International Business
COURSE OUTLINE
The course is in four parts. In the first we are concerned with the special nature of the international environment and its impact on firm strategy and operations, paying attention to the cultural, social, political and economic complexities of foreign environments. In the second part we consider alternative mechanisms for entering a foreign market, such as exporting, licensing, direct investment and joint ventures, in the search for a balance between opportunity and risk.
Globally operating firms have opportunities to gain economies of scale and scope, in various parts of the value chain. However, they also need to be responsive to differences in national or regional markets. Understanding the relative importance of these two opposing forces in each of their businesses, and devising structures and processes to accommodate to them effectively, are major challenges and our focus in the third part of the course.
For a strategy to be sustainable over time it must be based on durable competences, in the form of organizational architecture, processes and culture, or intellectual capital. This is the focus of the final section of the course.
The course uses a variety of industry, company and national settings to simulate the flavor of the international environment.
OBJECTIVES
The objectives of the course are:
- To develop your ability to manage the opportunities & risks of international business.
- To understand the special issues of managing an international organization.
- To reinforce your capacities of strategic analysis and application in an international context.
To help develop your abilities to think outside narrow frameworks and incorporate broad perspectives into decision-making.
COURSE TEXT
The text for the course is Vijay Govindarajan & Anil Gupta, The Quest for Global Dominance, published by Jossey-Bass, San Francisco, 2001. This text provides a good coverage of the issues of international strategy and organization. For an overview the international environment and the instruments and mechanisms of international trade and investment, a useful supplementary text is Charles W. L. Hill, Global Business Today (McGraw-Hill, second edition, 2002).
OUTLINE OF TOPICS
I. INTERNATIONAL EXPANSION: OPPORTUNITY AND RISK
1. Responding to cultural difference
Case: Procter & Gamble Japan (A)
[Procter & Gamble Japan (C) will be handed out in class]
2. Managing foreign currency risks: Transaction, translation and economic exposure
Case: Dozier Industries S-F-163 (Rev.2/02)
3. Analyzing the investment climate in a foreign country
4. Assessing a foreign market
Case: Kenny Rodgers Roasters in China (A)
[Kenny Rodgers Roasters in China (B) will be distributed in class]
5. National competitive advantage
Readings: Michael Porter, "The Competitive Advantage of Nations", HBR Singapore:
F. Wu, "The Asean Economies in the 1990s and Singapore's Regional Role," California Management Review. Other materials on Singapore
II. FOREIGN INVESTMENT: ENTRY AND GROWTH STRATEGIES
6. Evaluating a foreign investment opportunity
Case: PaintCo Brasileira Ltda.
PaintCo worksheet
7. Political risk & social stakeholders
Case: Enron Development Corp: The Dabhol project:
8. International acquisitions
Case: Electrolux: the acquisition and integration of Zanussi
Note on the Major Appliance Industry in 1988
9. The globalization debate
Readings from the Economist, Foreign Affairs, Review of International Political Economy
III. INTERNATIONAL STRATEGIES AND SUSTAINABLE COMPETITIVE ADVANTAGE
10. Dynamics of competition in a globalising industry: the tire industry-1
Cases: Pneumatiques Michelin IA & IB
Pneumatiques Michelin II
11. Dynamics of competition in a globalising industry: the tire industry-2
Case: Pneumatiques Michelin III
12. Regional strategy
Case: Procter & Gamble Europe: Ariel Ultra's Eurobrand Strategy
13. Global latecomers-1
Case: The Acer Group: building an Asian multinational
14. Global latecomers-2
Case: Alibaba.com
15. Nonmarket strategic issues
Case: Shell, Greenpeace and Brent Spar
IV. BUILDING COMPETENCES: ORGANIZATIONAL ARCHITECTURE AND PROCESSES
16. Building competences
Case: Canon: competing on capabilities
17. Sustainable competences
Case: Singapore Airlines in the 90s
18. Intellectual capital in a global corporation
Case: Anderson Consulting (Europe): Entering the Business of Business Integration
19. Organizational architecture and processes
Case: ASEA Brown Boveri
Readings Included in Course Syllabus
1. Ari–o, Africa, JosŽ de la Torre and Peter S. Ring, "Relational Quality: Managing Trust in Corporate Alliances," California Management Review, Vol. 44, No. 1, Fall 2001.
