3 Teaching Methodology Combination of lectures and cases Lectures on Tuesdays, Cases on ThursdaysCases based on lecture topics used to reinforce learningRequired Text: International Management, Beamish, Morrison, Inkpen & Rosenzwieg, 2003, 5th edition
4 Student Evaluation Individual work – Case write-ups (two) – 35% Group Consulting Report (one) – 45%Individual class participation (ongoing) – 20%No mid-term test or final exam – poor way to evaluate performanceIntegrative Consulting Report - a much better way of measuring understanding
5 Course Purposes Course Perspective: Globalization is the pervasive force in our world and the mechanism through which globalization occurs is the MNCImportant to examine and understand how and why MNCs are created and what they do
6 Course PurposesExamine and understand how to manage MNCs, globalization and the associated functions of international businessExamine and understand the forces that affect MNC operations and performanceLearn how to decide when and why a firm should internationalize and the optimal place to go
7 RationaleFirms become international in scope for a variety of reasons:Desire for continued growthUnsolicited foreign ordersDomestic market saturation,Potential to exploit a new technological advantageThe dominant reason relates to performance
8 Process Internationalization is the process by which Firms increase their awareness of the influence of international activities on their futureEstablish and conduct transactions with firms from other countries.
9 ProcessInternational transactions can influence a firm’s future in both direct and indirect ways. Business decisions made in one country, regarding such things as foreign investments and partnership arrangements, can have significant impact on a firm in a different country—and vice versa. The impact of such decisions may not be immediately and directly evident.
10 ProcessDevelopment of an awareness and appreciation for the role of foreign competition becomes integralThis is key due to the “Liability of Foreignness” firms often face when entering new marketsOpportunities exist to turn the liability into an asset.
11 Dimensions of Internalization Internationalization has both inward-looking and outward-looking dimensions.The outward-looking perspective incorporates an awareness of the nature of competition in foreign markets
12 Dimensions of Internalization (cont.) Includes the following modes of activities:Exporting.Acting as licensor to a foreign company.Establishing joint ventures outside the home country with foreign companies.Establishing or acquiring wholly owned businesses outside the home country.
13 Dimensions of Internalization (cont.) Similar to the Sequential Approach theory of internationalization:As firms build confidence, experience and success:Existing BusinessNew BusinessPartially OwnedWholly Owned(1) Capital Participation(2) Joint Venture(3) Acquisition(4) Greenfield
14 Dimensions of Internalization (cont.) Not all firms do or can follow the sequential process of internationalization:Dependent upon industrial and environmental conditionsNeed to coordinate operations in many countries and many value chain activities
15 Dimensions of Internalization (cont.) Internationalization affects firms in equally important ways from an inward perspective.The related modes of activity include:Importing/sourcing.Acting as licensee from a foreign company.Establishing joint ventures (JVs) inside the home country with foreign companies.Managing as the wholly owned subsidiary of a foreign firm
16 Dimensions of Internalization (cont.) Many firms have an appreciation of the global environment but do not seek out international opportunities in countries that differ greatlyQuestions to explore:What products/services can be “global”?How can a firm know if it has a globally competitive product?How can the firm successfully take a product global?
17 Dimensions of Internalization (cont.) Internationalizing isComplexDifficultRiskyUncertainTime consumingBut it can be done and have huge rewards!
18 Course Content Overview The Global Business EnvironmentThe World of International TradeLearning how to find an appropriate location for international expansionWhat makes risks, opportunities, compatibility etc.Understanding the international trade environmentSTEP analysisComparative and competitive advantage
19 Course Content Overview Managing Export OperationsTo where should the firm expand?What is the best way to enter a market?
20 Course Content Overview Global Sourcing StrategyIs it better to import a good/service or purchase or produce locally?From where?Degree of integration vs. importingOrganization structure – one plant or many, related or autonomous?Where should R&D be located?
21 Course Content Overview LicensingOpportunity to leverage technology without costs of production and distributionCore vs. peripheryRisks?
22 Course Content Overview The Design and Management of International Joint VenturesWhy do them?Advantages vs. risksTypes of cooperationGuidelines for successful design and management
23 Course Content Overview International Strategy FormulationHow do MNCs formulate product/market strategy to maximize international competitiveness?Conflicting pressures to achieve global efficiencies and be locally responsiveKeeping on track despite all the environmental influences and uncertainty
24 Course Content Overview (cont.) The Evolving MultinationalHow do MNCs change over time and in response to environmental factors?“Base-of-the-pyramid” marketing
25 Course Content Overview (cont.) The Global ManagerManaging the New Global WorkforceDeveloping and leveraging global strategic skillsManage change, transition, cultural diversityWork in flexible structuresFostering and leveraging diversity
26 Course Content Overview (cont.) Strengthening International Government RelationsNon-market strategy – a key resource in overcoming the liability of foreignnessOpportunities exist to turn the liability into an asset