BUS 480 – GLOBAL BUSINESS STRATEGIES

BUS 480 – GLOBAL BUSINESS STRATEGIES
Adams State University – CEP© Page 1 of 36 July 2018
WELCOME FROM YOUR INSTRUCTOR ~
Welcome to BUS 480: Global Business Strategies. This purpose of this course is for you to
demonstrate the knowledge you have acquired throughout your undergraduate program. This
will occur within the context of applying this knowledge to global business. The barriers to enter
the global market are shrinking for almost all industries, but expansion into other countries and
cultures requires new considerations.
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COURSE MATERIALS:
Textbooks can be purchased from the Adams State University Bookstore. To order textbooks or
obtain information about book titles, you may go to exstudies.adams.edu and click on the
“Bookstore” link. Select the campus “Extended Studies”.
(https://www.bkstr.com/adamsstatestore/home/en)
Use Section Number: 1792 to order books from Bookstore site. This should provide the correct
textbook information and ordering options.
If you have questions, you can contact the Bookstore by phone at 719-587-7912, email at
asubookstore@adams.edu, or by mail to Adams State University Bookstore, 1603 1st Street,
Alamosa, CO 81101.
Required Textbook(s):
x Peng, M. (2017). Global Business. Cengage. ISBN: 9781305500891
CATALOG DESCRIPTION:
Designed to help students understand strategic planning activities including environmental
analysis, determination of alternatives, policy formulation, execution of plans, and development
of company strategy as currently used by contemporary business enterprises. Involves extensive
case study.
STUDENT LEARNING OUTCOMES:
Upon completion of this course, the student will be able to:
1. Explain the importance well thought out plans to the long term success of a company.
2. Analyze a company’s business situation.
3. Develop strategic options and to formulate an effective plan.
4. Integrate the knowledge learned in earlier business courses.
5. Utilize a structured approach to analyze an existing situation to serve as a tool for
development of plans.
6. Effectively communicate, in writing and orally, plans and the rationale for those plans.
COURSE REQUIREMENTS:
Syllabus Assignment: 20 points Submit a paragraph providing an introduction of yourself and a
statement verifying that you have read and understand the syllabus.
Academic Integrity/Academic Dishonesty Statement: You are required to read and accept the
Academic Integrity/Academic Dishonesty statement, located in the Course Instructions section
of this Study Guide. While this is not a graded assignment, it must be completed and returned to
your instructor with your first assignment submission.
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All written work is subject to plagiarism detection software review. Identified instances of
cheating or plagiarism will follow the Academic Integrity statement in the Syllabus.
Case Studies: There are 10 Case Studies, each worth 30 points. These are to be typed together
with a coversheet (not required if you are emailing your work directly to me) These Case Studies
will relate to specific chapters in the text.
Midterm Exam: 200 points and covering Chapters 1-8. It will consist of 30 multiple choice and
true/false questions. The test is closed book/closed note.
Final Exam: 200 points and covering Chapters 9-17 questions total. It will consist of 30 multiple
choice and true/false questions. The test is closed book/closed note.
Final Business Research Paper: 280 points. The final Business Research Paper will allow
students to demonstrate the knowledge they have acquired throughout their Adam’s State
University undergraduate program.
Instructor Response Time: Instructor will respond to student emails/letters within 24 hours
Monday – Friday. Saturday – Sunday emails/letters response will be by Monday. Assignments
will be graded within one week of receipt. Students will be notified of any exceptions to these
policies.
GRADE DISTRIBUTION AND SCALE:
In alignment with ASU academic policies, no D may apply to a major or minor field.
Grade Distribution:
Syllabus Assignment 20 points 2% of grade
Case Studies (10 cases worth 30 points each) 300 points 30% of grade
Midterm Exam 200 points 20% of grade
Final Exam 200 points 20% of grade
Final Research Paper 280 points 28% of grade
Grade Scale:
900 – 1000points 90 – 100% A
800 – 899 points 80 – 89% B
700 – 799 points 70 – 79% C
600 – 699 points 60 – 69% D
0 – 599 points 59% and below F
ADA STATEMENT:
Adams State University complies with the Americans with Disabilities Act and Section 504 of the
Rehabilitation Act. Adams State University is committed to achieving equal educational
opportunities, providing students with documented disabilities access to university programs. In
order for a course to be equally accessible to all students, different accommodations or
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COURSE INSTRUCTIONS
It is very important to work through this course in the order presented below in the table of
contents and the study guide. The materials builds upon concepts learned early in the course. It
is recommended that you submit each assignment as it is completed rather than submitting
assignments as a group. This allows for feedback to be given and corrections to be made to
future assignments if necessary.
