Workshop Articles Summary PDF

Lecture 1: Globalization and Internationalization ================================================= Workshop 1.1: *Paradox Standardisation vs. Localisation / Adaption* (2 articles) ================================================================================ The paradox of **standardization ver...

Lecture 1: Globalization and Internationalization ================================================= Workshop 1.1: *Paradox Standardisation vs. Localisation / Adaption* (2 articles) ================================================================================ The paradox of **standardization versus localization (or adaptation)** is a fundamental challenge faced by businesses operating in international markets. It revolves around finding the optimal balance between maintaining a consistent global strategy (maintaining uniformity across products) and adapting to local market needs. Below is a structured explanation: Ein Bild, das Text, Screenshot, Schrift, Zahl enthält. Automatisch generierte Beschreibung If all 4 on the checklist yes consider global standardisation strategy   There can be elements of standardisation and localisation in the value chain of a company (not black and white) Ein Bild, das Text, Screenshot, Diagramm, Reihe enthält. Automatisch generierte Beschreibung Workshop 1.2: *The State of Globalization in 2023 / Bricks and mortar in a borderless world 2017* (2 Articles) ============================================================================================================== Both articles introduce the concept of **Economic Dislocation and Nationalism, which will hinder globalization movements. However, the 2017 article assumes nationalism and economic inequality will create stronger anti-globalization movements (backlashes). The 2023 article continues on this view, however, clearly states that it hasn\'t dismantled global trade and capital flows as anticipated (in 2017 article)** [Main concepts 2017 article] - **Globalization's Backlash**: Backlash against globalization, driven by nationalism, economic inequality, and anti-immigrant sentiment. This backlash is rooted in both economic dislocation and sociopolitical factors. - **Economic Dislocation**: Globalization has led to job losses in advanced economies, increasing inequality, and a perception that the benefits of global trade primarily favor elites. - **Technological and Structural Changes**: Globalization has transformed into a deeply integrated system, global supply chains of MNEs Making backlash to local supply chain impossible - **Three Future Scenarios**: - \"Muddle Through\" (limited impact of the backlash) - "Irrational Exuberance\" (global trade war and breakdown of international institutions) - \"Billiard Table World\" (cyclical closure and reopening of economies) Most likely scenario [Main concepts 2023 article] - **Resilience of Globalization: Despite the Covid-19 pandemic, Russia-Ukraine conflict, and U.S.-China decoupling, [globalization has shown resilience.] Flows of trade, capital, and information have surpassed pre-pandemic levels.** - **Decoupling Without Deglobalization: Although there is evidence of U.S.-China decoupling, there is no broader fracture of the world economy into rival blocs. [Global flows between countries remain robust].** - **Limited Regionalization: Despite expectations of increased regionalization, data shows that [international flows have not shifted significantly towards shorter distances] or regionally concentrated patterns.** - **Backlash of Globalization not that severe as anticipated in 2017 article** [How MNEs should handle the pressure on globalization and mitigate it:]  Workshop 1.3: *Bell Case: Managing the paradox of globalization and localization (see Workshop 1.1)* ==================================================================================================== **Pressure for localization for Bel** - Local regulations and consumer preferences force Bel to adapt products to local tastes. - Localization increases operational complexity - Distribution networks and supply chains need to be localized to meet local demand efficiently. - Maintaining global brand consistency while adhering to local regulations becomes difficult - The need to ensure that the products align with local cultural values, which can be challenging. - Increased cost associated with developing and marketing products for different local markets **Manage the paradox between localization and globalization** - Bel's portfolio consists of several strong brands, including both global and regional brands. - This diversity allows Bel to cater to both global and local markets simultaneously **How to manage the paradox:** - **Global brands** provide a consistent image and leverage economies of scale. - **Local brands** allow flexibility to adapt to specific market needs without compromising the overall brand identity. - By **strategically utilizing this portfolio**, Bel can balance the need for global consistency with the need for local responsiveness Bel as a **family business** brings advantages and disadvantages when it comes to managing globalization vs. localization strategies Ein Bild, das Text, Screenshot, Schrift enthält. Automatisch generierte Beschreibung Lecture 2: Managing Across Borders in a Socially Responsible Way ================================================================ Workshop 2.1: 2 Articles ======================== **Article \#1:** *The Social Responsibility of Business is to Increase its Profits* - [Summary]: Milton Friedman\'s 1970 article argues that the **sole social responsibility of business** in a free-market system is to **maximize profits** while adhering to legal and ethical standards. He **critiques the concept of \"social responsibility\"** for businesses, claiming it imposes **undemocratic \"taxes\"** by diverting shareholder funds to societal causes, which should be addressed by political mechanisms rather than corporate actions. Friedman asserts that broadening a business\'s role beyond profit-making risks undermining the foundations of a free society and replacing market mechanisms with central control - [Main Ideas]: - Businesses should focus solely on maximizing profits within legal and ethical boundaries. - CSR improperly uses shareholder funds for societal issues, functioning like