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Technische Universität Berlin
Strategic Leadership and Global Management
Prof. Dr Dodo zu Knyphausen-Aufseß
www.strategie.tu-berlin.de
SYLLABUS
MULTINATIONAL CORPORATIONS AND
CORPORATE CONTROL
WINTER TERM 2019/20
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WELCOME TO THE MODULE
“MULTINATIONAL CORPORATIONS AND CORPORATE CONTROL”
73 140 L 1511 Multinational Corporations and Corporate Control
This module consists of two parts―Part 1: “Multinational Corporations: Theories and Practice” and Part 2:
“Corporate Control”.
Part 1 is taught by Prof. Dr Dodo zu Knyphausen-Aufseß, chair professor at TU Berlin, in the first half of the
semester. Part 2 is taught by Prof. Dr Ulrich Pidun, honorary professor at TU Berlin and director in the
Frankfurt office of the Boston Consulting Group, in January 2020. This combination helps to ensure that
theoretical rigor is complemented by practical relevance. Please note that you need to complete both parts.
PART 1: MULTINATIONAL CORPORATIONS: THEORIES AND PRACTICE
October to December 16 Oct to 5 Dec 2019
Wednesdays 2 to 4 pm EW 202
Thursdays 12 noon to 2 pm HL 001
Lecturer Prof. Dr Dodo zu Knyphausen-Aufseß ([email protected])
Research associate Dipl.-Ing. Niko Ippendorf ([email protected])
PART 2: CORPORATE CONTROL
January 17 Jan to 31 Jan 2020
Fridays 9.30 am to 5.30 pm H 0106
Lecturer Prof. Dr Ulrich Pidun ([email protected])
Research associate Dipl.-Ing. Niko Ippendorf ([email protected])
IMPORTANT INFORMATION
Introductory lecture
Wed 16 October 2019 2 to 4 pm EW 202
Written tests
Mon 17 Feb 2020 12.30 to 2.30 pm (80 min) H 3010
Mon 30 Mar 2020 10 am to 12 noon (80 min) H 0104 (re-exam)
Enrolment
Module enrolment possible as from 16 Oct 2019 ISIS (password in introductory lecture)
Exam registration 14 Oct to 20 Dec 2019 QISPOS or examination office
Re-exam registration 21 Feb to 20 Mar 2020 QISPOS or examination office
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SCHEDULE
LECTURES IN WINTER TERM 2019/20
PART 1: MULTINATIONAL CORPORATIONS: THEORIES AND PRACTICE (Professor Dr Dodo zu Knyphausen-Aufseß)
Day (Wed)
Lecture 2 to 4 pm, EW 202
Day (Thu)
Lecture 12 noon to 2 pm, HL 001
Case study
16 Oct 1 Introduction & The case of Cahora Bassa 17 Oct 2 Foreign direct investment and MNC
23 Oct 3 Culture and the role of distance 24 Oct 4 Family firms internat.1 & Modes of market entry
30 Oct 5 Doing business in a distant country2 31 Oct 6 MNCs as spearheads of imperialism… 1 Shell
6 Nov 7 …or as enablers of the third world’s development? 7 Nov 8 Macro- and regionally-oriented approaches 2 Novartis | 3 Google
13 Nov 9 Trade wars and globalisation: Trump versus China 14 Nov 10 MNC from an industrial organisation perspective 4 Student panel discussion
20 Nov 11 Firm- and transaction cost-based approaches 21 Nov 12 Dynamic capability and institutional views on MNC
27 Nov 13 Behavioural and process approaches 28 Nov 14 Firms’ internat. behaviour in developing countries 5 Aldi and Lidl | 6 Alibaba
4 Dec 15 MNC in the digital economy 5 Dec 16 What we have learned?
PART 2: CORPORATE CONTROL (Professor Dr Ulrich Pidun)
Day (Fri)
Lecture 9.30 am to 1 pm, H 0106
Lecture 2 to 5.30 pm, H 0106
Case study
17 Jan 1 Value-based management Strategic planning 7 DSM
24 Jan 2 Risk management Investment management (organic and M&A) 8 Hydro One | 9 Bayer
31 Jan 3 Financial management Integrated management & What have we learned? 10 General Electric | 11 Danone
For further information see page 9 Guest lecturers: 1Cornelius Hafner, 2Dr Andreas Dippe
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OUTLINE
Outline ............................................................................................................................................................... 3
1 Goals and module content ............................................................................................................................. 4
2 Participants and language .............................................................................................................................. 5
3 Credit points and exam................................................................................................................................... 5
4 Enrolment ....................................................................................................................................................... 6
5 Course material and readings ......................................................................................................................... 7
6 Case studies .................................................................................................................................................... 7
7 Interactivity and feedback .............................................................................................................................. 8
8 Module schedule ............................................................................................................................................ 9
1 GOALS AND MODULE CONTENT
PART 1: MULTINATIONAL CORPORATIONS: THEORY AND PRACTICE
Multinational corporations (MNC) are part of our modern economy. Big companies like BMW and Bosch are
active on an international scale―but it's not only them. Small and medium sized enterprises are conducting
business abroad, too. Even start-up enterprises are widely discussed as being potentially “Born Globals”.
However, the emergence of MNCs is not self-evident. Companies usually know less about foreign than about
their domestic markets. Moreover, foreign investments bear risks. Thus, why should companies not only
restrict their activities to domestic markets, and serve foreign markets only by means of export or licensing
instead of greenfield investments? This is a basic question that requires an answer founded on solid theory.