TABLE OF CONTENTS
Academic Integrity/Academic Dishonesty Acknowledgement
Unit 1
Unit 2
Unit 3
Unit 4
Unit 5
Unit 6
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STUDY GUIDE
UNIT ONE
Syllabus Assignment
Submit one paragraph introducing yourself and acknowledging that you have read the syllabus.
All written work is subject to plagiarism detection software review. Identified instances of
cheating or plagiarism will follow the Academic Integrity statement in the Syllabus.
Lecture Notes
Our most fundamental question is: What determines the success and failure of firms around the
globe? The two core perspectives are (1) the institution-based view and (2) the resource-based
view. We develop a unified framework by organizing materials in every chapter according to the
two perspectives guided by the fundamental question. Some view globalization as a recent
phenomenon, and others believe that it is a one-directional evolution since the dawn of human
history. We suggest that globalization is best viewed as a process similar to the swing of a
pendulum. A basic understanding of the global economy is necessary. It is important to critically
examine your own personal views and biases regarding globalization.
Institutions are commonly defined as “the rules of the game.” Institutions have formal and
informal components, each with different supportive pillars. The key function of institutions is
to reduce uncertainty. Managers and firms rationally pursue their interests and make choices
within the formal and informal institutional constraints in a given institutional framework. While
formal and informal institutions combine to govern firm behavior, in situations where formal
constraints are unclear or fail, informal constraints will play a larger role in reducing uncertainty
and providing constancy to managers and firms. Democracy is a political system in which
citizens elect representatives to govern the country. Totalitarianism is a political system in which
one person or party exercises absolute political control over the population. Laws in different
countries are transplanted from three legal traditions. Civil law uses comprehensive statutes and
codes as a primary means to form legal judgments. Common law is shaped by precedents and
traditions from previous judicial decisions. Theocratic law is a legal system based on religious
teachings. An economic system refers to the rules of the game on how a country is governed
economically. A pure market economy is characterized by laissez faire and total control by
market forces. A pure command economy is defined by government ownership and control of all
means of production. Most countries operate mixed economies with a different emphasis on
market versus command forces. Two leading debates are drivers of economic development and
private ownership versus state ownership. Managers considering working abroad should have a
thorough understanding of the formal institutions before entering a country. In situations where
formal constraints are unclear, managers can reduce uncertainty by relying on informal
constraints, such as relationship norms.
Ethics is not only an important part of informal institutions, but is also deeply reflected in formal
laws and regulations. When managing ethics overseas, what is ethical in one country may be
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unethical in another country. Ethics fights corruption around the world. Three “middle-of-theroad” principles guide managers to make ethical decisions. Cultural differences can be
understood by using three approaches: context, cluster, and dimension. The context approach
differentiates cultures based on the underlying background upon which social interaction takes
place. The cluster approach groups similar cultures together as clusters and civilizations. Five
cultural dimensions have been identified: (1) power distance, (2) individualism/ collectivism, (3)
masculinity/femininity, (4) uncertainty avoidance, and (5) long-term orientation.
Culture consists of the shared values, morals, rituals and identities of a group of people. It is
based upon community and how people interact with one another. It defines what is socially
acceptable and what is not. It can also encompass language, religion, and marriage. Culture can
change and evolve based on social events and modernization. Thus, it is important to understand
the culture of the people living in an area where business is conducted because the culture of the
people living in that area will impact how employees of the business will approach and conduct
the business operations. Business culture is a concept that describes the social norms within a
given organization. It is what shapes how interactions occur, the level of formality and
professionalism. Some companies have a very laid back culture where employees can come and
go as they please, dress casually and are friendly with one another. There may be policies and
procedures, but these are seen more as guidelines than rules. Other companies can be very
formal where business attire is expected and required and policies and procedures are followed to
a tee. Many companies have a culture that is somewhere between these two extremes. The
culture of a company evolves over time. It is often set by the tone of owners and management
and then trickles down to employees based upon the expectations that have been set and modeled
by management. However, it is possible for an employee or group of employees to change the
culture of an organization by introducing new ideas or attitudes. The culture of a company often
dictates how it functions internally as well as with customers, suppliers, and other business
partners and contacts.