undemocratic taxation. - Addressing social problems is the role of government, not business. - Expanding business roles undermines free markets and risks central control. - Many CSR actions are self-serving and harm free-market principles in the long term. - Long-Term Consequences: Pursuing social responsibility rhetoric can harm free-market systems by promoting the idea that profit-seeking is immoral, leading to greater government intervention. - [Shareholder Primacy Theory]:  **Article \#2:** *Stockholders and Stakeholders: A New Perspective on Corporate Governance* - [Summary]: The article by Freeman and Reed introduces the stakeholder concept, arguing that **businesses should consider not only stockholders but also stakeholders** who are impacted by or essential to the organization\'s success. They define stakeholders broadly, including employees, customers, suppliers, governments, and activists, and propose a framework for integrating their interests into corporate governance and strategic management. The authors emphasize that **understanding and managing stakeholder dynamics is essential for addressing conflicts and navigating turbulent business environments**. - [Main Ideas]: - Stakeholder Focus: Businesses should consider all groups affected by or essential to their success, not just stockholders. - Definitions: Stakeholders can be broadly anyone with influence or narrowly those critical to survival. - Strategic Management: Boards must balance stakeholder interests and proactively manage conflicts. - Corporate Governance: Stakeholder involvement can improve decision-making if carefully managed. - Dynamic Business Environment: Organizations need innovative management processes to navigate changing stakeholder landscapes and integrate both economic and political considerations into strategy. - [Stakeholder Definition]: A screenshot of a blue and white screen Description automatically generated - [The Role of Stakeholders in Decision-Making]:  Workshop 2.2: *Ethical Concerns at the Bottom of the Pyramid: Where CSR meets BOP* ================================================================================== - [Summary]: The article explores the **ethical dilemmas** of marketing to the **\"Bottom of the Pyramid\" (BOP)**, where **businesses target low-income consumers** earning less than \$2 per day. It critiques C.K. Prahalad\'s concept of finding a \"fortune\" in this market, emphasizing the **importance of integrating corporate social responsibility (CSR) to avoid exploitation** and ensure ethical practices. The author highlights the need for firms to **balance profit-making with social responsibility**, addressing ethical issues such as fair pricing, honest advertising, and the impact on vulnerable consumers - [Main Ideas]: - BOP Market Opportunity: Firms can profit by engaging with low-income consumers while addressing poverty. - Ethical Issues: Fair pricing, product suitability, and avoiding exploitation are critical concerns. - CSR Importance: Integrating corporate social responsibility is essential for ethical and sustainable BOP strategies. - Vulnerability: BOP consumers are susceptible to manipulative marketing due to limited resources and education. - Local and Environmental Impact: Companies must consider waste, reinvest profits, and benefit local communities. - Stakeholder Responsibility: Firms engaging with the BOP have a responsibility to consider broader societal impacts, including the perspectives of NGOs, governments, and advocacy groups. - The Role of CSR in BOP Strategies: CSR is not charity but a core element that ensures sustainable and ethical business practices in BOP markets. - Balancing Profit and Ethics: Companies must find a balance between achieving profits and fulfilling their ethical and social responsibilities to avoid perceptions of exploitation. - [Ethical Concerns when doing Business with the BOP]: - [Best Practices when doing Business with the BOP]:  Workshop 2.3: *Compassion vs Competitiveness -- Dilemma at Novo Nordisk* ======================================================================== - [Summary]: The Novo Nordisk case study explores the company's efforts to **integrate sustainability and social responsibility into its strategy while remaining competitive** in the global pharmaceutical industry. Through its **"Triple Bottom Line" framework**, Novo Nordisk prioritizes social, environmental, and financial goals, ensuring that patient needs, environmental impact, and ethical leadership are at the core of its operations. The Greek dilemma highlights a significant challenge the company faced when austerity measures during **Greece\'s financial crisis** forced reductions in healthcare budgets, creating pressure to cut the price of its life-saving diabetes products. Despite these economic pressures, Novo Nordisk maintained its ethical stance by continuing to provide insulin to the Greek market, albeit with reduced profitability, **balancing the needs of patients with the company\'s financial viability**. This decision underscores the company's commitment to long-term sustainability and trust-building with stakeholders, even when faced with difficult trade-offs. - [Main Ideas]: - Triple Bottom Line: Novo Nordisk integrates social, environmental, and financial goals into its strategy, prioritizing sustainability alongside profitability. - Patient-Centric Approach: The company focuses on addressing patient needs, particularly for chronic conditions like diabetes, as a core part of its mission. - Ethical Leadership: Novo Nordisk emphasizes ethical decision-making to build trust with stakeholders, even in challenging market conditions. - Greek Dilemma: The company faced a moral and financial challenge during Greece's financial crisis, choosing to continue supplying insulin despite pressure to cut prices. - Long-Term Sustainability: Novo Nordisk balances short-term financial pressures with long-term goals, maintaining its commitment to stakeholders and sustainable practices. - Stakeholder Engagement: The company actively considers the perspectives of patients, governments, and the broader community in its decision-making processes. - Balancing Tensions: The case highlights the difficulty of managing conflicts between shareholder expectations and broader social responsibilities in the competitive pharmaceutical