Moreover, an explanation for the emergence of MNCs and their different shapes is also needed because
these companies can be very powerful today; e. g., in 2018 Daimler AG had revenues of € 167.362 bn. This is
more than the GDP of countries like Serbia (about € 51 bn), Slovenia (about € 54 bn), and Lithuania (about €
53 bn)―and also more than their sum! Hence, the responsibility and especially the behaviour of MNCs come
into focus, and it is not surprising that there are many critics of globalisation who call for a limitation of MNCs'
power. These critical arguments―that are at the heart of many political debates and also apply to the digital
world, think about AGFA (Apple, Google, Facebook, Amazon)―should be based on proper theoretical
considerations as well.
While theoretical approaches provide the structural skeleton of this course, we will extensively use case
studies to illustrate several aspects of special interest.
We think that this combination is appropriate for a master degree schedule at a university and that the eye
on theory may be useful for you if you decide to write a thesis in the field of business administration or
management. However, please note that Part 2 “Corporate Control” has also a strong focus on practical
application but at the same time providing a robust theoretical grounding.
Overall, we want to introduce multiple approaches for a theoretical explanation of MNCs. You should be able
to distinguish the different arguments of these theoretical approaches afterwards and to decide which of
these theories can be seen as suitable in order to assess the challenges that MNCs have to face today.
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PART 2: CORPORATE CONTROL
After the introduction into multiple approaches for a theoretical explanation, Corporate Control focuses on
the practical challenges in steering and controlling MNCs.
We will try to answer questions such as: What should be the key performance indicators for steering an
MNC? How can planning and budgeting be synchronised across the different businesses and geographies?
How can the biggest risks to the firm be identified and effectively managed? How can management make
sure to select the most promising investments and acquisition targets? How can these investments be
financed? And what are examples of superior management systems that we observe in successful MNCs?
The course is structured along six topics: value-based management, strategic planning, risk management,
investment management, financial management and integrated management systems. For each topic, we
will cover theoretical foundations and concepts, practical applications and challenges as well as case studies
to illustrate how individual MNCs have dealt with them.
2 PARTICIPANTS AND LANGUAGE
The module can be taken by students of Industrial Engineering (Wi-Ing) and Innovation Management,
Entrepreneurship, and Sustainability (IMES). Students of other programs should make sure that the module
is included in their electives. Of course, we also welcome ERASMUS, exchange and visiting students.
The module is taught in English.
3 CREDIT POINTS AND EXAM
The workload of the module sums up to 180.0 hours. Therefore, the module contains 6 Credit Points (ECTS):
WORKLOAD
Description Multiplier Hours Total
Class attendance 15.0 4.0h 60.0h
Class preparation and follow-up 15.0 2.0h 30.0h
Course-independent workload
Case study 1.0 30.0h 30.0h
Test preparation 1.0 60.0h 60.0h
180.0h (6 ECTS)
PLEASE NOTE: THIS MODULE IS OFFERED FOR THE LAST TIME IN WINTER TERM 2019/20!
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The portfolio exam consists of the following two performances:
PORTFOLIO EXAM
You pass the module, if you achieve 50 percent overall―regardless of what you have achieved in a single
exam part.
Throughout the semester we will support you, and especially at the end of each module part you will have
the opportunity to ask questions regarding the written test.
In general, all topics of the two module parts as well as the contents of the case studies are relevant for
the written test! But note: the scope of the written tests is dependent on your participation rate―the
more you as a group show attendance, the more we will reduce the scope, e. g., down to the content of
half of the sessions.
GRADING SCALE
1.0 1.3 1.7 2.0 2.3 2.7 3.0 3.3 3.7 4.0 5.0
90.0 85.0 80.0 76.0 72.0 67.0 63.0 59.0 54.0 50.0 0.0
1.0, 1.3: excellent 1.7, 2.0, 2.3: good 2.7, 3.0, 3.3: satisfactory 3.7, 4.0: sufficient 5.0: fail
4 ENROLMENT
For this module, you have to register twice:
On the e-learning platform ISIS, you register for the case study. Additionally, we provide you with the lecture
slides and exam results. Here we can also get in contact with you to announce short-term changes. The course
areas are password-protected. You will receive the password during the introductory session.
On QIPSOS or at the examination office, you register for the written test. At the same time, you are officially
enrolled for the module as portfolio exam. Please note the two different registration periods depending on
the test dates.
If you have any questions on how to register for your individual study program, please contact your program
coordinator or the examination office―we only offer the module and don’t know the regulations of all study
programs.
30%
70%WRITTEN TEST
Individual performance
CASE STUDY PRESENTATION
Group performance
6 CREDIT POINTS (ECTS)
4 SWS
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MODULE ENROLMENT
Part of portfolio exam Registration period Enrolment option
Case study 14 Oct to 20 Oct 2019 ISIS
Written test (17 Feb 2020) 14 Oct to 20 Dec 2020 QISPOS or examination office
Withdrawal by 11 Feb 2020
Written test (re-exam, 30 Mar 2020) 21 Feb to 20 Mar 2020 QISPOS or examination office
Withdrawal by 20 Mar 2020
ERASMUS or visiting students who need a certificate or “Schein” need to register on ISIS and have to send
an enrolment e-mail to our department’s assistant, Ms Anja Dittmann.