Readings
Chapter One
Chapter one discusses globalization. International business is typically defined as (1) a
business (firm) that engages in international (cross-border) economic activities and (2)
the action of doing business abroad. Global business is defined in this book as business
around the globe. This book goes beyond competition in developed economies. It devotes
extensive space to competitive battles waged in emerging economies and the base of the
global economic pyramid.
Chapter Two
Chapter two reviews some of the formal infrastructures the companies need to consider
when expanding globally. It is important to be aware of any political, legal or economic
issues that may be impacting the ability to expand or open a new location in a country.
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Chapter Three
Chapter three reviews the importance of conducting research on the cultural and ethical
norms in a new country as well as any language nuances that may impact
communication.
Assignments
Case Study 1: Integrative Case 1.2: THE FUTURE OF CUBA
Read the case and answer the questions at the end of the case in 1-2 pages.
Submit in APA format with a title page and references. The title page and
references do not count towards the 1-2 page requirement.
Case Study 2: Integrative Case 1.3: POLITICAL RISK OF DOING BUSINESS IN
THAILAND
Read the case and answer the questions at the end of the case in 1-2 pages.
Submit in APA format with a title page and references. The title page and
references do not count towards the 1-2 page requirement.
All written work is subject to plagiarism detection software review. Identified instances of
cheating or plagiarism will follow the Academic Integrity statement in the Syllabus.
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UNIT TWO
Lecture Notes
Resources and capabilities are the tangible and intangible assets a firm uses to choose and
implement its strategies. A value chain consists of a stream of activities from upstream to
downstream that add value. A SWOT analysis engages managers to ascertain a firm’s strengths
and weaknesses on an activity-by-activity basis relative to rivals. Outsourcing is turning over all
or part of an organization’s activity to an outside supplier. An activity with a high degree of
industry commonality and a high degree of commoditization can be outsourced, and an industryspecific and firm specific (proprietary) activity is better performed in-house. On any given
activity, the four choices for managers in terms of modes and locations are offshoring,
onshoring, captive sourcing/FDI, and domestic in-house activity. SWOT (Strengths,
Weaknesses, Opportunities, and Threats) is a traditional analytical tool. A VRIO framework
suggests that only resources and capabilities that are valuable, rare, inimitable, and
organizationally embedded will generate sustainable competitive advantage. Two debates are
discussed: Are domestic capabilities the same as international (cross-border) capabilities? For
Western firms and economies, is offshoring beneficial or detrimental in the long run? Managers
need to build firm strengths based on the VRIO framework. Relentless imitation or
benchmarking, while important, is not likely to be a successful strategy. Managers need to build
up resources and capabilities for future competition. Students are advised to make themselves
“untouchables” whose jobs cannot be outsourced.
The resource-based view suggests that nations trade because some firms in one nation generate
valuable, unique, and hard-to-imitate exports that firms in other nations find it beneficial to
import. The institution-based view argues that as “rules of the game,” different laws and
regulations governing international trade aim to share gains from trade. Classical theories
include (1) mercantilism, (2) absolute advantage, and (3) comparative advantage. Modern
theories include (1) product life cycle, (2) strategic trade, and (3) national competitive advantage.
The net impact of various tariffs and nontariff barriers (NTBs) is that the whole nation is worse
off while certain special interest groups (such as certain industries, firms, and regions) benefit.
Economic arguments against free trade center on (1) protectionism and (2) infant industries.
Political arguments against free trade focus on (1) national security, (2) consumer protection, (3)
foreign policy, and (4) environmental and social responsibility. The first debate deals with
whether persistent trade deficit is of grave concern or not. The second deals with whether service
trade will benefit or hurt rich countries. Managers should discover and leverage the comparative
advantage of world-class locations. Monitor and nurture current comparative advantage of
certain locations and take advantage of new locations. Be politically active to demonstrate,
safeguard, and advance the gains from international trade.
