Cornell University

S.C. Johnson Graduate School of Management

NBA 5840: International Competitive Strategy

Spring, 2009

Professor: Gary Katzenstein, Ph.D.

Office: Sage Hall 401F
Phones: (607) 255-7469
Fax: (607) 254-4590
Email: gjk29@cornell.edu
Office Hours: By appointment, or Wednesdays, 2-5pm
Prerequisites: At least one course on Corporate Strategy

COURSE DESCRIPTION

Introduction:

Most influential companies do business outside their home countries. Few companies
who aspire to superior profitability are able to achieve this within the bounds of a single
national market. For an increasing number of businesses, competing internationally is no
longer an option. Moreover, the actions of non-North American multinationals means
that today more than ever, competitive activity must have a strong defensive element as
well.

Success in international markets is not a result of luck, but of skill and persistence.
Developing proficiency in international strategy translates into competitive advantage.
Building competence in this area means understanding, at a sophisticated level, how
companies succeed in the most demanding competitive arenas, which are usually found
beyond their head office nation’s borders.

The approach we will take in this course is practical and problem-oriented. It is intended
to enable you to acquire proficiency at strategy formulation and implementation in an
international context. The course will do this by developing and applying concepts,
analytical frameworks, and intuition to the strategic issues that face real-world
multinational corporations, regardless of their size, industry or location.

The four fundamental issues addressed in the course can be stated as follows:

• How can the firm take advantage of the global market place?

NBA 5840—International Competitive Strategy Spring Term, 2009

• How does a corporation create economic value through its multimarket activities?
• How must the corporation be structured and managed to realize the benefits of its
multimarket activities?
• When should those activities be undertaken inside the corporation, rather than accessed
through contracts, joint ventures or strategic alliances?

The course will offer analytical frameworks developed to address these questions and
will examine how these frameworks apply in concrete business situations.

COURSE FORMAT

The majority of class time will be devoted to the analysis and discussion of corporate
strategy and global competition cases. Short lectures (and selected videotapes) will
also be used to elaborate on key theoretical models and frameworks or to reinforce
crucial concepts. These lectures, however, will be subordinate to the case analysis.
Cases provide a natural "test-bed" for theory and provide vivid examples that aid
memory of concepts.

The case method also gives students a chance to deal with ambiguity. Most cases do
not have obvious "right" answers. Managers must be able to function in situations
where the right answer is not known, without falling into the trap of assuming that
any answer is as good as another. Some analyses and proposed strategies are clearly
wrong, and some are clearly better than others. A popular phrase in case analysis
classes is "There are no right answers, but there are wrong answers." Case discussion
techniques provide a chance to learn the meaning of analytical rigor in situations other
than open-and-shut problems.
Preparing

It is important you understand basic strategy concepts such as:

• Industry analysis
• General environment analysis
• Competence
• Value chain analysis
• Generic strategies
• Corporate and business strategy

These are the fundamental underpinnings of the field and should have been covered in your
courses so far.

COURSE EVALUATION
Course grades will be determined by students’ relative performance on the following three
course components:

Course Participation 30%

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 (2) Short Case Analyses (Indiv./Pairs) 35%
Company Strategic Analysis (Group) 35%

NBA 5840—International Competitive Strategy Spring Term, 2009

COURSE PARTICIPATION/COMMITMENT

Course participation will primarily be evaluated in terms of in-class participation and,

to a lesser extent, general commitment to the course, including attendance (see below
for the latter).

Case courses work best when everyone is an active participant. In grading in-class
participation, I will look at both the quantity and quality of your class contributions. I
recognize that some students are far more comfortable than others with in-class
participation. However, it is important you make an effort every class to contribute in
some meaningful way. Please feel free to come and discuss with me ways to enhance
your participation.

The evaluation of your class contribution will be based on your understanding of the
situation, your recommendations for action and their connection to your
understanding or analysis, and your effectiveness in communicating this information.
Classroom contributions are evaluated using the following criteria after each class:

Excellent: Participant offers a complete analysis and action plan; synthesizes

contributions; summarizes and/or moves class discussions ahead and
contributes to the learning of others.

Satisfactory: Participation reflects good analysis and action plan; participant

constructively criticizes others’ ideas and substantiates position with
well-rounded analysis.

Unsatisfactory: Participant is unprepared when called upon; analysis or action plan

others substantiated or reasoning faulty; criticisms directed at others
vs. their ideas; absence.

Readings/Cases

In designing the course, I’ve tried to respect the busy lives that you all have. Therefore,
although the reading packet is hefty, I’ve prioritized readings so that you will have a
sense of what you must read, what is recommended, and what is optional or for future
reference. As you can see on the attached schedule, each class is comprised of two kinds
of assignments, Foundation Readings and Articles/Cases.