CONTACT FOR MODULE ENROLMENT AND EXAM ISSUES
Anja Dittmann Office H 9167 ([email protected])
5 COURSE MATERIAL AND READINGS
The lecture slides and additional literature are available on ISIS. They shall help you to understand the topics,
deepen your insights, and take part in discussion.
Keep in mind: Only if all participants prepare themselves for the respective lecture and participate in the
discussions, the goals of this course can be achieved. From our experience, it is too late if you try to read all
the literature at once and for the first time right before the written test.
6 CASE STUDIES
In our introductory session we will present you the preliminary case study assignments for the whole module.
Depending on the number of students in this session we may offer additional case studies. You have to
choose three of them and confirm your priorities on ISIS.
CASE STUDY
Topic selection 3 case studies (priorities) on ISIS by Sunday, 20 October 2019, 12 midnight
Slides 10 to 15 slides upload on ISIS (PDF file) by date of presentation
Presentation 20 minutes plus 10 minutes additional discussion
We will try to assign each of you to a group and case study of your choice―but please note that some topics
are very popular and the size of each student group is limited. So, possibly not everyone will get his or her
first or second priority.
THE CASE STUDIES AND RESPECTIVE QUESTIONS ARE AVAILABLE ON ISIS.
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HINTS FOR YOUR CASE STUDY WORK
Leading questions: For each case study, we provide 4 to 5 leading questions. Do not answer those
questions separately, but integrate the aspects they are addressing into your overall story line.
▪ Scope: about 10 to 15 content slides (PowerPoint, etc.). Additionally, you have to upload your slides
on ISIS as PDF files by the date of your case study presentation.
▪ Time limit: Maximum of 20 min plus 10 min additional discussion. The discussion has to be prepared
and moderated by your group
▪ Literature: We will provide you with some basic case study literature which should serve as a starting
point for the preparation of your case study. Nevertheless, you have to search for additional sources
and information on your own.
▪ Furthermore: Please include a guideline chart “red thread” as first slide in your slide set which makes
it easier to follow and understand your presentation.
▪ Please keep in mind: The case study content is relevant for the portfolio exam. The better you
prepare your presentation and the subsequent discussion, the more you and your fellow students
will benefit.
OPTIONAL PEER ASSESSMENT
If desired by one of your group members, we offer you the possibility of a peer assessment procedure for the
case study evaluation. Every student needs to evaluate her/his own performance and the performance of
her/his group members in preparing and presenting the case study. As a consequence, the peer assessment
will influence 50 percent of your case study grade as a weighting factor.
If your group want to participate in a peer assessment, please inform us immediately by e-mail. Thus, you
have to complete an EXCEL template available on ISIS by the date of your case study presentation.
Please note: After your case study presentation, a peer assessment is no longer possible and each group
member receives the group grade.
CONTACT FOR CASE STUDIES AND PEER ASSESSMENT
Dipl.-Ing. Niko Ippendorf Office H 9168 ([email protected])
7 INTERACTIVITY AND FEEDBACK
We encourage your participation in the module as far as possible. To ensure the communication won't be
one-sided, we ask you to articulate all your questions and ideas openly in class. Furthermore, we are at your
disposal for all kinds of questions and requests by e-mail. Please also make use of our forum on ISIS as a
communication platform.
To reveal the shared responsibility for a successful module, we ask two participants every week to provide
feedback to your fellow students holding a presentation. For this reason, it is important that you attend the
course on a regular basis.
At the end of the course you will have the possibility to officially evaluate the module―of course we have to
and want to improve ourselves.
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8 MODULE SCHEDULE
PART 1: MULTINATIONAL CORPORATIONS: THEORIES AND PRACTICE
Time Case study Topic Content Readings
Wednesday 16 Oct 2019 2 to 4 pm
SESSION 1 General information session, introduction, and a case study: Cahora Bassa
Let’s begin with some basics about our key terms, the “multinational corporations” (MNC) and “globalisation”, as well as the concept of “theory”. After that, I will present and discuss with you an introductory case study that directly leads us to the moral and cultural implications of globalisation. This case is a rather old but nevertheless very interesting one—it describes the Cahora Bassa Dam project in Mozambique that was planned and executed by the colonial Portuguese regime in the 1960s and 1970s. We look on this case through the lenses of the Siemens corporation: Should this company engage in such a project and thereby help to stabilise a political regime that was so much in contrast to the values of a modern democracy? (Currently, there are certainly also candidates where you can ask such a question; think about it!) The discussion of these questions will provide you a feeling about the role of multinational corporations in a globalised world.
Thursday 17 Oct 2019 12 to 2 pm
SESSION 2 Foreign direct investment and the multinational enterprise
In the foregoing session I already introduced key terms of our course, but there is much room left for a more detailed discussion! The focus is on the MNC, but this time I want to relate it to the concept of foreign direct investments (FDI) which describes a specific way of entering foreign markets, as opposed to, most notably, export (and import) activities. Furthermore, you will see that there is a range of potential activities that a company can conduct in foreign countries, leading also to a certain “fuzziness” of the term “Multinational Corporation”. These definitional exercises will serve as a starting point for the more theoretical considerations we will discuss in subsequent sessions. I will also present you some empirical evidence in order to provide you a feeling how important the phenomenon is that we consider in so much detail in this course.