FDI refers to directly investing in activities that control and manage value creation in other
countries. MNEs are firms that engage in FDI. FDI can be classified as horizontal FDI and
vertical FDI. Flow is the amount of FDI moving in a given period in a certain direction (inflow
or outflow). Stock is the total accumulation of inbound FDI in a country or outbound FDI from a
country. FDI results in economic gain. Firms seek ownership (O) advantages, location (L)
advantages, and internalization (I) advantages—collectively known as the OLI advantages. The
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resource-based view suggests that the key word of FDI is D (direct), which reflects firms’
interest in directly managing, developing, and leveraging their firm-specific resources and
capabilities abroad. The institution-based view argues that recent expansion of FDI is indicative
of generally friendlier policies, norms, and values associated with FDI (despite some setbacks).
Ownership refers to MNEs’ possession and leveraging of certain valuable, rare, hard-to-imitate,
and organizationally embedded (VRIO) assets overseas. Location refers to certain locations’
advantages that can help MNEs attain strategic goals. Internalization refers to the replacement of
cross-border market relationship with one firm (the MNE) locating in two or more countries.
Internalization helps combat market imperfections and failures. Forces affecting bargaining
include common interests, conflicting interests, and compromises as affected by each party’s
strengths and perception of gain from the bargain. The first debate deals with whether FDI
should be undertaken as opposed to outsourcing. The second debate focuses on whether recent
anti-FDI incidents represent mere aberrations in the larger environment of having FDI friendlier
policies or represent some routine occurrences in the future. Managers should carefully assess
whether FDI is justified, in light of other options such as outsourcing and licensing. Pay careful
attention to the location advantages in combination with the firm’s strategic goals. Be aware of
the institutional constraints governing FDI and enhance legitimacy in host countries.
When operating in the global market, it is necessary to plan for varying regulations in different
countries. Thus, conducting research when entering a new market is important to determine how
technology can be used. Also, it is important to conduct continuous research in areas where the
company does business to stay aware of any changes to current regulations. Depending on the
size of the company, it can be possible to work with legislators in different companies to assist in
developing technology laws that provide oversight, but do not restrict lawful use of technology
for individuals or companies. Privacy is a current topic that many countries are considering
regulating. Thus, companies need to be able to adapt their own policies to reflect the
requirements of each country in which they operate.
Readings
Chapter Four
Chapter four evaluates how to determine where and how resources should be used. In a
global company, resources can be spread out among many locations. It is important to
create a strategy to maximize how the resources are used.
Chapter Five
Chapter five evaluates trading internationally including any competitive advantage that
can be gained, the product life cycle of products that are traded, and the impacts of tariffs.
Chapter Six
Chapter six reviews the key concepts to be aware of when investing internationally. It is
important to be aware of laws, regulations, and exchange rates. This is an important part
of financial planning for any company that is already global or that is considering global
expansion.
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Assignments
Case Study 3: Integrative Case 1.7: OSTNOR’S OFFSHORING AND
RESHORING
Read the case and answer the questions at the end of the case in 1-2 pages.
Submit in APA format with a title page and references. The title page and
references do not count towards the 1-2 page requirement.
Case Study 4: Integrative Case 2.1: BRAZIL’S QUEST FOR COMPARATIVE
ADVANTAGE
Read the case and answer the questions at the end of the case in 1-2 pages.
Submit in APA format with a title page and references. The title page and
references do not count towards the 1-2 page requirement.
All written work is subject to plagiarism detection software review. Identified instances of
cheating or plagiarism will follow the Academic Integrity statement in the Syllabus.
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UNIT THREE
Lecture Notes
The international monetary system evolved from the gold standard (1870–1914), to the Bretton
Woods system (1944–1973), and eventually to the current post-Bretton Woods system (1973–
present). The IMF serves as a lender of last resort to help member countries out of financial
difficulty. Three foreign exchange transactions are spot transactions, forward transactions, and
swaps. Three strategic responses include invoicing in their own currencies, currency hedging,
and strategic hedging. The debates are fixed versus floating exchange rates, a strong dollar
versus a weak dollar, and currency hedging versus not hedging. Fostering foreign exchange
literacy is a must. Risk analysis of any country must include an analysis of its currency risks. A
currency risk management strategy is necessary via currency hedging, strategic hedging, or both.
