University of California at Davis
Graduate School of Management
Spring 2004
Adjunct Professor Bart Petrini
bfpetrini@earthlink.net
257 AOB 4; Phone: 752-7371
MGT & MGP 297-1
Management of International Firms
I.
Course Description
This course focuses on the strategic management of firms that conduct business across national
boundaries.
The issues that we explore include:
•
industry and firm-level forces that give rise to global competition
•
the impacts of social, cultural and political forces on multinational firms
•
alternative methods of corporate international expansion
•
methods of organizing and controlling international operations
•
problems and opportunities that middle managers face in international
Assignments
II.
Course Material
Students are required to purchase the following textbook for the course. Additional readings will be made
available during the quarter. Please read and prepare this additional material as well as the material
assigned from the textbook.
Beamish, Paul W., Allen J. Morrison, Philip M. Rosenzweig, and Andrew C. Inkpen. 2000.
International Management: Text and Cases, Fourth Edition. Irwin McGraw-Hill. ISBN # 007-247644-3 (hereafter IM)
The course is structured so that we will discuss theoretical concepts and empirical evidence related to
a topic before analyzing cases on the same topic.
I
I I I . Assignments
a) Prepare required case and reading materials in time for each class meeting, and participate in the
class discussion. Teams will be assigned to make brief in-class presents ions of two cases, one each
from parts A and B of the course (also see note below on "teams").
b) Each class member must submit two written cases that are different from the ones assigned for
team presentation. Specifically, you should submit:
1 case analysis based on eases discussed in Part A of the course
1 case analysis based on cases discussed in Part B of the course
Case analyses are persuasive documents that recommend action to decision makers. I grade them on
thoroughness, persuasive quality, logical consistency of argument, implementation content, evidence
that writers have engaged the course materials, creativity, and quality of writing and presentation. (See
"Written Case Analyses" below, for further detail).
Case analyses are due at the start of the day the case is discussed in class.
c) Final project report.
d) There will be 2 quizzes
IV. Evaluation
Final grades will be based on the following:
2 Quizzes, 10% EACH
20%
Class Participation
20%
Written case analyses (2) 10% EACH
20%
40%
Final project
Total
100%
V. Teams
Participants are required to form six teams of 3-6 members each to work on the final project and
prepare case assignments. Each team will take turns leading the class discussion by presenting their
analyses of two cases, one each from parts A and B of the course during the quarter. Presentations can
range from 15-30 minutes in length with an emphasis on content. No written analysis is required of the
team.
It is expected that teams will meet to discuss every case. Team members remain individually
responsible for contributing to every class discussion. If you cannot prepare for a particular class session,
I will make every effort to avoid calling on you, provided that you notify me in advance in writing or by email. Please also notify me if you must be absent, leave the class early or arrive late for professional
reasons. Please keep such requests to a minimum, however -- abuse of the privilege will result in a reduced
participation grade.
VI.
Written Case Analyses
Each student is required to submit a written analysis of two cases, one each from parts A and B of the
course. Cases chosen for this individual exercise should be different from the ones that are
assigned for team presentation. Written case analyses must be 2 pages long at a maximum, not
including the cover page, with 1 inch margins all around, 12-point type of Times New Roman or
equivalent font, and double spaced. You may include up to 3 exhibits as additional pages. Shorter
submissions are welcome. Longer submissions will be returned unread, for revision. These must be
resubmitted by the next class session, with the original submission attached, in order to obtain credit.
Such revisions do not incur a grade penalty.
I will hold written work to a professional standard of presentation, spelling and English usage. Materials
not meeting such a standard are unacceptable, and will be returned once for revision. Such revision
opportunities are offered at the instructor's option, to address issues of presentation, not substance.
Revised materials not meeting a professional standard will be downgraded accordingly.
The case write-up may take the form of a memorandum to your supervisor if you find this helpful. The
exact format of the analysis is up to you, and may vary depending on the particular context. However, it
should usually contain the following elements:
1) Identify the problem - Identify a particular challenge presented in the case and address your
comments to a particular problem. This is an important step. The value of the remainder of your
analysis hinges on identifying an important problem.