industry. - [Balancing Compassion and Competitiveness]: Novo Nordisk's Dilemma in Greece A screenshot of a web page Description automatically generated - [Triple Bottom Line Concept]:  - [Potential Impact of such a Dilemma]: A screenshot of a computer Description automatically generated Lecture 3: Market Selection =========================== **Workshop 3.1:** Building your company's capabilities through global expansion [Core Findings:] - Evaluate whether your company's capabilities are relevant and transferable to the new country --- and whether you can appropriate value from them there. - Ask whether new capabilities gained through cross-border expansion will be complementary, transferable and value-providing to the rest of the organization. A little bit more detail: - Exploiting existing capabilities: leverage home-grown capabilities abroad\ **RAT test** = relevant (creates values for customers), appropriable (firm can capture the created value and prevent imitation by competitors) and transferable (effective deployment of home-market capabilities -- complementors in target country)\ RAT test should answer the questions how well the company's capabilities will travel and in which location they might work best - Creating new capabilities: enhancing a company's capabilities by expanding\ **CAT test** = complementary (to existing capabilities that form base of competitive advantage), appropriable and transferable (effectively transfer capability from specific context they were developed in to rest of organization) - Taken together, virtuous cycle of capability exploitation and enhancement (RAT-CAT cycle)  **Workshop 3.2:** The hassle factor: An explanation for managerial location shunning - The \"hassle factor\" refers to a list of **11** **travel inconveniences** associated with foreign investment locations -- top 3 with most negative effect: local transportation standards, health risks and medical standards, business facilitation challenges (= meeting reliability, and foreigner discrimination) A screenshot of a computer Description automatically generated - The hassle factor discourages managers from selecting high-hassle locations for FDI, leading to reduced FDI intensity and sales, as managerial biases influence decision-making. While economic, political, and sociocultural factors dominate investment considerations, the hassle factor adds a personal dimension. - non-resource-seeking companies are affected by the hassle factor more significantly (natural-resource-seeking firms affected less due to location-bound nature of resources) - Experienced managers with strong networks can help mitigate the hassle factor  **Workshop 3.3:** SENS Foods: Scaling up sustainable cricket protein - SENS Foods is a Czech company that produces sustainable insect protein snacks. Their product range includes protein bars, chips, crackers, and ready-to-eat meals, all made using cricket protein; motto "maximal good, minimal bad" - SENS Foods is planning to expand internationally to one of the Nordic countries because of a mix of push (competitive advantage and positioning in Czechia, strong brand name) and pull factors (growing share of flexitarians in Nordics, sustainability awareness). SENS Foods\' core capabilities developed in its home market, the Czech Republic: - Ownership of Cricket Lab: This farm in Thailand is SENS Foods\' sole supplier of high-quality cricket flour. Owning the farm allows SENS Foods to control quality, deliveries, research, and production processes, giving them an edge in innovation and potential economies of scale. - Strong Brand Name: SENS Foods has built a strong brand name associated with quality products and a sustainability message. Their brand awareness is growing, particularly in the Czech Republic and Germany. - Focus on Sustainability: SENS Foods\' core message revolves around sustainability. They promote their products as environmentally friendly and appeal to consumers looking for sustainable food options. - Innovation and Research: SENS Foods is committed to innovation and research, particularly in their cricket farming and production processes. This focus ensures high-quality products and allows them to stay ahead in a rapidly evolving market. **basis for RAT test** Lecture 4: Modes of Entry -- Exporting ====================================== **Workshop 4.1:** *Beating the odds in market entry* The paper highlights the challenges companies face when entering new markets and provide strategies for increasing the likelihood of success. **For every successful market entry, approximately four fail**. This high failure rate is often attributed to **cognitive biases** - systematic errors in how executives process information - which can negatively impact market entry decisions. To **improve** the **odds of success**, the sources recommend two key approaches: **1.** Developing a **Robust Outside View** - Even before selecting reference cases, conducting a thorough review of the **six key predictors of success** that **strongly predict the success of a market entry** can reveal whether the odds are stacked against going forward A white text on a white background Description automatically generated - **Create a reference class**: Analyse at least five similar market entry decisions made by other companies in the past. This reference class should **include** both **successful** and **unsuccessful** **entries** to get a realistic picture of potential outcomes. - **Look beyond your industry**: While focusing on your industry is helpful, it\'s crucial to **consider examples from other industries**, particularly if the target market is new or emerging. - **Avoid the availability bias:** Don\'t limit your analysis to the most readily available examples. **Expanding the reference class to include diverse cases** can raise new questions and reveal potential pitfalls that might otherwise be overlooked.  **2.