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Wednesday 23 Oct 2019 2 to 4 pm
SESSION 3 Culture and the role of distance
What makes multinational corporations, what makes International Management unique, compared to “normal” (domestic) corporations and management? One answer which we can often find in the literature is: culture. MNCs and international management imply cross-border relationships and activities, and in turn this implies that one has to deal with different cultures and behavioural patterns. The usual assumption then is that distance matters—the more distant the cultures are, the more likely it is that cross-border activities fail. However, testing this assumption requires that we have a solid concept of what culture is and how we can measure cultural distance. The most well-known candidate for this is based on a one-company (IBM) study conducted by Geert Hofstede—quite long ago! Many issues are to be discussed: What dimensions does culture really have? Do cultures change over time and what are the determinants of such change? Is cultural distance related to other distances—administrative, geographic, economic, as suggested by P. Ghemawat? And in the end, does distance really matter, in general and within the context of digitalisation?
▪ Ghemawat, P. (2018), The new global roadmap: Enduring strategies for turbulent times. Boston: Harvard Business Press; pp. 13-38.
▪ Hutzschenreuter, T., Kleindienst, I. & and Lange, S. (2015), The concept of distance in international business research: A review and research agenda. International Journal of Management Reviews 18; pp. 160-179.
Thursday 24 Oct 2019 12 to 2 pm
SESSION 4 How family firms internationalise: a diversification perspective Modes of market entry: What are and what do we know about cross-border mergers and acquisitions?
If we want to understand how firms internationalise, why not rely on established concepts from the strategic management literature? One candidate for such an endeavour is diversification. Diversification is often related to product diversification; however, the famous “product-market matrix”, which goes back to Igor Ansoff in the 1960s, counts as diversification only those growth strategies that are related both to new products and new markets, in our case: new countries or regions. Alternatively, we could also speak of country or geographic diversification and then ask whether such an approach leads to similar considerations and results as we know them from the product diversification literature. We discuss these ideas in the first half of our session with Cornelius Hafner, a consultant at Boston Consulting Group and a doctoral student at my chair, and with a special focus on family firms, as he takes it in his dissertation project.
How do firms diversify in, how do they enter foreign markets? One way to do this is via mergers and acquisitions (M&A). Indeed, cross-border M&A activities are an important phenomenon. In the second half of this session I will review the mostly empirical literature that has appeared after Shimizu et al.’s (2004) call for research focusing on this topic. I first show that existing data on the phenomenon are hard to interpret, and that there are only few studies that take the challenge of drawing the demarcation line
▪ Hafner, C. (2019), Diversification in family firms. A systematic review of product and international diversification strategies. Review of Managerial Science (forthcoming)
▪ Knyphausen-Aufseß, D. zu & Pidun, U. (2018), What are and what do we know about cross-border mergers & acquisitions?, Conference Abstract.
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between national and cross-border M&A transactions seriously. Based on a systematic literature selection process, I then review the relevant studies along the lines of Shimizu et al.’s organising framework. My conclusion is that despite a plethora of studies our knowledge on cross-border M&A transactions is still fragmentary and not very reliable, and that we need further research to provide the business practice with helpful advice.
Wednesday30 Oct 2019 2 to 4 pm
SESSION 5
Doing business in a distant country: The case of Volkswagen in China
How do companies enter foreign markets and how do they operate within these markets? This question is at the heart of our course. As a starting point for our attempt to provide an overview of academic answers to this question, it might be useful to have a look into the business practice. “Volkswagen in China” might be a particularly interesting case example—on the one hand because China offers a huge market opportunity due to the size of its population and the ongoing growth of consumer expenses, and on the other hand because Volkswagen was an early mover into this market and has many experiences regarding the obstacles of entering such a market and defending the company’s market position against other competitors from abroad and also from within the country. Based on personal experiences in China, Dr Andreas Dippe, Head of Group Portfolio Strategy at Volkswagen, will present and discuss the case with us.
▪ Yang, J. Y., Tipton, F. B., Li, J. A (2011), A review of foreign business management in China. Asia Pacific Journal of Management 28: 627-659.
Thursday 31 Oct 2019 12 to 2 pm
CASE 1 Shell in Nigeria
SESSION 6 Multinational firms as spearheads of imperialism...
Theorising about MNCs and their role in a globalised world can start from different angles – from the development of modern societies and capitalism to macroeconomic and industrial organisation theories to theories of the firm and microanalyses of individuals’ behaviour. We start with the—at least from what you are used to in “business administration”—rather “wild” theories of imperialism. Indeed, theories of imperialism have a special relevance for our discussion about internationalisation activities of MNCs. They may explain in how far these activities follow usual internal mechanisms of capitalistic systems and/or if those activities result from a tension between political and economic configurations. We will begin our discussion with some “bourgeois” theories of imperialism and will contrast these with Marxian approaches, which include the Dependencia theory. The Marxian approaches see MNCs benefiting from exploiting third-world countries and fostering their underdevelopment. Shell in Nigeria provides a compelling case to support such a view!
▪ Kruger, H. (1955), Hobson, Lenin, and Schumpeter on imperialism, Journal of the History of Ideas 16(2): 252-259.
▪ Diez, T. (2011), Key Concepts in international relations, Sage, Los Angeles, pp. 22-27.
▪ Case study 01 “Shell in Nigeria”
Lynn Sharp Paine, L. S., Moldoveanu, M. C. (2009) Royal Dutch/Shell in Nigeria (A) and (B). Harvard Business Publishing; 28 pages, 2 pages.
Shell in Nigeria. TUB Notes.
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Wednesday 6 Nov 2019 2 to 4 pm
CASE 2 Novartis in India
SESSION 7 ...or as enablers for the development of the third world?