2) Identify potential solutions to the problem - Draw from the case a set of feasible
solutions. This step helps you to limit your analysis to a finite set of choices.
3) Develop criteria for solving the problem - State your approach to solving the problem. What are
the relevant considerations? How do you choose among the alternative solutions? This step allows
you to demonstrate your ability to critically analyze the situation.
4) Apply the criteria to the potential solutions and make your recommendation
Rambling discussions mostly recapping the case are not what is wanted. Half a page at most should be enough
to recap the major issues and identify the problem. About half a page each for the other elements described
above will give you the 2 page analysis required.
VII. Class Discussion
Discussion represents a principal course learning and evaluation mode. Class participation grades will be
assigned based on comments that I record immediately after each session on the quality of each member's
contributions. Note that while regular attendance is a necessary condition for a high participation grade, it is
by no means sufficient; I expect regular, high quality, contributions from each student in the class. High quality
contributions are those which advance the discussion by presenting relevant information, analysis,
interpretation, debate and integrative summaries that support conclusions. Questions pushing for clarification
from other students or the instructor can also be of high value.
VIII. Final Team Project
Each team is required to write a paper based on one of the two projects described below. The paper's
length should not exceed 20 pages excluding exhibits, tables, figures, appendices, covers, executive
summary and references. I value clear, concise analyses - feel free to use less than the maximum
length. Papers are to be double spaced, one-inch margins all around, in 12 point Times New Roman or
equivalent font. Make sure that you number the pages. The paper is due in class on Thursday, March $.
Please feel free to consult with me regarding specific questions about your project. This is not an exam.
You will benefit from linking this project to issues that confront companies in the industry in which you
work or hope to work. I encourage you to submit an outline of your project to me as you progress. I am
happy to review and provide feedback. This may help you structure and focus the paper as well as provide
a better idea of my expectations.
Also, remember to reference the sources from which you draw information. Information sources have
their own biases and assumptions. Citing your sources makes your reader aware of these biases. It also
allows others to assess the assumptions and data quality on which your industry analysis is built.
The following describes the two project options. If neither of the two projects is to your liking and you have
another option in mind, related to the material covered in this course, please come talk to me.
Option I - Market Entry
Select a firm and a country. Conduct an analysis of a proposed investment (real or hypothetical) in a
given country. You will likely need to conduct extensive secondary research. In addition, you are
encouraged to supplement this information with primary information (e.g. talk with managers).
In choosing between a real situation (existing investment) or a hypothetical situation (potential investment),
a hypothetical situation might be easier. Most of this project's value-added is in analyzing an international
market opportunity. A potential problem with projects addressing existing real world situations is that they
can degenerate into a simple reporting of the facts (firm X did this and that). These real world facts might
inadvertently restrict your analysis to only reporting what actually happened. On the other hand, a real-life
situation is worth studying if you can provide analysis beyond the facts on hand, and particularly if the firm
has encountered a particularly unusual or otherwise interesting situation.
Part I - Motivation for Entry
A brief description of the proposed investment, its purpose and location. You may also want to include
industry and company information, which illustrate why the particular market may be of strategic interest
for your company.
Part 2 - Environment
Describe the current market environment of the target nation. Important environmental
categories include:
Economic: How strong is the economy? Is the current infrastructure sufficient? What is the
workforce availability? Are there suitable suppliers available?
Political/Legal: How stable is the current government? Are there government
incentives/disincentives to investment? (e.g. tax holidays)? Regulations which will
affect the investment? (e.g. local content requirements) Currency or other
restrictions?
Culture: Are there different norms? (e.g., typical management styles, attitudes
towards work)
Note: You may find that it is not necessary to cover all of these categories. You may also want to make
these categories specific to the particular firm and/or industry that you are analyzing.
Part 3 - Recommend Whether and How
Given the business environment factors/projections, do you recommend this company proceed with the
investment? Why or why not? If so, how? If not, would you ever proceed with the investment and under what
conditions?