The GATT (1948–1994) significantly reduced tariff rates on merchandise trade. The WTO
(1995–present) was set up not only to incorporate the GATT but also to cover trade in services,
intellectual property, trade dispute settlement, and peer review of trade policy. The Doha Round,
intended to promote more trade and development, has failed to accomplish its goals. Political
and economic benefits for regional integration are similar to those for global integration.
Regional integration may undermine global integration and lead to some loss of countries’
sovereignty. The EU has delivered more than half a century of peace and prosperity, launched a
single currency, and constructed a single market. Its challenges include internal divisions and
enlargement concerns. Despite problems, NAFTA has significantly boosted trade and
investment among members. In South America, the prominent regional deals are Andean
Community, Mercosur, USAN/UNASUR and CAFTA. Regional integration in Asia Pacific
centers on CER, ASEAN, APEC, and TPP. Regional integration deals in Africa are both
numerous and ineffective. Given the acceleration of regionalism, managers are advised to focus
more at regional than global levels. Managers also need to understand the rules of the game and
their transitions at both global and regional levels.
Outsourcing is the process of contracting a third party company to conduct business on behalf of
the originating company. Thus, companies have been outsourcing for several decades. At first,
it made sense for a company to outsource the mining of raw materials or manufacturing of a
product to a country where the raw materials were in great supply or to outsource a service to
another company that specialized in that service such as marketing or human resources. As
globalization has continued to evolve, companies have conducted cost benefit analyses to
determine which tasks were financially beneficial to the company to outsource. This could be
anything from manufacturing, supply chain, customer service, IT, marketing, human resources,
and other essential business functions. Each company needs to determine independently which,
if any, operations should be outsourced.
Readings
Chapter Seven
Chapter seven evaluate foreign exchange. The complexities of exchange rates and how
they impact business are important concepts for businesses to consider when determining
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how to conduct business internationally. A foreign exchange rate is the price of one
currency expressed in another. Basic determinants of foreign exchange rates include (1)
relative price differences, (2) interest rates and monetary supply, (3) productivity and
balance of payments, (4) exchange rate policies, and (5) investor psychology.
Chapter Eight
Chapter eight evaluates the case for global economic integration including both political
and economic benefits for global economic integration.
Assignments
Case Study 5: Integrative Case 2.2: TWELVE RECOMMENDATIONS TO
ENHANCE UK EXPORT COMPETITIVENESS
Read the case and answer the questions at the end of the case in 1-2 pages.
Submit in APA format with a title page and references. The title page and
references do not count towards the 1-2 page requirement.
Case Study 6: Integrative Case 2.3: WOULD YOU INVEST IN TURKEY?
Read the case and answer the questions at the end of the case in 1-2 pages.
Submit in APA format with a title page and references. The title page and
references do not count towards the 1-2 page requirement.
All written work is subject to plagiarism detection software review. Identified instances of
cheating or plagiarism will follow the Academic Integrity statement in the Syllabus.
Midterm Exam
Plan to take the Midterm Exam after reading Chapters 1-8 of the text book.
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UNIT FOUR
Lecture Notes
Entrepreneurship is the identification and exploration of previously unexplored opportunities.
Entrepreneurs may be founders and owners of new businesses or managers of existing firms.
Entrepreneurial firms in this chapter are defined as SMEs that employ fewer than 500 people.
Characteristics of a growing entrepreneurial firm include growth, innovation, financing, and
internationalization. Entrepreneurial firms can internationalize by entering foreign markets
through entry modes such as direct exports, franchising/licensing, and foreign direct investment.
Entrepreneurial firms can also internationalize without venturing abroad by exporting indirectly,
becoming suppliers for foreign firms, becoming licensees or franchisees of foreign brands,
becoming alliance partners of foreign direct investors, and harvesting and exiting through selloffs.
When entering foreign markets, firms confront liability of foreignness. Both institution- and
resource-based views cover how to overcome such liability. Two sets of considerations drive the
location of foreign entries: strategic goals and cultural and institutional distances. Favorable
locations provide location-specific advantages. Firms’ strategic goals include seeking natural
resources, market, efficiency, and innovation. In regards to first- and late-mover advantages
(when to enter), each has pros and cons, and there is no conclusive evidence pointing in one
direction. How to enter depends on the scale of entry: large-scale versus small-scale entries. A
comprehensive model of foreign market entries first focuses on the equity (ownership) issue. The
second step focuses on making the actual selection, such as exports, contractual agreements, JVs,
or wholly owned subsidiaries. The three leading debates are liability versus asset of foreignness,
global versus regional geographic diversification, and old-line versus emerging multinationals.