In the last session, MNCs were presented in a rather critical manner, somehow in line with the Cahora Bassa case that we discussed in our introductory session. However, it might also be possible to develop a more positive view about the possible roles of MNCs in the third world and appeal to their social responsibility. Are there ways to combine the needs of poor people and the commercial interests of multinational companies? C.K. Prahalad’s concept of the “bottom of the pyramid” may give an answer to this question. Again, we will discuss a case study—Novartis, one of the big pharmaceutical firms from Switzerland—to see what a company can do in this respect.
▪ Prahalad, C. K. & Hammond, A., Serving the world’s poor, profitably, in: Harvard Business Review, September 2002, pp. 48-57.
▪ Chliova, M./Ringov, D. (2017), Scaling impact: template development and replication at the base of the pyramid. Academy of Management Perspectives 31(1): 44-62.
▪ Case study 02 “Novartis”
Chattopadhyay, A., Angelmar, R. (2018) Novartis: Building a Sustainable Business at the Bottom of the Pyramid. Harvard Business Publishing Education; 16 pages.
Thursday 7 Nov 2019 12 to 2 pm
CASE 3 Google in China
SESSION 8 Theories of the MNC: Macro- and regionally-oriented approaches to the multinational enterprise (1)
In the preceding lectures, we focused primarily on the possible roles of MNCs for the (under-)development of the third world, thereby discussing one of the core topics in the modern globalisation debate. Next, we will take a look at approaches that try to explain MNCs by using economic welfare arguments. Special emphasis is given to trade theories, which spring from mercantilism. They were further developed by A. Smith, D. Ricardo and other scholars. Furthermore, I want to highlight the importance of the product life cycle model of R. Vernon and variations of industrial location theory, like the diamond model of M. Porter or Paul Krugman’s “strategic trade theory”. The latter theories also allow us to build a bridge between macro- and micro-geographic arguments. Afterwards, we will turn to the approach of “obsolescing bargaining”. This approach highlights the interaction between companies on the one side and governments and other institutions, which decide about conditions for market entries, on the other side. In line with the abovementioned “strategic trade theory”, this theory is in contrast to liberal trade theories, as it emphasises the productive role of states in the acquisition of world market shares of single companies. Our Google case study refers to this latter (obsolescing bargaining) theory.
▪ Clegg, L. J. & Wang, E. Y. (2018), International trade theory and the firm, in: Buckley, P. J., Enderwick, P. & Cross, A. R. (eds.), International Business, Oxford: Oxford University Press, pp. 92-127 (-121).
▪ Grosse, R. & Behrman, J. N. (1992), Theory in international business: Transnational Corporations 1 (1992), p. 93-126.
▪ Case study 03: “Google in China”
Perepu, I. (2017) Google in China―the re-entry dilemma. IBS Center for Management Research; 14 pages.
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Wednesday 13 Nov 2019 2 to 4 pm
CASE 4 Student panel discussion
SESSION 9 Macro- and regionally oriented approaches (2) Trade wars and globalisation: Trump versus China
In this session I will first continue my last lecture, for not more than 30 minutes. Then we have one hour to move into our next topic: Trade wars and globalisation! Proponents of trade are typically in favour of globalisation—they believe that globalisation is beneficial for economic growth and welfare, not only in the developed world but also in third-world countries. No wonder then that politicians around the world, who share this “neo-liberal” belief, promote negotiations between individual countries or economic regions in order to break down trade barriers and support as much economic freedom as possible. (One recent and heavily debated example is the Transatlantic Trade and Investment Partnership (TTIP), a proposed trade agreement between the European Union and the United States.) This debate around trade has most recently become a new flavour since the anti-globalisation and anti-TTIP activists usually find themselves on the left side of the political spectrum—are they now allying with the Trump administration which recently has started a new wave of protectionism or, more dramatically, “trade war” and de-globalisation? Is this “trade war” an indication that we are entering a phase in history in which the United States of America and China are struggling about global hegemony? What implications would this have for MNCs and their way of doing business? Let’s discuss these and other questions on a plenary where some students take specific roles and argue against each other—and, of course, also answer questions from the audience!
▪ Witt, M. A. (2019), De-globalization: Theories, predictions and opportunities for international business research. Journal of International Business Studies 50: 1153-1177
▪ Case 04: “US-China trade war”
Dutta, S., Poddar, A. (2018) The US-China trade war―escalating tensions. Amity Research Centers; 12 pages.
Cavallo, A. F., Cal, M., Laski A. (2019) The US-China trade war. Harvard Business Publishing; 32 pages.
Thursday 14 Nov 2019 12 to 2 pm
SESSION 10 Theories of the MNC: Multinational enterprises seen from an industrial organisation perspective
After discussing macroeconomic approaches (and also regionally-oriented derivatives) to understand the emergence and role of MNCs, we now step one level down and take industrial organisation-based approaches into account. The most basic consideration these approaches is that there are industry-specific parameters which determine the behaviour of companies within that industry. This also includes the behaviour with regard to internationalisation activities. If you have participated in our basic module or the module “Strategic management”, you will surely remember the “Structure-Conduct-Performance (SCP) Paradigm”. Here we use two variations of this approach. First, we have the approach of S. Hymer, which emphasises the specific constellation for advantage triggering companies to enter foreign markets. This includes also a consideration of the “Liability of Foreignness”, namely the disadvantages that a company has compared to companies that originated from the corresponding foreign country.
▪ Dunning, J. & Pitelis, C. N. (2008), Stephen Hymer's contribution to international business scholarship: an assessment and extension. Journal of International Business Studies 39: 167-176.