2. David Baron, "China" Ch. 15 in: Business and its Environment. Prentice-Hall, Upper Saddle River, New Jersey. Third edition, 2000.
3. David Baron, "Private Nonmarket Action", Ch. 4 in: Business and its Environment, Prentice-Hall, Upper Saddle River, New Jersey. Third edition, 2000. pp. 90-105
4. Bowman Cutter, W., J. Spero and L. D'Andrea Tyson (2000), "New World, New Deal. A Democratic Approach to Globalization," Foreign Affairs, March/April, pp. 80-98.
5. De Koning, A., Verdin, P. and Williamson, P., "So you want to integrate Europe: how do you manage the process?" European Management Journal, 1997, pp. 252-265.
6. de la Torre, JosŽ and David H. Neckar, "Forecasting Political Risks for International Operations," International Journal of Forecasting, Fall 1988, Vol. 4:2, pp. 221-41.
7. Dollar, David and Aart Kray, "Spreading the Wealth", Foreign Affairs, Vol. 81 No.1, Jan-Feb 2002
8. Hill, Charles, Peter Hwang and W.C. Kim, "An Eclectic Theory of the Choice of International Entry Mode," Strategic Management Journal, March-April 1990, Vol. 11:2, pp. 117-28.
9. Kaplinsky, R. (2001), "Is Globalization All it is Cracked Up to Be?" Review of International Political Economy, Vol. 8, No. 1, Spring, pp. 45-65.
10. Leamer, Edward E. and Storper, M, "The Economic Geography of the Internet Age", Journal of International Business Studies, Vol. 32, No. 4, 2001, pp. 641-665.
11. Lessard, Donald R., "Incorporating Country Risk in the Valuation of Offshore Projects," Journal of Applied Corporate Finance, Vol. 9, No. 3, Fall 1996, pp.52-63.
12. Maister, David, "Balancing the Professional Service Firm", Sloan Management Review, Fall 1982
13. Mathews, "The New Zoology of the International Economy," Ch. 2 in Dragon Multinational, New York: Oxford University Press, 2002
14. B. McKern, "Estimating the Risk of an Exchange Rate Adjustment", Carnegie Bosch Institute IM 95-6
15. Meier, Johannes, Perez, J., M. Johannes and J. Woetzel, "Solving the Puzzle: MNCs in China," McKinsey Quarterly, No. 2, 1995, pp. 20-33.16. Pfeffer, Jeffrey, "Competitive Advantage Through People", California Management Review, 36(2), Winter 1994.
17. Michael Porter, "The Competitive Advantage of Nations", Harvard Business Review, March-April, 1990
18. Root, Franklin R., "Deciding on the Right Entry Mode," chapter 7 in Entry Strategies for International Markets. New York: Lexington Books, 1994, pp. 181-91.
19. Rugman, A.M. and R. Hodgetts (2001), "The End of Global Strategy," European Management Journal, Vol. 19, No. 4, pp. 333-343.
20. The Economist, "Globalisation and Its Critics." Survey, September 27, 2001.
21. The Economist, "Globalisation: Is it at risk?" Special Report, February 2, 2002.
22. Vanderbroeck, Paul, "Long-Term Human Resource Development in Multinational Organizations," Sloan Management Review, Fall 1992, Vol. 34:1, pp. 95-9.
23. Vernon, Raymond, "Big Business and National Governments: Reshaping the Compact in a Globalizing Economy," Journal of International Business Studies, Vol. 32, No. 3, 2001, pp. 509-18.
24. Yip, George. Chapter 7 in: Total Global Strategy: Managing for Worldwide Competitive Advantage, (Business School edition). Englewood Cliffs, NJ: Prentice Hall, 1995.
Reference Books & Papers (on reserve in Jackson Library)
Austin, James E., Managing in Developing Countries. New York: Free Press, 1990
Friedman, Thomas L., The Lexus and the Olive Tree, New York: Farrar, Strauss & Giroux, 1999.
Govindarajan, Vijay & Anil K. Gupta, The Quest for Global Dominance. San Francisco: Jossey-Bass, 2002.