From an institution-based view, managers need to understand the rules of the game, both formal
and informal, governing competition in foreign markets. From a resource-based view, managers
need to develop overwhelming capabilities to offset the liability of foreignness. Managers must
learn to match market entry and geographic diversification with strategic goals.
Cultural values are the moral and ethical beliefs held by a social group. This could be within a
country, within a city or neighborhood, or within a company or family. These values are shaped
by the cultural identity of the people comprised in the group as well as the agreed upon values
and ethical beliefs of the people within that group. Each person brings a unique perspective and
as globalization continues, those perspectives have become more diverse. This can impact the
cultural values in a setting such as a company as the company either consciously or
unconsciously includes more employees from different backgrounds and perspectives.
Industries primed for collusion tend to have fewer rivals, a price leader, homogeneous products,
high entry barriers, and high market commonality (mutual forbearance). Domestically, antitrust
laws focus on collusion and predatory pricing. Internationally, antidumping laws discriminate
against foreign firms and protect domestic firms. Resource similarity and market commonality
can yield a powerful framework for competitor analysis. Regarding the drivers for attacks,
counterattacks, and signaling, there are three main types of attacks: thrust, feint, and gambit.
Counterattacks are driven by awareness, motivation, and capability. Without talking directly to
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competitors, firms can use various means to signal rivals. When confronting MNEs, local firms
can choose a variety of strategic choices: defender, extender, dodger, and contender. They may
not be as weak as many people believe. The leading debates concerning competitive dynamics
consist of competition versus antidumping and competitive strategy versus antitrust policy.
Managers need to understand the rules of the game, particularly the laws, governing domestic
and international competition around the world. Savvy managers know themselves and their
opponents and will develop the skills and knowledge necessary to effectively analyze their
competitors.
Cross cultural communication is a concept that evaluates how people from different cultures
communicate with one another. In addition to language barriers, there can also be cultural
differences that can create communication barriers. In global business, it is important to be
aware of the cultures of different business locations. In some countries, it is not culturally
acceptable to make eye contact. Thus, on a video conference call, one party may be offended if
the other is not looking into the camera, while others may feel uncomfortable if there is too much
eye contact. Another example is that some cultures have more defined gender roles in business
and often women do not hold managerial or executive positions. Thus, if a woman from another
country tries to conduct business, she may not initially be taken seriously or communicated with
respectfully. When operating internationally, research and education are vital to ensuring that
communication barriers are kept to a minimum. If a culture barrier is detected, it is possible to
create a strategy to mitigate the barrier before it becomes an obstacle in business operations.
Readings
Chapter Nine
Chapter nine discusses how to grow and expand a small startup company that many only
have a few or one owners. Due to technology, the barriers to entry into the global market
have been significantly reduced. These companies still have the same considerations as
larger companies when entering into a new country, but they are able to replicate their
services on a smaller scale.
Chapter Ten
Chapter ten reviews the logistics of entering a foreign market. It is important for leaders
and those working with that new area to familiarize themselves as much as possible with
the culture, language and social norms of the area.
Chapter Eleven
Chapter eleven evaluates how to manage competitors on a global level. Given the
increase in globalization and the minimal barriers to entry, a company many have
competitors from all over the world. Thus, it is important to conduct research to learn the
competitive advantages of competitors, their market share and determine the best
strategies to co-exist with those competitors.
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Assignments
Case Study 7: Integrative Case 2.4: THE MYTH BEHIND CHINA’S OUTWARD
FOREIGN DIRECT INVESTMENT
Read the case and answer the questions at the end of the case in 1-2 pages.
Submit in APA format with a title page and references. The title page and
references do not count towards the 1-2 page requirement.
Case Study 8: Integrative Case 2.5: THE KOREA-US FREE TRADE
AGREEMENT (KORUS)
Read the case and answer the questions at the end of the case in 1-2 pages.
Submit in APA format with a title page and references. The title page and
references do not count towards the 1-2 page requirement.
All written work is subject to plagiarism detection software review. Identified instances of
cheating or plagiarism will follow the Academic Integrity statement in the Syllabus.