Performance on Parts 1, 2, and 3 will be weighted equally when determining your grade.
Option 2 - Corporate Strategy
Select an industry and focus on a firm that is engaged in `global competition'. You can interpret the
term `global competition' in a very broad sense. Examples include an American firm that competes
against a European firm, or a Japanese firm that competes against another Japanese firm at home
and in the United States. Check with me if you want to verify your choice of industry and company.
Part 1 - Environmental Analysis
Analyze the industry that you chose. A careful and comprehensive industry analysis will provide
information about key success factors, competitors' strengths and weaknesses, current industry trends, and
the forces that will shape competition in the future. For a framework, you may want to apply Porter's
"Five-Forces" model. Porter's model suggests that the following five factors determine an industry's
attractiveness and are key considerations when forming firm strategies:
Competition:
•
•
•
Who are the competitors in the market?
What are their strengths and weaknesses?
What are the key success factors?
Substitutes:
•
•
Are there any substitutes for the product?
What advantage does the product have over these substitutes?
Entry barriers (threats from new entrants):
•
•
Are there any barriers to entry in this industry?
What are they?
Buyers:
•
•
•
Who are they?
What pressures do they put on industry participants?
What is the nature of demand?
Suppliers:
•
•
What are the factor inputs and what does this mean for production?
What kind of pressures can input suppliers put on industry participants?
Note: when designing future strategies it is important to analyze the above forces in the current
environment and also pay attention to how they are expected to change in the future.
Part 2 - Strategy Recommendation
Make specific recommendations for the global strategy of your firm. In settling on
recommendations, what will count is the logic of the argument. A sound argument will
incorporate many of the points raised in the industry analysis, highlight why particular
alternatives are and are not chosen, and state any assumptions that are made.
Do not forget to consider the expected actions or reactions of competitors or other interested parties (e.g.,
governments or labor unions). It is unlikely that these actors will blindly go about "business as usual" once
confronted by your strategy. Pay some attention to what their reaction will likely be and what, in turn, this
means for your strategy.
Also, do not forget that your firm has strengths and weaknesses. Your goal is to strengthen the firm's
position but this will be constrained by the firm's current capabilities and weaknesses.
Performance on Parts 1 and 2 will be weighted equally when determining your grade.
IX.
Topics and Assigned Readings
A. The Internationalization Process
Class 1a Course Introduction
Read: IM: Chapter 1
Class 1: The Global Business Environment
Read: IM: Chapters 2 and 3
Class 2a Internationalization Process
Case: Mercedes Comes to Alabama (IM: Chapter 25)
Case Questions: Evaluate the shift in strategy that Mercedes-Benz announced in 1993. Evaluate MercedesBenz's actions following entry into Alabama. What is you overall: evaluation of Mercedes-Benz's experience in
Alabama? If you rate it a success, why? How could it have been improved?
Class 2b: Global Sourcing Strategy
Read: IM: Chapter 5
Case: Hush Puppies Chile (IM: Chapter 22)
Case Questions: How successful has Hush Puppies been domestically? Why? What are the major alternatives
facing the company? What are the pros and cons of each alternative?
Class 3a: M o d e s o f Entry into Foreign Markets
Read: IM: Chapter 4, 6, and 7
Class 3b: Managing Export Operations
Case: Selkirk Group in Asia (IM: Chapter 18)
Case Questions: What is your assessment of the company's current competitive strategy and position, both in
Australia and across Asia? How well does the current export organization and approach to managing export
operations support the existing strategy for Asia? What are the company's current strategic options in Asia and
what is your assessment of the prospects for different options? What recommendations would you make to
Bernie Segrave, the Managing Director of Selkirk Group, with respect to the company's competitive strategy
and organization for the Asian region?
Class 4 a : Licensing
Case: Cameron Auto Parts (A) (IM: Chapter 21)
Case Questions: Should Cameron have licensed McTaggart or continued to export? Was McTaggart a
good choice for licensee? Was the royalty rate reasonable?