** Improving the **Inside View** - **Address five core issues:** - **Value proposition and capabilities:** Entering a market that **aligns with existing capabilities** and value propositions increases the chances of success. - **Market size:** Avoid overestimating the market potential by considering the **industry life cycle** and the **possibility of a shakeout**. Benchmark your market size estimates against the **performance of the reference class** - **Competition:** **Don\'t underestimate existing competitors\' likely responses**, known as the \"brick wall effect\".10 **Conduct gaming exercises** to anticipate potential responses and adjust the entry strategy accordingly. - **Market share and revenue:** Be realistic about achievable market share and revenue, particularly in the face of competition. **Use the reference class to set reasonable expectations**. - **Costs:** Avoid the **\"planning fallacy\"** (underestimating time and cost). **Use the reference class to develop a realistic cost range** A white sheet of paper with text Description automatically generated By implementing these strategies, companies can **reduce the risks associated with market entry** and increase their chances of achieving sustainable success. **Good To know:** - **Planning Fallacy:** - The **planning fallacy** refers to the tendency to underestimate the time and costs required to complete a project - This bias stems from an overly optimistic outlook and a failure to consider potential challenges and delays - Blind Spots and Brick Wall Effect - **Competitive blind spots** refer to a failure to **anticipate** the **potential entry of new rivals** into a target market. For example, British Satellite Broadcasting (BSB) failed to foresee Rupert Murdoch\'s entry into the satellite broadcasting market, leading to significant losses - The **brick wall effect** describes the tendency to underestimate the **reactions** of **existing competitors** to a **new market entry**. Companies falling prey to this bias assume that incumbents will not adjust their strategies in response to the new entrant. Anheuser-Busch\'s foray into the snack food market illustrates this effect: Frito-Lay\'s aggressive response, including price cuts, ultimately forced Anheuser-Busch to exit the market **Workshop 4.2 :** Strategies that fit emerging markets The paper highlights the **challenges** multinational corporations (**MNCs**) **face** when **entering emerging markets** and offer strategies for success. Many MNCs struggle in these markets because they apply strategies that work in developed countries without considering the unique \"**institutional voids**\" present in developing economies. These **voids** represent the **absence** of **specialised intermediaries**, **regulatory systems**, and **contract-enforcing mechanisms** commonly found in developed economies. **Understanding Institutional Contexts** To succeed, MNCs need to understand the institutional contexts of their target countries. The paper introduces a \"**five contexts framework**\" to help map these contexts: - **Political and Social Systems**: Examining the political structure, civil society, and level of trust within a society helps understand the influences on business operations. (e.g. Chile\'s shift to a right-wing government in the 1970s led to liberal economic policies that fostered a vibrant capital market. However, restrictions on trade unions hindered the development of the labour market.) - **Openness**: Evaluating a country\'s receptiveness to foreign investment, restrictions, and the presence of foreign intermediaries is crucial (e.g. while China welcomes foreign investment, it restricts information flow and citizen movement. Conversely, India, with its historical openness to Western ideas and fewer restrictions on travel, has cultivated market-oriented managers, despite stricter regulations on foreign direct investment) - **Product Markets**: Understanding consumer behaviour, the availability of market research and advertising, and product-related regulations is essential (e.g. the absence of comprehensive data sources and credit histories hinders consumer finance businesses. MNCs also face challenges in market research and advertising due to their underdeveloped state) - **Labour Markets**: Assessing the education infrastructure, availability of skilled workers, and the presence of recruitment agencies is critical (e.g. MNCs often encounter difficulties in hiring skilled workers in emerging markets due to challenges such as gaps in the education system and a limited role of recruitment agencies. These agencies play a crucial role in screening candidates and matching them to appropriate job openings, particularly for mid-level positions, but their limited presence can hinder effective talent acquisition and workforce development) - **Capital Markets**: Analysing the sophistication of financial institutions, access to capital, and the strength of corporate governance norms is crucial (e.g. the limited presence of key intermediaries such as credit rating agencies, investment analysts, and venture capital firms poses challenges for MNCs in raising capital locally) **The Trouble with Composite Indices** Companies often **rely** **on composite indices**, such as GDP growth, population demographics, and country rankings, to inform their globalisation strategies. However, these indices often **fail** to **capture** the **nuances of institutional contexts**. Using Brazil, Russia, India, and China as examples, the paper demonstrate that despite similar rankings across various indices, the market infrastructure and key success factors in each country vary significantly. **Adapting Strategies** Based on their understanding of institutional contexts, **MNCs** have **three strategy** **choices**: 1\. **Adapt Business Models:** Companies should modify their business models to address the specific institutional voids in each country while maintaining their core value propositions. For example, Dell adapted its direct-sales model in China to accommodate local consumer habits and government regulations. McDonald\'s, facing a lack of reliable suppliers in Russia, built a vertically integrated supply chain while preserving its core value proposition of fast food served in a clean environment. 2\. **Change the Contexts:** Powerful MNCs can influence the institutional contexts they operate in. This can be achieved by introducing new products or services that drive market transformations. Suzuki\'s entry into India triggered a quality revolution in the automotive supply chain. Metro Cash & Carry, by investing in cold chains and promoting quality standards, improved rural-urban business links and brought positive changes in China, Russia, and India. 