Multinational Management Learning Guide

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Gaining and Sustaining Competitive Advantage

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Multinational Management

 

Rationale and Objectives

 

 

 

This course provides a comprehensive introduction to issues and challenges for managing a multinational workforce in light of an organization’s strategic objectives and the larger global environment in which multinational organizations operate. We will investigate techniques and strategies for managing performance in multinational settings to insure effective and efficient performance. Topics include cross-cultural teams and leadership and international dimensions of human resource management. The structure of the course consists of one lecture and two discussion sections per weekly course meeting. Lectures will be based on the required text and will provide the basic conceptual background for the course. Once per week, individual students will make a presentation and lead discussion of assigned readings about the practical realities of international management. In addition to class participation, students will be expected to write an in-depth case study.

 

The objectives of the course are to:

1. Review an organization or current business situation.

2. Identify and develop a situation statement requiring a proposed solution.

3. Identify specific organization activities/functions affected by the proposed solution.

4. Identify and utilize primary (proprietary) and secondary (public) sources of information relevant to the business situation being studied.

5. Process the foundational components contributing to the preparation of the final recommended solution.

6. Prepare the final recommended solution.

 

 

Learning Outcomes

 

Upon successful completion of this course, the student will be able to:

1. Understand the forces that drive international trade and the reasons why governments regulate it

2. Evaluate the reasons for companies to invest abroad or form strategic alliance

3. Understand the challenges of globalization for MNCs

4. Assess the potential advantages for global firms

5. Evaluate the structures and strategies which may lead to global success by

  • Demonstrating skills useful in finding and analyzing information needed to make global marketing management decisions.
  • Using the communication skills needed by managers to function effectively in the global business world.
  • Appreciating the roles of formal analysis and creative work in approaching global marketing problems.
  • Analysing the origins, evolution and structure of trade strategies leading to trade agreements.
  • Evaluating the impact of global business on national economies and individual companies.
  • Applying the principals of currency exchange to rate problems and opportunities in international trade.
  • Comparing and contrast the economic advantages and disadvantages of increased foreign trade activities.
  • Assessing corporate functional areas of management, marketing, accounting, HRM and finance related to international business
  • Analysing corporate policies for strengths and weaknesses in terms of economic, political and cultural factors.
  • Recommending appropriate global resource allocation policies and strategies multinational business environment


 

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Global Economy

 

Tutorials

 

Readings

The world economy can be evaluated in various kind of ways: depending on the model used, and this valuation can then be represented in (for example, in 2006 US dollars). It is inseparable from the geography and ecology of Earth, and is therefore somewhat of a misnomer, since, while definitions and representations of the "world economy" vary widely, they must at a minimum exclude any consideration of resources or value based outside of the Earth. For example, while attempts could be made to calculate the value of currently unexploited mining opportunities in unclaimed territory in Antarctica, the same opportunities on Mars would not be considered a part of the world economy—even if currently exploited in some way—and could be considered of latent value only in the same way as uncreated intellectual property, such as a previously unconceived invention.

Transatlantic Leadership for a New Global Economy

Beyond the minimum standard of concerning value in production, use, and exchange on the planet Earth, definitions, representations, models, and valuations of the world economy vary widely.

It is common to limit questions of the world economy exclusively to human economic activity, and the world economy is typically judged in monetary terms, even in cases in which there is no efficient market to help valuate certain goods or services, or in cases in which a lack of independent research or government cooperation makes establishing figures difficult. Typical examples are illegal drugs and other black market goods, which by any standard are a part of the world economy, but for which there is by definition no legal market of any kind.

However, even in cases in which there is a clear and efficient market to establish a monetary value, economists do not typically use the current or official exchange rate to translate the monetary units of this market into a single unit for the world economy, since exchange rates typically do not closely reflect worldwide value, for example in cases where the volume or price of transactions is closely regulated by the government. Rather, market valuations in a local currency are typically translated to a single monetary unit using the idea of purchasing power. This is the method used below, which is used for estimating worldwide economic activity in terms of real US dollars. However, the world economy can be evaluated and expressed in many more ways. It is unclear, for example, how many of the world's 6.8 billion people have most of their economic activity reflected in these valuations.

 

See also

 

External links

 

World Economic Outlook:

 

 

 

Foundations of Multinational Management

 

Tutorials

 

Readings

 

International Corporate Social Responsibility

 

Corporate social responsibility (CSR, also called corporate conscience, corporate citizenship, social performance, or sustainable responsible business/ Responsible Business)[1] is a form of corporate self-regulation integrated into a business model. CSR policy functions as a built-in, self-regulating mechanism whereby a business monitors and ensures its active compliance with the spirit of the law, ethical standards, and international norms. The goal of CSR is to embrace responsibility for the company's actions and encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere who may also be considered as stakeholders.