In the Foundation Readings column each session’s assignment consists of a few core
readings, sometimes a recommended article, and some optional or reference readings.
Optional readings are noted as such. The foundation readings are critical to your
understanding of international competitive strategy. Recommended articles are also
quite useful for the same purposes but not critical. The remaining articles provide
alternative perspectives in case you are interested, or if the required readings do not
satisfy you.

The Articles/Cases column
included some short articles
articles will sometimes come
the course Website) to guide
provides those materials that we will discuss. I have
and several cases virtually every class date. The short
with questions (I will e-mail them and/or post them on
your reading. Be prepared to answer them during class
4
discussion. These articles will provide practical insights that illustrate the material more
powerfully than straight lecture material. Also, questions for the main caseswill be
placed online for your convenience.

TEXT, READINGS, AND CASES

Course Web Site The course has a Web site on Blackboard where I will post the
course syllabus, references to interesting readings on the Web, and
lecture notes as the course progresses. Also, some of the textbook
readings and some other articles will be on the Blackboard Website.

Reading Packet The main readings and cases for this course
come in the course packet. The major focus will be on articles from
the business press (WSJ, HBR, International Herald Tribune,
Economist, and Business Week) and cases from Harvard Business
School. The packet is available in Center Sage.

Library Reserve There should also a copy of the course reading pack on reserve for
NBA 5840.

COMMUNICATION AND FEEDBACK

Feedback is a critical part of any learning experience, both for you as a student and for me as
your instructor. You may communicate with me in any number of ways. I encourage you as
individuals and as groups to come and talk to me about any aspect of the course or your
work. You are welcome to call me in my office and leave a voice mail message, or make an
appointment for another time. The surest way to reach me is via Email.

In addition, I will establish a feedback committee that I hope will give me feedback once a
weekafter class or when convenient. The feedback committee only takes about five minutes
after class and will help ensure that students get what they want out of the class and that
problems and issues that arise are taken care of to make the class a valuable and enjoyable
learning experience. x

NBA 5840—International Competitive Strategy Spring Term, 2009

ABOUT ME

This is my 3rd year at Cornell. Prior to joining the Johnson School, I was on the faculty
(Management of Organizations Department) for 8.5 years at the Hong Kong University of
Science and Technology. I received my Ph.D. in Organizational Behavior from the Tepper
School of Business, Carnegie Mellon University. I also have an M.B.A. from UCLA/Anderson,
and an M.S. in Computer Science, also from UCLA. My bachelor’s degree, in Computer Science, is
from Brown University.
I’ve spent a good deal of my career overseas, having living in Hong Kong as a professor, in
South Korea, where I helped start a business and taught, and in Japan, where I got to work for
Sony and a large Japanese software company and research center as a Luce Scholar.
In my previous careers, I’ve worked as a freelance author, freelance writer, technical writer,
software analyst/programmer. I am passionate about helping students improve their
communication skills, particularly their writing.

ACADEMIC INTEGRITY

Academic integrity is a critical value of the University community. Integrity violations destroy
learning communities and the spirit of inquiry that is vital to the effectiveness of the University.
Anyone caught cheating or plagiarizing will fail the class. Plagiarism is copying anything from another
source without citing that source.As you probably know, Cornell subscribes to various services
that can check your paper for plagiarism including Turnitin. If these sites determine that you
have copied from previous Cornell students or the Internet, there will be serious consequences.

If you are not going to be able to make a deadline on a case write-up, please do me (and
yourself) a favor. First, do not sit in the classwhere we discuss the case. Second, please let me
know beforehand (if possible) that you will not make the deadline, and we can discuss how to
go from there. If you do not do either, you will fail the case, and obviously this will have serious
consequences for your overall grade.

Because some of you come from cultures where what is considered academically acceptable vs.
cheating may vary I wanted to be very clear about this. With the Internet so ubiquitous in our
lives some people have suggested that doing some "research" on the Internet about a case might
be a good way to start thinking about things. In the U.S., (at least in this class) this is clearly
considered cheating and is fully unacceptableat the Johnson School. Therefore, do not type the
name of the case into some search engine looking for someone else's answers or thoughts on the
case. In the past, a number of my students have done just that and eventually purchased
answers to cases through sleazy websites that sell such answers. Others have simply copied
other answers posted on the Internet. I can assure you that Turnitin in and the various other
cheating protection services will find those answers along with previous answers submitted by
Cornell students and will bring them to my attention. Therefore, please do not even consider
using the Internet for any sort of research or background checks related to the cases in this
class. Again, I will be very strict with any violations of integrity, so do me and yourself a
favor and please do your own work.