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UNIT FIVE
Lecture Notes
Important terminology related to alliances and acquisitions is introduced to understand the
balance of the chapter. Formal institutions influence alliances and acquisitions through antitrust
and entry mode concerns. Informal institutions affect alliances and acquisitions through
normative and cognitive pillars. The impact of resources on alliances and acquisitions is
illustrated by the VRIO framework. Alliances are typically formed when managers go through a
three-stage decision process. Managers need to combat opportunism and, if necessary, manage
the dissolution process. Four factors affect performance: equity, learning, nationality, and
relational capabilities. Acquisitions are often driven by synergistic, hubristic, and managerial
motives. Many acquisitions fail because managers do not address pre- acquisition and postacquisition problems. Managers need to understand and master the rules of the game governing
alliances and acquisitions around the world. When managing alliances, managers must pay
attention to the “soft” relationship aspects. When managing acquisitions, the savvy manager
should not overpay and should focus on both strategic and organizational fit.
Companies that are currently outsourcing have several considerations that must be evaluated.
Cloud computing is growing in popularity due to the ease of use and the ability for companies to
back up information offsite. However, companies also need to consider the company to which
they have outsourced their data storage. If the company is located internationally, the company
should conduct research on security and policies if data needs to be accessed by any law
enforcement agency. Another consideration is the ability to keep information secure and data
private. When a company chooses to outsource technology to a third party company, they need
to ensure that the company has taken all necessary precautions to keep data secure. Companies
should also consider the new trend to have employees work virtually or to hire independent
contractors rather than employees to complete projects for the company.
Current trends in outsourcing are dependent upon current business and political climate. When
tariffs and taxes change, companies need to evaluate their current outsourcing strategies to
determine if it is still the best option for their company. Currently, outsourcing manufacturing of
technology products such as smart phones, computers and other devices is trending. Much of
this production is being outsourced to Asian countries including India and Asia.
Offshoring is different than outsourcing in that with offshoring, the physical location that is
conducting the work is still owned by the original company. The company chooses to open its’
own operations in another country. Outsourcing is when the company chooses to contract
another company to conduct part of the company operations. Only outsourcing can happen
domestically, while both outsourcing and offshoring happens internationally.
Readings
Chapter Twelve
Chapter twelve covers strategies to expand internationally making alliance and gaining
acquisitions. When expanding globally, it can be helpful to work third party companies
that are already familiar and operating within the new area.
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Chapter Thirteen
Governing multinational strategy and structure is an integration-responsiveness
framework. There are four strategy/structure pairs: home replication
strategy/international division structure, localization strategy/geographic area structure,
global standardization strategy/global product division structure, and transnational
strategy/global matrix structure.
Chapter Fourteen
In international marketing, the leading concern about product is standardization versus
localization. Marketers care about price elasticity—how responsive purchasing behavior
is when prices change. In promotion, marketers need to decide whether to enhance or
downplay the country-of-origin effect. Technically, “place” used to refer to distribution
channel—the location where products are provided. More recently, the term “distribution
channel” has been replaced by “supply chain management” in response to more
outsourcing to suppliers, contract manufacturers, and 3PL providers.
Assignments
Case Study 9: Integrative Case 3.1: FARMACIAS SIMILARES: INNOVATING IN
THE MEXICAN HEALTHCARE INDUSTRY
Read the case and answer the questions at the end of the case in 1-2 pages.
Submit in APA format with a title page and references. The title page and
references do not count towards the 1-2 page requirement.
Case Study 10: Integrative Case 3.4: THE ANTITRUST CASE ON THE AT&T–TMOBILE MERGER
Read the case and answer the questions at the end of the case in 1-2 pages.
Submit in APA format with a title page and references. The title page and
references do not count towards the 1-2 page requirement.
All written work is subject to plagiarism detection software review. Identified instances of
cheating or plagiarism will follow the Academic Integrity statement in the Syllabus.
BUS 480 – GLOBAL BUSINESS STRATEGIES
Adams State University – CEP© Page 28 of 36 July 2018
UNIT SIX
Lecture Notes
International staffing primarily relies on ethnocentric, polycentric, and geocentric approaches.