3\. **Stay Away:** When adapting proves uneconomical or impractical, companies can choose to stay away from certain markets. Home Depot\'s initial foray into emerging markets faced challenges due to its reliance on specific U.S. institutions. Recognising the difficulties in adapting its business model, the company has since adopted a more cautious approach to emerging markets. **Creating Synergies** While different markets require tailored approaches, MNCs can create synergies by **treating these markets as part of a system**. GE Healthcare, for instance, leverages its operations in various emerging markets to optimise its global supply chain and tap into local talent pools. This holistic view of emerging markets, as both markets and sources of talent and innovation, is crucial for MNCs aiming to secure their future success. **Workshop 4.3 :** Huayi Brothers : Strategic Transformation **Huayi Bros. business model and its contribution to international expansion**: - Huayi Bros. initially focused on film production, expanding into talent management, film distribution, and cinema construction. They produced films exceeding box office expectations and gained recognition for their visual effects - **Diversification**: The company diversified into Internet entertainment and live entertainment. This diversification strategy aimed to create a convergent, multiplatform entertainment experience, integrating technology and entertainment - **International Expansion through partnerships**: Huayi Bros.\' international expansion strategy involved partnerships and collaborations with foreign companies. Notably, the STX deal aimed to produce and distribute Hollywood films in China and globally. This provided access to the global market and facilitated knowledge transfer from experienced Hollywood professionals **Other suitable modes of entry**: - **Foreign Direct Investment (FDI)**: Establishing wholly-owned subsidiaries or acquiring existing production companies in target markets could give Huayi Bros. more control and allow them to tailor content to specific audiences. - **Joint Ventures**: Partnering with local companies in foreign markets would provide valuable insights into local preferences and distribution channels, mitigating risks associated with unfamiliarity with foreign markets. - **Licensing and Franchising**: Huayi Bros. could license their successful film franchises or intellectual property to foreign production companies, generating revenue while minimizing operational involvement **STX Deal**: - **Entailment and Benefits**: The STX deal involved a multi-year agreement where Huayi Bros. would co-finance and distribute STX Entertainment\'s Hollywood films in China. This provided Huayi Bros. with access to high-quality Hollywood content, potentially boosting their revenue and brand recognition - **Risks and Mitigation**: - **Financial risk**: Dependence on the success of STX films could lead to financial losses if the films underperform. To mitigate this, Huayi Bros. could diversify their investments across multiple STX projects and carefully assess the commercial viability of each film - **Reputational risk**: If STX films fail to resonate with Chinese audiences, it could negatively impact Huayi Bros.\' reputation. Huayi Bros. could conduct thorough market research to ensure that the chosen films align with Chinese audience preferences - **Cultural differences**: Misunderstandings or clashes in cultural values could arise during the collaboration. Huayi Bros. could foster open communication and cultural sensitivity training for both teams to bridge potential cultural gaps **Pressures for localization and consequences**: - **Content Adaptation**: Huayi Bros. may face pressure to adapt STX films for the Chinese market. This could involve dubbing, subtitling, and even modifying storylines or characters to align with cultural sensitivities and preferences - **Censorship**: The Chinese government\'s strict censorship regulations could require modifications to STX films, potentially affecting their artistic integrity and international appeal - **Balancing Localization and Global Appeal**: Catering to Chinese audiences while maintaining the essence of Hollywood films that appeal to global audiences presents a significant challenge. Failure to strike this balance could limit the films\' success in both markets. **Huayi\'s Portfolio and Managing the Paradox**: - **Portfolio Breakdown**: Huayi Bros.\' portfolio encompasses visual entertainment (films, talent management), internet entertainment, and live entertainment (theme parks, cultural tourism) - **Leveraging Diversity**: - **Cross-promotion**: Huayi Bros. can leverage its diverse portfolio to cross-promote its ventures. For instance, promoting STX films through its internet platforms and incorporating elements from successful films into theme park attractions - **Global Reach with Local Flavor**: Combining its expertise in producing locally successful content with the appeal of Hollywood productions could help Huayi Bros. create content that resonates with both Chinese and international audiences - **Strategic Partnerships**: Partnering with local companies in foreign markets can aid in adapting content to suit specific cultural preferences, maximizing local engagement **Obstacles to International Expansion beyond Localization and Globalization**: - **Competition**: Huayi Bros. faces intense competition from both domestic and international entertainment giants. To succeed, they need to differentiate their offerings and create unique value propositions - **Talent Acquisition and Retention**: Attracting and retaining top talent in a competitive global market is crucial. Huayi Bros. must offer competitive compensation packages and foster a creative and supportive work environment. - **Intellectual Property Protection**: Protecting intellectual property rights in foreign markets is vital. Huayi Bros. needs to implement robust legal measures to safeguard their creations from piracy and infringement - **Regulatory and Political Challenges**: Navigating complex and evolving regulations and political landscapes in foreign markets poses significant challenges Lecture 5: Modes of Entry -- Strategic alliances ================================================ Key Concepts from the lecture: ============================== 