The term "corporate social responsibility" came into common use in the late 1960s and early 1970s after many multinational corporations formed the term stakeholder, meaning those on whom an organization's activities have an impact. It was used to describe corporate owners beyond shareholders as a result of an influential book by R. Edward Freeman, Strategic management: a stakeholder approach in 1984.[2] Proponents argue that corporations make more long term profits by operating with a perspective, while critics argue that CSR distracts from the economic role of businesses. Others argue CSR is merely window-dressing, or an attempt to pre-empt the role of governments as a watchdog over powerful multinational corporations.

CSR is titled to aid an organization's mission as well as a guide to what the company stands for and will uphold to its consumers. Development business ethics is one of the forms of applied ethics that examines ethical principles and moral or ethical problems that can arise in a business environment. ISO 26000 is the recognized international standard for CSR. Public sector organizations (the United Nations for example) adhere to the triple bottom line (TBL). It is widely accepted that CSR adheres to similar principles but with no formal act of legislation. The UN has developed the Principles for Responsible Investment as guidelines for investing entities.

 

See also

 

External links

 

 

Introduction: Defining the Multinational Enterprise

 

Tutorials

 

 

Readings

Globalization or (Globalisation) refers to the increasingly global relationships of culture, people and economic activity. Most often, it refers to economics: the global distribution of the production of goods and services, through reduction of barriers to international trade such as tariffs, export fees, and import quotas. Globalization accompanied and allegedly contributed to economic growth in developed and developing countries through increased specialization and the principle of comparative advantage.[1][2] The term can also refer to the transnational circulation of ideas, languages, and popular culture.

 

Globalization Backfire

 

Opponents alleged that globalization's benefits have been overstated and its costs underestimated. Among other points, they argued that it decreased inter-cultural contact while increasing the possibility of international and intra-national conflict.[3]

 

 

See also
The European Central Bank in Frankfurt, Germany, is the central bank for the Eurozone

 

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Multimedia

 

 

A multinational corporation (MNC) or transnational corporation (TNC), also called multinational enterprise
(MNE)[1], is a corporation or an enterprise that manages production or delivers services in more than one country. It can also be referred as an international corporation. The International Labour Organization (ILO) has definedan MNC as a corporation which has its management headquarters in one country known as the home country and operates in several other countries known as host countries.

 

The first modern MNC is generally thought to be the Dutch East India Company. Nowadays many corporations have offices, branches or manufacturing plants in different countries than where their original and main headquarter is located.

This often results in very powerful corporations that have budgets that exceed some national GDPs. Multinational corporations can have a powerful influence in local economies as well as the world economy and play an important role in international relations and globalization. The presence of such powerful players in the world economy is reason for much controversy.

 

See also

 

External links

 

Theory and History of MNEs

 

Tutorials

 

Readings

Global Competitiveness Index (2008-2009): competitiveness

International trade is the exchange of capital, goods, and services across international borders or territories.[1] In most countries, such trade represents a significant share of gross domestic product (GDP). While international trade has been present throughout much of history (see Silk Road, Amber Road), its economic, social, and political importance has been on the rise in recent centuries.

Industrialization, advanced transportation, globalization, multinational corporations, and outsourcing are all having a major impact on the international trade system. Increasing international trade is crucial to the continuance of globalization. Without international trade, nations would be limited to the goods and services produced within their own borders.

International trade is, in principle, not different from domestic trade as the motivation and the behavior of parties involved in a trade do not change fundamentally regardless of whether trade is across a border or not. The main difference is that international trade is typically more costly than domestic trade. The reason is that a border typically imposes additional costs such as tariffs, time costs due to border delays and costs associated with country differences such as language, the legal system or culture.

Another difference between domestic and international trade is that factors of production such as capital and labor are typically more mobile within a country than across countries. Thus international trade is mostly restricted to trade in goods and services, and only to a lesser extent to trade in capital, labor or other factors of production. Trade in goods and services can serve as a substitute for trade in factors of production.

Instead of importing a factor of production, a country can import goods that make intensive use of that factor of production and thus embody it. An example is the import of labor-intensive goods by the United States from China. Instead of importing Chinese labor, the United States imports goods that were produced with Chinese labor. One report in 2010 suggested that international trade was increased when a country hosted a network of immigrants, but the trade effect was weakened when the immigrants became assimilated into their new country.[2]

International trade is also a branch of economics, which, together with international finance, forms the larger branch of international economics.