Hill, Charles W. L., Global Business Today, New York: McGraw-Hill, 2nd Edition, 2002
Mathews, John A., Dragon Multinational, New York: Oxford University Press, 2002.
Porter, Michael, "The Changing Patterns of International Competition," California Management Review, Winter 1986, Vol. 28:2, pp. 9-40.
Roos, Johan, Gšran Roos, Nicola C. Dragonetti & Leif Edvinsson, Intellectual Capital. London: MacMillan Press, 1997.
Rugman, Alan M. The End of Globalization, New York: AMACOM/McGraw-Hill, 2001
UNCTAD. World Investment Report, 2001: Promoting the Linkages. Geneva: United Nations Conference on Trade and Development, 2001
Wu, F., "The Asean Economies in the 1990s and Singapore's Regional Role," California Management Review, Vol. 34, No. 1, Fall 1991.
Yip, George. Total Global Strategy: Managing for Worldwide Competitive Advantage, (Business School edition). Englewood Cliffs, NJ: Prentice Hall, 1995.
Other Works in International Business (on reserve)
Aharoni, Yair, The Foreign Investment Decision Process. Boston: Harvard Business School, Division of Research, 1966.
Buckley, Peter J. and Mark Casson, The Future of Multinational Enterprise. New York: Holmes & Meier, 1976.
Caves, Richard, E., Multinational Enterprise and Economic Analysis (2nd ed.). Cambridge: Cambridge University Press, 1996.
Dunning, John H., Multinational Enterprise and the Global Economy. Reading, MA: Addison-Wesley, 1993.
Porter, Michael E., The Competitive Advantage of Nations. New York: Free Press, 1990.
Vernon, Raymond, In the Hurricane's Eye: The Troubled Prospects of Multinational Enterprises. Cambridge, MA: Harvard University Press, 1998.
Economic and Political Environment
Dunning, John H. & Karl P. Sauvant (Eds.), Transnational Corporations and World Development. London & Boston: UNCTAD & International Thomson Business Press, 1996.
Dunning, John H. (Ed.), Governments, Globalization and International Business. Oxford: Oxford University Press 1997
Gladwin, Thomas N. and Ingo Walter, Multinationals Under Fire: Lessons in the Management of Conflict, New York: Wiley, 1980.
Graham, Edward M., Fighting the Wrong Enemy: Antiglobal Activists and Multinational Enterprises. Washington, DC: Institute for International Economics, 2000.
Moran, Theodore H., Multinational Corporations: The Political Economy of Foreign Direct Investment, Lexington, MA: D. C. Heath & Co., 1988.
Rodrik, Dani, Has Globalization Gone Too Far? Washington, DC: Institute for International Economics, 1997.
Strategy, Structure and Process
Bartlett, C.A., and Sumantra Ghoshal, Managing Across Borders. Boston, Mass.: Harvard Business School Press, 1989.
Dowling, Peter, Denice Welch & Randall S. Schuler, International Human Resource Management. Cincinnati: South-Western College Publishing, 1999.
Ghoshal, Sumantra, and D. Eleanor Westney (eds.), Organization Theory and the Multinational Corporation, New York: St. Martin's Press, 1993.
Lasserre, Philippe & Hellmut SchŸtte, Strategies for Asia Pacific. London: Macmillan, 1995
Nohria, Nitin & Sumantra Ghoshal, The Differentiated Network. San Francisco: Jossey-Bass, 1997.
Ozawa, Terutomo, Multinationalism, Japanese Style. Princeton, N.J.: Princeton University Press, 1982.
Porter, Michael E. (ed.), Competition in Global Industries. Boston: Harvard Business School Press, 1986.
Prahalad, C.K., and Yves Doz, The Multinational Mission: Balancing Local Demands and Global Vision. New York: The Free Press, 1988.
Root, Franklin, Entry Strategies for International Markets
Journals
The Journal of International Business Studies
Columbia Journal of World Business
Management International Review
Transnational Corporation
Journal of International Management
The International Executive
Newspapers
Business Week (US or International Edition)
The Economist
The Financial Time
Other Sources
Investing, Licensing and Trading Conditions Abroad
Business International (various specialized editions)
The Economist Intelligence Unit
OECD Economic Surveys
UNCTAD reports