1. When building a strategic alliance there must be synergistic effects 2. Licensing IP or technology for royalty is **not** a strategic alliance 3. **Main external drivers** for alliance formation: fast technological changes and globalisation 4. **Types of alliances** 5. Reasons for alliance 6. **Vertical strategic alliance** 7. **Alliances between competitors** A diagram of a company Description automatically generated 8. **Partner selection:** Cultural aspects, financial aspects, strategic aspects, organisational aspects 9. **Trust in strategic alliances:** Increase learning, customised investments, speed to respond to market changes, lowers transaction cost; **don't put more emphasis on trust than on the firm's strategic objectives** Workshop 5.1: *Collaborate with your competitors and win* ========================================================= Summary: - Strategic alliances, especially among competitors, are increasingly popular but fraught with risks, particularly for Western firms collaborating with Asian partners. The article emphasizes the importance of maintaining strategic intent, mutual benefit, and safeguarding proprietary knowledge. Successful alliances depend on clear objectives, conflict management, and a focus on learning from the partner while limiting unintended knowledge transfer. Key concepts: **Learning and Safeguarding:** - Strategic alliances should be seen as an opportunity to learn and build internal capabilities. Companies need to strategically plan what knowledge and skills they aim to gain while setting clear boundaries to protect core competencies. - Example: Asian companies often outperform Western partners in alliances because they enter partnerships with a strong focus on learning, while Western firms sometimes view alliances as a shortcut to avoid investments​(CollaborateWithYourComp...). **Strategic Intent:** - Alliances work best when both parties enter with clear strategic objectives and a commitment to achieving mutual benefits. Misaligned goals can lead to one partner gaining significantly more than the other. - Example: NEC used its alliances to develop global competencies across telecommunications, computers, and semiconductors, systematically strengthening its position​(CollaborateWithYourComp...). **Dynamic Collaboration:** - Alliances are not static; they evolve over time, often with conflicts arising. These conflicts, when managed constructively, can indicate a healthy and dynamic collaboration. - Example: The success of an alliance depends on monitoring daily interactions to prevent unintentional transfer of critical skills or knowledge​(CollaborateWithYourComp...). Workshop 5.3: *Renault - Nissan* ================================ Summary: - The Renault-Nissan Alliance is a model of a successful strategic alliance that leveraged cross-shareholding to achieve synergies while preserving brand identities. The collaboration allowed both companies to share costs, access each other\'s expertise, and expand into new markets. Key features include a shared governance structure, combined R&D efforts, and effective synergy realization in areas like manufacturing, purchasing, and powertrain development. Key concepts: **Mutual Dependence:** - Cross-shareholding ensures both partners have a vested interest in each other\'s success, fostering a \"win-win\" scenario where neither dominates the other. - Example: Renault\'s 43.4% stake in Nissan and Nissan\'s 15% stake in Renault created a balance of power while aligning strategic goals​(CaseStudy\_Renault\_Nissa...). **Synergy Realization:** - Through shared R&D, manufacturing, and purchasing systems, the alliance achieved economies of scale and cost reductions. - Example: The Common Module Family (CMF) initiative, where 70% of Renault-Nissan vehicles share modular components, drastically cut costs and increased operational efficiency​ (CaseStudy\_Renault\_Nissan...). **Resilience and Market Entry:** - Alliances enable companies to withstand market fluctuations and access new markets by leveraging combined resources and expertise. - Example: Nissan used Renault's facilities in Brazil to establish a local foothold, while Renault entered China through Nissan's existing partnerships​(CaseStudy\_Renault\_Nissa...). **Governance:** - A centralized governance structure like the Renault-Nissan Alliance Board ensures alignment on strategic objectives and oversight of operations. - Example: The Alliance Board focused on maintaining brand identity while achieving competitive economies of scale​ (CaseStudy\_Renault\_Nissa...). Workshop 5.2: *How to manage alliances better* ============================================== Summary: - Managing multiple alliances requires strategic oversight to ensure individual partnerships align with the company's overall alliance portfolio. The article highlights pitfalls of ad hoc alliance formation and stresses the need for systematic evaluation at both the individual and portfolio levels. It advocates for a centralized alliance management function, clear decision-making processes, and an integrated cost-benefit analysis framework. Key concepts: **Holistic Analysis:** - Each alliance should be evaluated not only as a standalone partnership but also for its impact on the company's overall alliance portfolio. - Example: Danone's multiple overlapping joint ventures in China disrupted its key partnership with Wahaha, leading to lawsuits and loss of market share​(How to manage alliances...). **Alliance Portfolio Management:** - Establishing a dedicated alliance management function allows firms to oversee how multiple partnerships interact, ensuring they collectively add value. - Example: Salesforce.com leveraged its alliances with Google and Amazon to integrate their technologies, creating a comprehensive service offering​(How to manage alliances...). **Systematic Decision-Making:** - Organizations should adopt a structured decision-making process to balance local business needs with corporate-wide alliance goals. - Example: CASA's local-focused alliance with McDonnell Douglas undermined its broader strategic collaboration with Airbus, highlighting the risks of uncoordinated alliance decisions​(How to manage alliances...). **Conflict Management:** - Introducing new alliances can disrupt existing ones if they create overlap or competition. Proactive