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Second, we turn to the approach of F. Knickerbocker, who focused on the sequence of market entries. Knickerbocker postulates that in industries with a high concentration market leader are the first to enter foreign markets and that other companies will follow in order to keep the (oligopolistic) market balance. I conclude the session with a discussion of the performance implications of entering new markets, a topic that is most interesting not only from an SCP but also from a strategic management perspective in general.
Wednesday 20 Nov 2019 2 to 4 pm
SESSION 11 Theories of the MNC: Firm- and transaction cost-based approaches: Towards an eclectic paradigm?
Our next step takes us to the perspective on single companies or transactions, respectively. The main question is here: Why should companies enter foreign markets by establishing subsidiary companies, which must be directed via internal discretionary power? They could also restrict their activities to export and import relations, i.e. trade of goods. Why should they bother to found new organisations and to build up new structures in a foreign country? In other words: Why should a company internalise external market relationships? This question is at the heart of the internalisation theory (not to be confused with internationalisation theory!) or transaction theory. Theories about capital markets like those of Rugman, Lessard and others belong to this theory group. They may be based on the investment behaviour of individuals, but they argue that the transaction costs for an investment in a foreign country are lower for companies than for individuals and investors. The internalisation theory is, in my reading, currently the most-discussed theories of the MNC, given its flexibility for adaptation to new phenomena (such as digitalisation, discussed in a later session). John Dunning has also tried to integrate this approach with industrial organisation and location theories, resulting in the so-called “eclectic paradigm”. I will present this idea at the end of this session (or in the beginning of the next session, depending on the time we have).
▪ Narula, R., Asmussen, C., Chi, T. and Kundu, S. (2019) Applying and advancing internalization theory: the multinational enterprise in the 21st century. Journal of International Business Studies.
(It is not necessary to read chapter “The papers in the special issue”)
▪ Rugman, A. (1977), Risk, direct investment and international diversification. Weltwirtschaftliches Archiv, Vol. 113, pp. 487-500.
▪ http://en.wikipedia.org/wiki/Eclectic_paradigm
Thursday 21 Nov 2019 12 to 2 pm
SESSION 12 Dynamic capability and institutional views on the MNC
The “eclectic paradigm” represents one attempt to integrate different theories of the MNC; another one stems from David Teece, one of the gurus in strategic management research, who has in the 1980s also engaged in developing a transaction cost (or internalisation) theory-based explanation of the MNC. In a more recent paper, he argues that technology transfer and capabilities perspectives have been somewhat neglected so far. As we can read in the abstract of his 2014 paper: “If fully integrated as part of a more complete approach, [this perspective] can buttress
▪ Teece, D. (2014), A dynamic capabilities-based entrepreneurial theory of the multinational enterprise. Journal of International Business Studies 45: 8-37.
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transaction cost, governance issues, and expand the range of phenomena that can be explained. In this more integrated framework, dynamic capabilities coupled with good strategy are seen as necessary to sustain superior enterprise performance, especially in fast-moving global environments. Entrepreneurial management and transformational leadership are incorporated into a capabilities theory of the MNE. The framework is then used to explain how strategy and dynamic capabilities together determine firm-level sustained competitive advantage in global environments. It is suggested that this framework complements contract-based perspectives on the MNE and can help integrate international management and international business perspectives.” I look forward to discuss with you this approach!
Wednesday 27 Nov 2019 2 to 4 pm
CASE 5 Aldi & Lidl
SESSION 13 Theories of the MNC: Behavioural and process approaches
As we are slowly approaching the end of this course, we have to realise that we have talked a lot about MNCs but not so much about the managers who make the decisions within these MNCs! How does individual managerial behaviour look like and how can we imagine the first question requires us to speak about principal- agent theory and the behavioural-oriented approach of Y. Aharoni. The latter question leads us to the so-called “Uppsala” school. For illustration, we will discuss another case study in order to reflect the applicability of behavioural- and process-oriented approaches.
▪ Johanson, J. & Vahlne, J.-E. (2009), The Uppsala internationalization process model revisited: From liability of foreignness to liability of outsidership. Journal of International Business Studies 40, pp. 1411-1431.
▪ Case study 05 “Aldi and Lidl”
Schmid, S., Dauth, T., Kotulla, T., Orban, F. (2018) Aldi and Lidl: From Germany to the Rest of the World. In: Schmid S. (eds) Internationalization of Business. Springer, pages 81-98.
Thursday 28 Nov 2019 12 to 2 pm
CASE 6 Alibaba
SESSION 14 Internationalisation behaviour of firms from developing countries: The Chinese case
Usually, MNC theory assumes that the investment flows go from developed countries in other developed countries or in underdeveloped countries, e.g. from the U.S. into China. But some of these former so-called underdeveloped countries—and China is a good example (and India another one)—have become much stronger and now play a major role for our world economy, leading, inter alia, to the prediction that they increasingly become origins for MNCs themselves. As one can read in a report: “Despite the global economic and financial crises of recent years, corporate China continues its push for globalisation. China now ranks third in the world for outward FDI (2012 data), with its fastest revenue growth over the period 2008-2012 coming from operations in North America and Europe. The top Chinese multinational corporations (MNCs) are increasing their overseas assets and overseas employment at rapid rates, and are
▪ Deng, P. (2012), The internationalisation of Chinese firms: a critical review and future research. International Journal of Management Reviews 14, pp. 408-427.