 

See also

 

 

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 The Causes of Inflation

 

 

 

Strategy Formulation for Multinational Companies

 

Tutorials

 

Readings

 

Process of Strategic Management

 

Strategic management is a field that deals with the major intended and emergent initiatives taken by general managers on behalf of owners, involving utilization of resources, to enhance the performance of firms in their external environments.[1] It entails specifying the organization's mission, vision and objectives, developing policies and plans, often in terms of projects and programs, which are designed to achieve these objectives, and then allocating resources to implement the policies and plans, projects and programs. A balanced scorecard is often used to evaluate the overall performance of the business and its progress towards objectives. Recent studies and leading management theorists have advocated that strategy needs to start with stakeholders expectations and use a modified balanced scorecard which includes all stakeholders.

Strategic management is a level of managerial activity under setting goals and over Tactics. Strategic management provides overall direction to the enterprise and is closely related to the field of Organization Studies. In the field of business administration it is useful to talk about "strategic alignment" between the organization and its environment or "strategic consistency." According to Arieu (2007), "there is strategic consistency when the actions of an organization are consistent with the expectations of management, and these in turn are with the market and the context." Strategic management includes not only the management team but can also include the Board of Directors and other stakeholders of the organization. It depends on the organizational structure.

“Strategic management is an ongoing process that evaluates and controls the business and the industries in which the company is involved; assesses its competitors and sets goals and strategies to meet all existing and potential competitors; and then reassesses each strategy annually or quarterly [i.e. regularly] to determine how it has been implemented and whether it has succeeded or needs replacement by a new strategy to meet changed circumstances, new technology, new competitors, a new economic environment., or a new social, financial, or political environment.” (Lamb, 1984:ix)[2]

 

Processes of strategy formulation and implementation (Source: based on Christensen and Dann, 1999)

 

See also

 

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Multinational Strategy and Structure for E-Commerce and Small Businesses

 

Tutorials

Readings

Porter’s four corners model is a predictive tool designed by Michael Porter that helps in determining a competitor’s course of action. Unlike other predictive models which predominantly rely on a firm’s current strategy and capabilities to determine future strategy, Porter’s model additionally calls for an understanding of what motivates the competitor. This added dimension of understanding a competitor's internal culture, value system, mindset and assumptions help in determining a much more accurate and realistic reading of a competitor’s possible reactions in a given situation.

 

Four Corner’s Analysis

 

 

See also

 

The diamond model is an economical model developed by Michael Porter in his book The Competitive Advantage of Nations,[2] where he published his theory of why particular industries become competitive in particular locations.Afterwards, this model has been expanded by other scholars.

 

The Porter diamond[

 

 

See also

 

 

Introduction: recent trends in Globalization
Introduction to the economics of corporate strategy including a review of economic theories of the firm

Theory & Management Strategy: the multinational firm
Why do diversified, i.e. multi-business, firms exist? How can the economics of the multi-business firms be related to
(capital-)market imperfection and development of unique assets within the firm?

The theory of the MNE: recent advances. Why and how do firms invest in other countries? Specific attention is devoted to real option theory and foreign direct investment (FDI) under uncertainty.

Globalization and strategies of MNEs in the European Union: new business development strategies
The theory of the MNE: recent advances. Why and how do firms invest in other countries? Specific attention is devoted to real option theory and foreign direct investment (FDI) under uncertainty.

Discusses how to reduce the risk of failure of innovations in global markets where innovation is an important component of MNEs long-term strategy. Which modes should be selected to reduce the risk of failure when entering new markets?

 

 

Electronic commerce, commonly known as e-commerce, ecommerce or e-comm, refers to the buying and selling of products or services over electronic systems such as the Internet and other computer networks. However, the term may refer to more than just buying and selling products online. It also includes the entire online process of developing, marketing, selling, delivering, servicing and paying for products and services. The amount of trade conducted electronically has grown extraordinarily with widespread Internet usage. The use of commerce is conducted in this way, spurring and drawing on innovations in electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. Modern electronic commerce typically uses the World Wide Web at least at one point in the transaction's life-cycle, although it may encompass a wider range of technologies such as e-mail, mobile devices and telephones as well.