conflict resolution mechanisms are necessary. - Example: British Airways' partnership with American Airlines led to USAir terminating its alliance with BA due to perceived competitive threats​(How to manage alliances...). Lecture 6: Modes of Entry - FDI´s and Technology transfer ========================================================= **[The core competence of the corporation]** 1. *Provide a 1-3 sentences summary of your respective article/ case *  This article deals with the concept of **core competencies** and how they can be used for the success of a company. - **Summary and explanation of key concepts** - **Core competencies** are defined as the collective learning in an organization, especially the ability to coordinate different production capabilities and integrate multiple technologies. - They are the roots of a company\'s competitiveness and nourish the **core products** from which business units and ultimately end products evolve. - Examples of core competencies are miniaturization (Sony), optical media (Philips), mechanics, video displays, bioengineering and microelectronics. - A company should **not** see itself **as a collection of business units, but as a portfolio of competencies**. - Focusing on core competencies creates **unique**, **integrated systems** that strengthen a company\'s various production and technology capabilities - a **systemic advantage** that **[competitors cannot duplicate]**. 2. *Put in the key concepts of the respective article ideally pictures of the concept*. The authors use the analogy of a **tree** to illustrate the concept: The trunk and main branches are the core products, the smaller branches are the business units, and the leaves and fruit are the end products. The root system that nourishes and stabilizes everything is the core competencies.  - Companies that assess their competitiveness primarily on the basis of the price-performance ratio of end products risk neglecting their core competencies or investing too little in their further development. **Identification of core competencies** Three tests can be used to identify core competencies: 1. Does the competency provide potential access to a variety of markets? 2. Does the competence contribute significantly to the benefits of the end product as perceived by the customer? 3. Is the competence difficult for competitors to imitate? **Advantages of focusing on core competencies** - Enables the development of products that meet customer needs that they have not even recognized yet. - Creates a competitive advantage based on the ability to develop new products faster and more cost-effectively than the competition. - Opens up new opportunities for innovation and diversification. **Risks of neglecting core competencies** - Dependence on external sources for critical components. - Loss of market share to competitors who have built up competencies in core products. - Missed opportunities to develop competencies that are emerging in existing business areas. **Strategic architecture** - In order to effectively utilize core competencies, top management must develop a company-wide strategic architecture. - This architecture serves as a roadmap for the future and defines which core competencies are to be developed and which technologies are required for this. - It helps to allocate resources, form alliances and make decisions about outsourcing. A close-up of a black and white text Description automatically generated 3. *Provide a real-life example where the concepts are applied  * **Practical example: Honda** Honda is a good example of a company that has successfully utilized its core competencies. Honda\'s core competence lies in the development and manufacture of engines and powertrains. This expertise has enabled Honda to enter and take leading positions in markets such as automobiles, motorcycles, lawnmowers and generators. Honda has continuously developed and improved its expertise in engines, enabling it to bring new and innovative products to the market time and time again. The company has also used its core competence to form strategic alliances and enter new markets. By consistently focusing on its core competencies, Honda has built a sustainable competitive advantage and established itself as one of the leading companies in the automotive industry. **[A better approach to M&A]** 1. *Provide a 1-3 sentences summary of your respective article/ case *  **Success rates of mergers and acquisitions** This Harvard Business Review article entitled "A Better Approach to Mergers and Acquisitions" examines the increasing success rates of mergers and acquisitions (M&A) over the last 20 years. In the past, 70% of M&As failed; today, 70% are successful. 2. *Put in the key concepts of the respective article ideally pictures of the concept*. The article identifies four main reasons for this trend reversal: - **Expanded strategies:** Companies are no longer using M&A just to acquire competitors or cut costs. They are pursuing broader strategies such as entering new industries, improving supply chains and acquiring new capabilities. - **Improved due diligence:** Companies today are conducting more thorough due diligence beyond just financial analysis. This includes cultural assessments, talent assessments and the use of social media to gather feedback from customers and employees. - **Specialized M&A teams:** Companies that make frequent acquisitions have built specialized teams dedicated solely to identifying targets, negotiating terms and conducting due diligence. This specialization leads to more experience and expertise. - **Improved integration:** The methods, tools and technologies for integrating companies have improved significantly over the last 20 years. Companies have learned from their experiences and optimized their integration approaches. The article also emphasizes that companies that make frequent acquisitions (at least one per year) achieve twice as high returns as companies that rarely or never make acquisitions. Investors are rewarding the increased M&A activity. 