General Motors (GM), Ford, Honda, Fiat Chrysler, Nissan, and BMW are the global sales leaders. Each firm produces a wide array of vehicles: small and large sedans, minivans, SUVs, and pickups. And then there are specialty producers such as Tesla and Lamborghini.

After decades of roaring growth, the “East Asian Miracle” – as touted in a 1993 book published by the World Bank – seemed to be in full swing. Yet a mere four years later, the region was engulfed in chaos. What became known as the Asian Financial Crisis unfolded in July 1997. As foreign exchange reserves were depleted, the Bank of Thailand was forced to let the Thai baht float freely. The currency immediately depreciated by 21%. By January 1998, the baht was 54% weaker against the dollar than it had been six months earlier. The turmoil was not restricted to Thailand; Singapore, Malaysia, Indonesia, and the Philippines also experienced stresses on their balance of payments as capital flows reversed course, with net flowing out rather than in. In November 1997, the Bank of Korea floated its currency after years of keeping its currency, the won, tightly managed against the dollar. By January 1998, the won had fallen in value by 39%. Figure 18.1 tells the story graphically.

In June of 2016, voters in the United Kingdom narrowly approved a referendum on leaving the European Union (EU), a common market wherein labor, capital, and goods and services are free to move between countries without impediment. The vote in favor of Britain’s exit – or “Brexit” – set in motion a process by which the country would leave the EU within two years.

When you switch on your smartphone, you are probably not aware of all the minerals that have been dug up around the world to make the electronics work. An iPhone screen has been polished with lanthanum and cerium, a magnet inside is made with neodymium and praseodymium, the circuitry in semiconductors uses arsenic metals, rechargeable batteries depend on cadmium, and light bulbs and heating elements rely on tungsten. It turns out that these so-called “rare earth” minerals are essential for modern life and are used in products ranging from smartphones to MRI machines to advanced defense technology to hair dryers.

You may not know it, but the tomato has always been the subject of controversy. Botanists debate whether the tomato is a vegetable or a fruit (it is actually a fruit). Linguists debate whether it is pronounced as to-may-toe or to-mah-toe (who cares!). Meanwhile, agricultural economists debate where the best place to produce this nutritious and delicious crop might be.

In September 2008, the oldest investment bank on Wall Street, Lehman Brothers, declared bankruptcy. Immediately, the world’s financial system seized up. Hundreds of billions of dollars’ worth of financial assets were frozen in place, the value of securities made uncertain, and the solvency of seemingly rock-solid financial institutions called into question. By the end of 2008, the United States’ economy was in freefall, shrinking at an annualized rate of 8%. Growth rates in other major industrialized economies also plummeted as well. The recession was so deep, and the recovery so labored that it took more than a decade for output to return to full employment levels.

We live in an era of globalization, in which most producers operate internationally on a global scale. We, as consumers, are affected by events taking place on distant shores – to say we live in an age of interconnectedness is a cliché, but it is still true. Just check out the labels on the clothes in your closet. Your shirts, sweaters, jackets, and jeans were probably not produced in the United States. More likely, they were made in China, Bangladesh, Vietnam, India, Sri Lanka, or Mexico. The same is true for your shoes.

We live in an era of globalization, in which most producers operate internationally on a global scale. We, as consumers, are affected by events taking place on distant shores – to say we live in an age of interconnectedness is a cliché, but it is still true. Just check out the labels on the clothes in your closet. Your shirts, sweaters, jackets, and jeans were probably not produced in the United States. More likely, they were made in China, Bangladesh, Vietnam, India, Sri Lanka, or Mexico. The same is true for your shoes.

Communicating Across Cultures – Bridging and Integrating. Bridging and integrating are, respectively, the second and third stages of the Map-Bridge-Integrate (MBI) model. There are three skills important to effective communication in a cross-cultural setting: engaging, decentering, and recentering. The three skills help improve all communication anywhere. An important theme is that mindful global leadership requires taking account of the context of the interaction. In interactions within a single culture, people generally operate with the same set of background assumptions often without people even being aware that they are doing so. The more culturally diverse the setting, the more difficult it is to recognize the assumptions, and the more explicit they should be. Although there are many ways that cross-cultural interaction can go wrong, they tend to fall into two basic patterns: destroying and equalizing. Much cross-cultural communication happens over email, chat, phone, video call, or other technology. Virtual communication is addressed.

High-Performing Global Teams. Most work in organizations today is done in teams. Teams in international management are highly complex, and leaders and members of international teams must start by excelling at the basics of teamwork. These basics include the team’s desired design including composition and roles, team processes and climate (task, interpersonal, learning, psychological safety, trust, cohesion), and outcomes. Global teams additionally have two elements that tend to affect their operations: culturally diverse composition and geographically distributed environment. Teams must be adept at leveraging diversity and collaborating virtually. They must interact to create value from the diversity and not destroy that value. Working virtually, they must maximize their effectiveness by ensuring they match the complexity of their communication with richness of the media that they use.

In late 2017, the US economy was nearing full employment. Unemployment was at a 40-year low of 4.2%, yet President Trump and the Republican-controlled Congress embarked upon a policy of tax cuts. The Federal Reserve, seeking to avoid overheating the economy, tightened monetary policy, raising interest rates. In other words, the two policies were working in opposite directions. The dollar rose in value, making US exports more expensive to foreigners, making imports cheaper to Americans, and thus worsening the trade deficit. How and why these events played out motivates the development of the model in this chapter.

For as long as people have roamed the earth, there has been a fear of strangers. The term xenophobia comes from Ancient Greek and combines xeno (meaning foreign or alien) and phobia (meaning fear). In particular, it is common for natives of a country – whether today or in the distant past – to worry about immigration, especially illegal immigration.

The distribution of the world’s natural resources is highly unequal. Norway is blessed with an abundance of oil, making it among the richest countries in the world, whereas its equally cold neighbor Finland has to live by its wits without such resources. Much of Algeria and Namibia is arid desert, whereas Brazil and Indonesia are lush and tropical. Chile is loaded with copper and Australia with iron ore and coal, while South Korea and Bangladesh are bereft of any natural resources.