 

E-commerce Security Issues

 

A large percentage of electronic commerce is conducted entirely in electronic form for virtual items such as access to premium content on a website, but mostly electronic commerce involves the transportation of physical items in some way. Online retailers are sometimes known as e-tailers and online retail is sometimes known as e-tail. Almost all big retailers are now electronically present on the World Wide Web.

Electronic commerce that takes place between businesses is referred to as business-to-business or B2B. B2B can be open to all interested parties (e.g. commodity exchange) or limited to specific, pre-qualified participants (private electronic market). Electronic commerce that takes place between businesses and consumers, on the other hand, is referred to as business-to-consumer or B2C. This is the type of electronic commerce conducted by companies such as Amazon.com. Online shopping is a form of electronic commerce where the buyer is directly online to the seller's computer usually via the internet. There is often no intermediary service involved, and the sale or purchase transaction is completed electronically and interactively in real-time. However in some cases, an intermediary may be present in a sale or purchase transaction, or handling recurring or one-time purchase transactions for online games.

Electronic commerce is generally considered to be the sales aspect of e-business. It also consists of the exchange of data to facilitate the financing and payment aspects of business transactions.

 

 

Structure your site and assign the correct keyword search types

 

See also

 

External links

 


Management Processes in Strategy Implementation: Design Choices for Multinational Companies

 

Tutorials

 

Readings

Design strategy is a discipline which helps firms determine what to make and do, why do it and how to innovate contextually, both immediately and over the long term. This process involves the interplay between design and business strategy, forming a systematic approach integrating holistic-thinking, research methods used to inform business strategy and strategic planning which provides a context for design. While not always required, design strategy often uses social research methods to help ground the results and mitigate the risk of any course of action. The approach has proved useful for companies in a variety of strategic scenarios.

 

Strategy Maps – how to use the business strategy map concept

 

Design strategy can play an integral role in helping to resolve the following common problems:

1. Promoting the adoption of a technology (Example: Toyota designing the hybrid Prius to resemble the conservative Echo instead of making the Prius look high-tech and adventuresome)

2. Identifying the most important questions that a company's products and services should address (Example: John Rheinfrank of Fitch Design showed Kodak that its disposable cameras didn't exist to replace traditional cameras, but instead to meet specific needs, like weddings, underwater photography and others)

3. Translating insights into actionable solutions (Example: Jump Associates helped Target turn an understanding of college students into a dorm room line designed by Todd Oldham) [1]

4. Prioritizing the order in which a portfolio of products and services should be launched (Example: Apple Inc. laid out the iPod+iTunes ecosystem slowly over time, rather than launching all of its pieces at once)

5. Connecting design efforts to an organization's business strategy (Example: Hewlett-Packard's global design division is focused most intently on designs that simplify technology experiences. This leads to lower manufacturing costs at a time when CEO Mark Hurd is pushing for cost-cutting.)

6. Integrating design as a fundamental aspect of strategic brand intent (Example: Tom Hardy, Design Strategist , developed the core brand-design principle ″Balance of Reason & Feeling″ for Samsung Electronics, together with rational and emotional attributes, to guide design language within a comprehensive brand-design program that inspired differentiation and elevated the company's global image.[2] [3] [4] [5]

 

 

See also

 

 

 

Strategy Implementation and Realisation

 

Implementation Institute

 

Despite the experience of many organizations, it is possible to turn strategies and plans into individual actions, necessary to produce a great business performance. But it's not easy. Many companies repeatedly fail to truly motivate their people to work with enthusiasm, all together, towards the corporate aims. Most companies and organizations know their businesses, and the strategies required for success. However many corporations - especially large ones - struggle to translate the theory into action plans that will enable the strategy to be successfully implemented and sustained. Here are some leading edge methods for effective strategic corporate implementation. These advanced principles of strategy realisation are provided by the Farsight Leadership organization, and this contribution is gratefully acknowledged.

Most companies have strategies, but far fewer achieve them. Various studies support this view, for example:

A Fortune Magazine study suggested that 70% of 10 CEOs who fail do so not because of bad strategy, but because of bad execution. (Source: Why CEOs Fail - R Charan & G Colvin, Fortune Magazine, 21 Jun 1999.)

In another study of 200 companies in the Times 1000, 80% of directors said they had the right strategies but only 14% thought they were implementing them well, no doubt linked to the finding that despite 97% of directors having a 'strategic vision', only 33% reported achieving 'significant strategic success'. (Source: Why do only one third of UK companies achieve strategic success? - I Cobbold & G Lawrie, 2GC Ltd., May 2001.)

The message clear - effective strategy realisation is key for achieving strategic success.