3. *Provide a real-life example where the concepts are applied  * **Example from practice** Chris Koch, CEO of Carlisle Companies, a building products company with a long history of M&A-driven growth, describes in the article how his company\'s approach to M&A has changed over time. Carlisle looks for companies with organic growth opportunities, clear synergies and strong leadership teams that can be integrated throughout the organization. The company conducts thorough due diligence and has a detailed integration plan with clear objectives and milestones. An example of the application of the concepts described in the article is Carlisle\'s decision to abandon the acquisition of a European company after due diligence revealed that the expected cost savings would be difficult to realize due to local regulations and labor practices. This case illustrates the importance of thorough due diligence and the willingness to walk away from an acquisition when the risks outweigh the potential benefits. **[Case: Goodyear Tire & Rubber: M&A synergies]** 1. *Provide a 1-3 sentences summary of your respective article/ case *  This article discusses the proposed acquisition of Cooper Tire & Rubber by the Goodyear Tire & Rubber Company in 2020. Richard Kramer, CEO of Goodyear, and Bradley Hughes, CEO of Cooper, met in June 2020 to discuss the overall industry situation. Goodyear had reported an accumulated loss of over \$5.15 billion in 2020 and recognized that the acquisition of Cooper could help increase sales and improve profitability. 2. *Put in the key concepts of the respective article ideally pictures of the concept*. Important aspects of the case: - **Synergies**: Goodyear expected to realize significant synergies from the acquisition of Cooper, which should translate into cost savings, efficiencies and increased sales. These synergies would help Goodyear to become more competitive and increase its market share. - **Valuation:** The valuation of a company plays a crucial role in mergers and acquisitions. Goodyear needed to determine the fair value of Cooper and make an offer that was acceptable to both companies. - **Financing:** Goodyear planned to finance the acquisition through a combination of cash and debt. The financing structure can have a significant impact on the success of an acquisition. - **Tax advantages:** Goodyear had suffered significant losses in previous years, resulting in tax loss carryforwards. These loss carryforwards could be used to reduce the tax burden after the takeover. - **Types of mergers:** The article describes different types of mergers, such as triangular mergers and reverse triangular mergers. - **Due diligence:** Before a takeover, the acquiring company carries out due diligence to check the financial and operational situation of the target company. In summary, the article illustrates the key concepts of mergers and acquisitions using the Goodyear and Cooper case. Synergies, valuation, financing, tax benefits, types of mergers and due diligence are important factors to consider in such transactions. 3. *Provide a real-life example where the concepts are applied  * **Real-life example:** A well-known example of an acquisition where synergies played an important role is Facebook\'s acquisition of WhatsApp in 2014. Facebook expected the acquisition of WhatsApp to create synergies in the areas of user growth, data collection and monetization. The acquisition enabled Facebook to expand its reach and strengthen its market position in the field of messaging. Lecture 7: Market Exit Strategies ================================= **Workshop 7.1:** Lessons learned from international expansion failures and successes The article \"Lessons Learned from International Expansion Failures and Successes\" explores the factors behind the successes and failures of companies expanding internationally. **It highlights five failure cases (Target in Canada, Tim Hortons in the U.S., Best Buy in China, Tesco in the U.S., and Walmart in Germany) due to issues like poor market understanding, supply chain problems, cultural misalignment, and competition.** Conversely, it also examines successes (Aldo in the U.S., Carrefour in China, and Nordstrom in Canada) achieved through **customer-centric strategies, localized operations, and adaptive supply chain management, providing a framework for navigating the complexities of global markets.** Why do international expansions fail?  **Understand Local Market**: Misjudging customer preferences led to failures (e.g., Target Canada, Best Buy China). **Adapt to Competition**: Underestimating local competitors caused struggles (e.g., Walmart Germany, Tesco U.S.). **Optimize Locations**: Poor site selection hurt accessibility and sales (e.g., Target Canada, Tesco U.S.). **Streamline Supply Chains**: Inefficient supply chains led to stock issues (e.g., Target Canada). **Control Expansion Pace**: Rapid or slow growth diluted success (e.g., Target Canada, Tim Hortons U.S.). **Factor in Economic Timing**: Launching during crises compounded challenges (e.g., Tesco U.S. during 2008). Why do international expansions succeed? Ein Bild, das Text, Screenshot, Schrift enthält. Automatisch generierte Beschreibung **Workshop 7.2:** Success and failure in technology acquisitions: Lessons for buyer and sellers Compare the motivations of buyers and sellers in technology acquisitions. How do differing motivations impact success? **Different dilemmas:** There is **delaying (waiting for targets IPO) or dating (forming relationships before acquisition) strategy** Technology acquisitions create a delicate balance in the autonomy vs. integration strategy, as integration is needed to realize synergies, but excessive integration risks stifling the acquired firm's innovation and disrupting its unique knowledge-based resources **Workshop 7.3:** Case study - The DaimlerChrysler Merger Challenge was the shifting consumer preference towards fuel efficiency and eco-friendly vehicles **Reasons for coperation failure:** excessive optimism, brand identity clash, underestimated market shifts (both companies underestimated the neglected eco-friendly transition) Ein Bild, das Text, Screenshot, Schrift, Design enthält. Automatisch generierte Beschreibung  The Fiat-Chrysler merger had a stronger foundation due to **Fiat's adaptable leadership, cultural flexibility, and a clear commitment to realizing synergies**. Strategic fit alone isn't enough. Cultural fit, leadership commitment, and a well-thought-out integration plan make all the difference. Fiat understood this, and their merger turned into a lasting partnership