Expatriates (primarily PCNs and, to a lesser extent, TCNs) play multiple challenging roles and
often have high failure rates. They need to be carefully selected, taking into account a variety of
factors. Expatriates need to be properly trained and cared for during expatriation and
repatriation. Training and development of HCNs are now an area of differentiation among many
MNEs. Expatriates are compensated using the going rate and balance sheet approaches. Top
talent HCNs now increasingly command higher compensation. Performance appraisal needs to
be done carefully to achieve its intended purposes. Despite efforts to revive unions, the power of
unions has been declining in developed countries. The power of unions in most developing
countries requires some attention but is mostly limited. HRM is significantly shaped by formal
and informal rules of the game—both at home and abroad. As HRM becomes more strategic,
VRIO dimensions are now more important. Leading debates consist of best fit versus best
practice and expatriation versus inpatriation. HR managers need to have the four Cs: being
curious, competent, courageous, and caring about people. Non-HR managers need to proactively
develop an international career mindset.
In the U.S. and UK, firms with separation of ownership and control dominate. Elsewhere, firms
with concentrated ownership and control in the hands of families or governments are
predominant. In firms with separation of ownership and control, the primary conflicts are
principal–agent conflicts. In firms with concentrated ownership, principal–principal conflicts
prevail. The board of directors performs control, service, and resource-acquisition functions.
Around the world, boards differ in composition and leadership structure. Internal, voice-based
mechanisms and external, exit-based mechanisms combine as a package to determine corporate
governance effectiveness. The market for corporate control and the market for private equity are
two primary means of external mechanisms. Different combinations of internal and external
governance mechanisms lead to four main groups. Institution-based and resource-based views
shed considerable light on finance and governance issues. Leading debates consist of
opportunistic agents versus managerial stewards and global convergence versus divergence.
Understand the rules, anticipate changes, and be aware of differences. Develop firm-specific
capabilities to differentiate on corporate finance and governance dimensions.
A stakeholder view of the firm urges companies to pursue a more balanced set of triple bottom
line, consisting of economic, social, and environmental performance. Despite the fierce defense
of the free market school, especially its shareholder capitalism variant, the CSR movement has
now become a more central part of management discussions around the globe. Savvy managers
must understand the rules of the game, anticipate changes, and seek to influence such changes.
CSR battles should be chosen carefully, not simply as an effort to imitate other firms’ CSR
activities. CSR should be an integral part of the core activities and processes of a firm.
BUS 480 – GLOBAL BUSINESS STRATEGIES
Adams State University – CEP© Page 29 of 36 July 2018
Readings
Chapter Fifteen
Chapter fifteen reviews managing human resources in the global environment. Human
resource professionals need to be aware of all employment laws in the various countries
where a company operates.
Chapter Sixteen
Chapter sixteen examines the financial considerations in the global market. Equity refers
to the stock (usually expressed in shares) in a firm, and debt refers to the loan that the
firm needs to pay back at a given time with a pre-specified interest. Tapping into a larger
pool of capital globally allows firms to lower their cost of capital.
Chapter Seventeen
Chapter seventeen discusses corporate social responsibility. When operating globally,
the carbon footprint of a company may be larger depending upon how much shipping and
distribution needs to occur. In this chapter, considerations and strategies to reduce the
negative environmental and social impacts are covered.
Assignments
Final Business Research Paper
Your final paper should be 8-10 pages excluding title page and references. Choose a company
where you have worked in the past, currently work, or would like to work in the future.
Explain how a manager should address the human and product issues that will arise from
global expansion to a country where the company is not currently operating. Specifically
address, how the organizational structure might change, how to handle change management,
and how this may impact the life cycle of the company.
x Recommend changes to the structure that would improve the effectiveness of the
company
x Recommend three changes that would improve the overall structure and culture of the
company.
x Analyze the life cycle of the company.
x -Identify each stage the company has already experienced providing examples of
indicators in each stage.
x You can take the following into consideration:
o Ability to obtain new financial sources
o Competitors
o Product life cycle
o New needs of a customer
o Regulations
o Sustainable development
o Changing/shifting demographics
o Social consciousness
o Demographics
o External/internal environment
BUS 480 – GLOBAL BUSINESS STRATEGIES
Adams State University – CEP© Page 30 of 36 July 2018
o Psychological needs of current employees
o Cultural differences of employees in the new country.
Final Exam
Plan to take the Final Exam after reading Chapters 8-17 of the text book.

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