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Organizational Strategy

 

Capabilities: Organizational Strategy

 

Each of these management functions has been the subject of extensive writing and research by scholars and practitioners and has covered in management books.

Since full coverage of each management function is beyond the scope of this thesis, I shall focus only on the factors that are most critical to effective implementation strategy.

 

 

Governments, Governance and Ethics

Tutorials

 

Readings

Corporate governance is the set of processes, customs, policies, laws, and institutions affecting the way a corporation (or company) is directed, administered or controlled. Corporate governance also includes the relationships among the many stakeholders involved and the goals for which the corporation is governed. The principal stakeholders are the shareholders, management, and the board of directors. Other stakeholders include employees, customers, creditors, suppliers, regulators, and the community at large.

 

Corporate Governance Models

 

Corporate governance is a multi-faceted subject.[1] An important theme of corporate governance is to ensure the accountability of certain individuals in an organization through mechanisms that try to reduce or eliminate the principal-agent problem. A related but separate thread of discussions focuses on the impact of a corporate governance system in economic efficiency, with a strong emphasis on shareholders' welfare. There are yet other aspects to the corporate governance subject, such as the stakeholder view and the corporate governance models around the world (see section 9 below).

There has been renewed interest in the corporate governance practices of modern corporations since 2001, particularly due to the high-profile collapses of a number of large U.S. firms such as Enron Corporation and MCI Inc. (formerly WorldCom). In 2002, the U.S. federal government passed the Sarbanes-Oxley Act, intending to restore public confidence in corporate governance.

 

See also

 

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Political Resources on the Net

North Amerisa South America Africa Asia Australia/Oceania Middle East Europe Central Americs

 

Managing People in International Operations

 

Tutorials

 

Readings

 

Differences between domestic HRM and International HRM (IHRM) are summarized below:

1. Domestic HRM is done at national level and IHRM is done at international level.

2. Domestic HRM is concerned with managing employees belonging to one nation and IHRM is concerned with managing employees belonging to many nations (Home country, host country and third country employees)

3. Domestic HRM is concerned with managing limited number of HRM activities at national level and IHRM has concerned with managing additional activities such as expatriate management.

4. Domestic HRM is less complicated due to less influence from the external environment. IHRM is very complicated as it is affected heavily by external factors such as cultural distance and institutional factors

 

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Human Resource Management in Multinational Enterprises

 

In economics, internationalization has been viewed as a process of increasing involvement of enterprises in international markets,[1] although there is no agreed definition of internationalization[2] or international entrepreneurship.[3] There are several internationalization theories which try to explain why there are international activities.

 

Uppsala Model

 

 

See also

 

Managing People

 

 

 

Ethnologue



Understanding Collaborations and Competitors: Comparative Strategic Management and Organisation Design

 

Tutorials


 

Readings

 

Case study and comparative strategic analysis of Toyota and Ryanair

 

Organization design involves the creation of roles, processes, and formal reporting relationships in an organisation. One can distinguish between two phases in an organisation design process: Strategic grouping, which establishes the overall structure of the organisation, (its main sub-units and their relationships), and operational design, which defines the more detailed roles and processes. The field is mainly practice-driven and many consulting firms offer organisation design assistance to managers. However, there is also a substantial academic literature. The most frequently cited book is still Thompson (1967); other key works include Galbraith (1973) and Lawrence & Lorsch (1967).

 

Organization design process

 

It is important to distinguish between organisation design and organisation theory. The latter is a descriptive discipline, mainly focusing on describing and understanding organisational functioning. Organisation design is (as the name suggests) a more normative, design-oriented discipline that aims to produce the frameworks and tools required to create effective organisations.

 

 

Major Multinationals. Conclusion: the Prospects for MNEs

Tutorials

Readings

 

A Closer Look at the Implications of the Current Economy on Relocation in Asia

Major Multinational Companies

 

 

 

Recommended Texts

 

Multinational Management: A Strategic Approach

Multinational Management: A Strategic Approach, 2e
by John. B. Cullen

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Mind Your Manners: Managing Business Cultures in the New Global Europe

Mind Your Manners: Managing Business Cultures in the New Global Europe (Third Edition)
ISBN: 1-85788-314-4
Author: John Mole
Price: $24.95
ISBN: 1-85788-314-4
Pages/Year: 266 pp, paper, 6 x 9, 2003
Publisher: Nicholas Brealey Publishing

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Negotiation: theory

 

America's Chaotic Road to War

 

 

Rating Globalization

Case Studies