Class 4b: Designing Joint Ventures
Case: Nora-Sakari: A Proposed Joint Venture in Malaysia (IM: Chapter 24)
Case Questions: Why have the negotiations so far failed to result in an agreement? Is the formation of the
joint venture between Nora and Sakari the best option for both companies to achieve their respective
objectives? As Zainal, what would you do to ensure that Nora fulfils the TMB contract? If Zainal decides to
renegotiate (and assuming Kuusisto agreed), how should he restructure the terms of the deal?
Class 5a: Managing Joint Ventures
Case: Matra-Ericsson Telecommunications 1990 (IM: Chapter 29)
Case Questions: Why did Matra and Ericcson form a joint venture? What caused the initial conflict
between the partners? As Lars Jarnryd, you have not been allowed to assume your management
position at MET. What would you do? From the longer term perspective, what should be done to ensure
that both partners maximize their benefits from the joint venture?
Class5b: The Evolving Multinational
Read: IM: Chapter 10
Case: Honeywell Inc. and Global Research & Development (IM: Chapter 33)
Case Questions: What are the important reasons for and against distributing R&D capabilities around the
world? How should Honeywell build effective global R&D capabilities? How quickly should HTC move to
establish international locations for R&D? What are the key organizational, managerial, and technological
challenges in moving from centralized R&D to more distributed global R&D? What advice would offer to
the HTC Vice President?
B. Coordination, Control and Decision Making in International Firms
Class 6a: Globalization versus local needs (A)
Read: IM: Chapter 8
Class 6b: Globalization versus local needs (R)
Case: Samsung China: The Introduction of Color TV (IM: Chapter 20)
Case Questions: What major problems does Samsung face as it tackles the television market in China?
How would you segment the Chinese TV market in terms of product, customers and competition? Which
market segment should Samsung target? What marketing strategy would you suggest Samsung
adopt?
Class 7a: Globalization and Internal Organization (A)
Read: IM: Chapter 9
Class 7b: Globalization and Internal Organization (B)
Case: GLOBAL Enterprises, Inc. (IM: Chapter 32)
Case Question: How would you describe GLOBAL's strategy? How would you describe GLOBAL's formal
and informal organization? What are the strengths and weaknesses of GLOBAL's organization? What
action would you recommend for Jennifer Copperman-William's? Should she go ahead with her
prepared statement? What, if anything, should she modify?
Class 8a: Managing Government Intervention
Read: IM: Chapter 12
Case: Enron Development Corporation (IM: Chapter 41)
Case Questions: How important is India to Enron? Why has this situation occurred? Should EDC have
predicted that the Dabhol project would be cancelled? Consider the following three parties: (1) Rebecca
Mark and Robert Sutton of EDC; (2) Gopinath Munde, Deputy Chief Minister of Maharashtra with direct
responsibility for the state energy ministry; and (3) Ajit Nimbalkar, Chairman and Managing director of
the Maharashtra State Energy Board. What are the bargaining positions of the three parties? What
should Rebecca Mark do? If the contract is renegotiated, what do the Government and EDC need to
achieve?
Class 8b: Stakeholders in the International Firm
Case: The Brent Spar Platform Controversy (A) (IM: Chapter 43)
Case Questions: Greenpeace has just boarded your oil platform. What are your options? What are the
pros and cons for each option? Who are the different players influencing Shell's actions? Are all
stakeholders equally important? Why did Greenpeace decide to board this platform? What should Shell
have done to avoid this situation?
Class 9a: The Global Manager (A) IM: Chapters 11 and
13
Class 9b: The Global Manager (B)
Case: Bristol-Compressors, Asia-Pacific (IM: Chapter 35)
Case Questions: How important is the Asia-Pacific region to the future of Bristol compressors? To
what do you attribute Bristol Compressors' performance problems in the Asia-Pacific? Which option
should Woods pursue: develop managers from within, hire top-flight locals, or flood the market with
expatriates? What criteria are most important in making this decision?
Class 10: Course Wrap Up
Final Week: Team project report due in class.