▪ Case study 06 “Alibaba”
Mohanty, S. (2018) Alibaba-MoneyGram deal: what went wrong? Amity Research Centers; 11 pages.
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seeing greater revenue increases from overseas operations than from their Chinese counterparts. Moreover, today’s Chinese globalisers have even more aggressive plans for geographic and functional expansion in the near future. The idea of a “New Silk Road” is a case in point… So, what strategies do these Chinese globalisers actually pursue and how successful are there activities so far? And do we need a specific theory to explain the internationalisation of companies from developing countries? Those are the questions we want to discuss in this session, illustrated by the case example of Lenovo.
Syed Tariq Anwar (2017) Alibaba: Entrepreneurial growth and global expansion in B2B/B2C markets. Journal of International Entrepreneurship, Springer, vol. 15(4), pages 366-389.
Wednesday 4 Dec 2019 2 to 4 pm
SESSION 15 Outlook: Multinational corporations in the digital economy
After all our discussions in this first half of the semester—do we have the tools at hand that enable us to understand the development of the modern MNC and its role within society? In an abstract of a recent article, Zeng et al. (International Business Review, forthcoming) write: “The rise of the digital economy provides firms across the globe with unique business opportunities. Companies such as Facebook, Alibaba, and Uber are competing in a new multi-sided platform world; the primary focus of these firms, from their inception, is to provide digital infrastructure, information and technology—intangible assets that enable direct interaction or value creation across platforms by linking different user group and complementors, often at the international level. Building on data drawn from multinational multisided Platform corporations (MMPCs) operating in China, we […] suggest that internalisation theory [and most likely also all the other approaches we have discussed] needs to shift its focus from the ‘boundaries of the firm’ to the ‘boundaries of the local network’. By integrating their internal and external networks of knowledge in adapting their business models in host markets, this new breed of MNEs is more likely than the traditional one to gain a sustainable competitive advantage in the new information age.” Stuff for your master thesis?
▪ Banalieva, E. R. & Dhanaraj, C. (2019), Internalisation theory for the digital economy. Journal of International Business Studies (forthcoming)
Thursday 5 Dec 2019 12 to 2 pm
SESSION 16 What have we learned?
Repetition of Part 1: Multinational Corporations: Theories and Practice
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PART 2: CORPORATE CONTROL
Time Case study Topic Content Mandatory readings
Friday 17 Jan 2020 9.30 to 11 am
BLOCK SESSION 1 Value-based management (concept)
Introduction to the course: • Learning objectives, overview of lectures • Required readings, grading, support • Group assignments Lecture content: • How do you measure success of an MNC? • The concept of "shareholder value" • Porter's concept of "shared value" • The corporate objective function • Limits of financial accounting • Capital market game
▪ U. Pidun: Corporate Strategy: Theory and Practice, 2019, Springer Gabler, Chapter 2.1 (pp.11-21)
▪ M. Jensen: Value Maximization, Stakeholder Theory and the Corporate Objective Function, Journal of Applied Corporate Finance 2010, 22(1), 32-42
▪ M.E. Porter, M.R. Kramer: Creating Shared Value, Harvard Business Review 2011 (Jan)
11.30 to 1 pm Value-based management (metrics and application)
• Requirements for effective value-based metrics • Evaluation of alternative top-level metrics for managing the global firm • Alternative ways to create shareholder value
2 to 3.30 pm Strategic planning (theory) • Schools of thought: How are strategies developed? • Elements and process of strategy development in a firm • Planning under uncertainty, adaptive strategy
▪ A.P. de Geus: Planning as Learning, Harvard Business Review 1988 (Mar-Apr)
▪ H. Mintzberg: The Fall and Rise of Strategic Planning, Harvard Business Review 1994 (Jan-Feb)
▪ A. Campbell: Tailored, Not Benchmarked: A Fresh Look at Corporate Planning, Harvard Business Review 1999 (Mar-Apr)
4 to 5.30 pm
CASE 7 DSM
Strategic planning (practice) • Design choices for corporate-level strategic planning • The W-Process of corporate planning • Typical pitfalls of existing strategic planning processes • Characteristics of effective strategic planning processes Case study „Strategy and Performance Management at DSM“: • Please describe the strategic planning process at DSM (elements,
participants, tools) and assess its strengths and weaknesses.
▪ U. Pidun: Corporate Strategy: Theory and Practice, 2019, Springer Gabler, Chapter 11.3 (pp.265-277)
▪ Case study 07 “DSM”
Haspeslagh, P., Slagmulder, R., Bloemhof, M. (2004) Strategy and Performance Management at DSM. INSEAD; 29 pages.
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• Please describe the value-based steering system at DSM and its benefits and challenges.
• How do strategic planning and value-based steering interact at DSM? How do the two processes reinforce one another and where do you see challenges?
• How does the Melamine business benefit or suffer from the strategic planning and steering processes at DSM? How can these processes help decide on the strategic direction of the business?
• How do you assess the overall planning and steering system at DSM? Would you recommend it to other companies? For which types of firms would it be best suited?
Friday 24 Jan 2020 9.30 to 11 am
BLOCK SESSION 2 Risk management (theory)
• Risk definition and classification • Measuring risk • Tools and techniques for risk assessment • Principles of risk management
▪ A. Damadoran: Strategic Risk Taking, 2008, Wharton School Publishing, Chapter 1 (pp.3-10), Chapter 4 (pp.65-88), Chapter 11 (pp.341-366), Chapter 12 (pp.367-378)
11.30 to 1 pm CASE 8 Hydro One
Risk management (practice) • Enterprise Risk Management systems • Process of risk management • Organisation of the risk management function • Weaknesses of existing systems (learnings from previous crises) Case study "Enterprise Risk Management at Hydro One (A)": • Please describe the enterprise risk management process at Hydro One
(elements, participants, tools). How would you assess the strengths and weaknesses of this process?
• What do you consider the key risks for the company? Which criteria would you use to assess those risks and what is your overall evaluation?
• What should be done to manage the identified key risks? How should the risks influence the company's strategy and investment decisions?
• Which limits of enterprise risk management become apparent in the case of Hydro One?
▪ The Art of Risk Management, BCG Report, 2013
▪ Case study 08 “Hydro One”
Mikes, A. (2008) Enterprise Risk Management at Hydro One (A). Harvard Business Publishing; 22 pages.
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2 to 3.30 pm Investment management (organic)
• Strategic capital budgeting • Investment valuation • Investment portfolio management • Investment project management • Investment governance and process
▪ U. Pidun: Corporate Strategy: Theory and Practice, 2019, Springer Gabler, Chapters 8.1 and 8.2 (pp.173-182)
4 to 5.30 pm CASE 9 Bayer-Monsanto
Investment management (M&A)
• Growing through M&A: A value-creating strategy? • Systematic M&A process: Organising for M&A • Success factors for M&A: Lessons from serial acquirers Case study "Bayer-Monsanto: The challenges of a mega merger": • Please give a brief overview of the agriculture industry and of the two
companies Bayer and Monsanto before the announcement of the merger.
• How do you assess the strategic rationale for Bayer to acquire Monsanto? How could Bayer justify the high takeover premium of 44 percent?
• What are key challenges and risks for Bayer from acquiring Monsanto? • What would be the impact of the Bayer-Monsanto merger on the
agriculture industry? What were the major concerns of the antitrust authorities? How did the approval process develop?
• What are your recommendations for Bayer to move forward after merger approval?
▪ U. Pidun: Corporate Strategy: Theory and Practice, 2019, Springer Gabler, Chapter 7.1 (pp.141-151)
▪ Case study 09 “Bayer-Monsanto”
Kittilaksanawong, W., Gaté, G. (2017) Bayer-Monsanto: The Challenges of a Mega Merger. Ivey Publishing; 16 pages.
Friday 31 Jan 2020 9.30 to 11 am
BLOCK SESSION 3 Financial management (funding)
• Sources of funds for MNCs • Theories of capital structure and the cost of capital • Capital structure decisions in practice
▪ A.C. Shapiro: Multinational Financial Management, 2003 (7th edition), John Wiley & Sons, Chapter 12.1 (pp.423-430).
▪ M.J. Barclay and C.W. Smith: The Capital Structure Puzzle: The Evidence Revisited, Journal of Applied Corporate Finance 2005, 17(1), 8-17.
11.30 to 1 pm Financial management (capital markets)
• The modern standard theory of capital markets and its limits • Methods for analysing capital market-based value creation • Shareholder activism
▪ U. Pidun: Corporate Strategy: Theory and Practice, 2019, Springer Gabler, Chapter 10 (pp.229-251)
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2 to 3.30 pm CASE 10 General Electric
Integrated management systems (I)
• Styles of Competition • High-Performance Operating Systems • Example: Danaher Business System Case study "Jeff Immelt and the Reinventing of General Electric": • How did Jeff Immelt change the corporate strategy of GE when he
became CEO? • What were the key elements of the GE management system that Jeff
Immelt inherited from his predecessor Jack Welch? • How did Jeff Immelt change and further develop the GE management
system? • To which extent did the new GE management system support the new
corporate strategy? • How successful was Jeff Immelt in reinventing GE? What were the
reasons for his successes and failures?
▪ U. Pidun et al.: A New Playbook for Diversified Companies, MIT Sloan Management Review 60(2), 56-62
▪ Case study 10 “General Electric”
Grant, R. M. (2015) Jeff Immelt and the New General Electric. Contemporary strategy analysis: text and cases, pages 681-701.
George, S. S., Regani, S. (2014) Jack Welch and Jeffrey Immelt: Continuity and Change in Strategy, Style and Culture at GE (Abridged). IBS Center for Management Research, 7 pages.
Immelt, J. (2017) How I remade GE. Harvard Business Review, Vol. 95, No. 5, Sep-Oct, pages 42-52.
4 to 5.30 pm
CASE 11 Danone
Integrated management systems (II)
• Smart simplicity • Wrap-up of the course, guidance for the final exam, questions &
answers Case study "Danone: Strategy Implementation in an International Food and Beverage Company": • How would you describe the Danone management style and how does
it relate to the company's history and the personality of its CEO Franck Riboud?
• What are the key elements of the Danone management system and how is it different from the management system of competitors Nestlé and Kraft Foods?
• What is the impact of the Danone management model on the company's corporate strategy and performance?
• How should Danone develop its organisation and management system to address its key strategic challenges and to improve performance?
What have we learned? • Repetition of Part 2: Corporate Control
▪ Y. Morieux: Smart Rules: Six Ways to Get People to Solve Problems Without You, Harvard Business Review, Sep 2011.
▪ Case study 11 “Danone”
Grant, R. M., Amodio, A. (2012) Danone: Strategy Implementation in an International Food and Beverage Company. Contemporary strategy analysis: text and cases, pages 727-745.