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 Class Schedule/Readings and Cases

Note: (*) designates Key Readings

Date Topic Foundation Readings Cases/Articles

• "What Is an American Car?”
• Optional: Friedman, The World
is Flat
• Optional: Ghemawat, Why the
March World Isn’t Flat
1 Introduction
9 • Optional: Florida, “The World Is
Spiky”
• Skapinker, “The battle for global
business is not yet won”
• (*) Text, pp. 1-13
• (*) Managing Global Expansion: • Case:
A Conceptual Framework March of
• (*) When You Shouldn’t Go the Mini-
Global Multinati
• Optional: Rangan, “Seven Myths onals
to Ponder Before Going Global” (location
)
• Startup
Firms
March Solve
2 Global Strategies
11 Challeng
es of
Going
Global
(location
)
• SAP
(org)
• Lenovo
(various)

7
 SPRING BREAK
• (*) Distance Still Matters • How Do
• (*) Khanna, “Strategy That Fits You Say
Emerging Markets” “Web”?
• (*) Hill, pp. 189-193 (Intl Article
Strategy) • Ajinomot
• Optional: Vietor, How Countries o Articles
March Environment of Compete • Miners
3
23 Multinationals Shun
• Optional: Oil, Politics, and Mineral
Corruption Wealth
of the
Philippin
es

• (*) Global Strategy…In a World • Wal-Mart in China

of Nations (global vs. local Vsdr
March Transferring
4 strategy) • Wal-Mart in Europe
25 Home Strategies
• Converting Global Presence into Case
Global Advantage

• (*) Root, Designing • Lincoln

Entry Strategies for Electric
International Case
Markets.” In Entry
March
5 Entry Strategies Strategies for
30
International
Markets. New York:
Lexington Books,
1990, pp. 1-23
Globalization • Zara: Fast Fashion
6 April 1 Drivers/ Case OR
Integration • Bollywood Set

• Go Global or No
7 April 6 Midterm Due
Case
8 April 8 Strategic • (*) The Design and • Dissolution of
8
 Management of IJVs Chinese-South Korean
• (*) Managing International Auto Venture Could
Alliances Serve as Cautionary
• Optional: Collaborate with your Tale
Competitors — And Win • Danone/Wahaha
Collaboration:
Reading Set
Alliances/JVs
• The Renault-Nissan
Alliance Case
• Optional: Game Over:
Amazon’s Dream
Alliance

9
Managing Within MNCs
Topic Foundation Readings Case(s)
• (*) BGB, pp. 648-660
• Tap Your Subsidiaries • Silvi
for Global Reach o
Subsidiaries/Count
• Optional: The Five Nap
ry
April Minds of a Manager oli at
9 Managers/Implem
13 Schi
enting Global
ndler
Strategy
India
(A)
Case
• BGB, pp. 333-349 • Send Jobs to India
• (*) “The Structures Behind Global • P&G SK-II Case
Companies”
Transferring
• (*) “Is Your Innovation Process
April Strategic
10 Global?”
15 Advantage/Innova
tion • Shenkar and Luo, Organizing and
Structuring Global Operations, Ch.
11 (Skim)

• (*) Managing • BRL

Executive Attention in Hard
Managing the Global Company y
April
11 Subsidiaries and • (*) Optional: Unleash Case
20
Strategy Innovations in Foreign
Subsidiaries

12 • (*) Making Global Strategies Work • Siem

12 Coordination and (pp. 11- top of 19 only) ens
April
Control vs. • Optional: Shenkar and Luo, AG
22
Strategy Managing Global R&D Case

10
 • The Challengers • Haier: Taking a
• A Bigger World Chinese
• The Empire Strikes Back Company
April MNCs in Emerging • The New Champions Global
13 27 Countries • Haier’s
Purpose

14 April Summary
TBA TBA
1 29

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Team Global Strategic Analysis

The objective of the team project (groups of 4 or 5) is to apply the tools of

global strategic analysis to evaluating the strategy and performance of a
global enterprise, and based on your assessment and analysis, make
recommendations for the international aspects ofits future.

Each team will take the role of strategy consultants hired by the company as
part of a wide-ranging strategic review to appraise its current global
strategy versus at least one important competitor, and establish direction for
the future.

Companies: The international company your team chooses to study can be

located in North Americaor elsewhere. A word of advice – regardless of
which company you choose, it makes sense to pick one about which there is
much information available either directly, from analysts, or on the Internet.
That likely means you’ll want to choose a public rather than private
company – but your choice should of course depend partly on your interest
and partly on the availability of information.

Caveat: You cannot use the company you are studying for any other
course’s assignment. Select a different enterprise and industry. The
advantage to you is broadening your exposure to a number of different
business situations and industry contexts.

Please advise me by e-mail by the end of Week 3as to the company whose
international strategy you propose to examine. I will confirm availability.
Since I only want a company studied by one team in the course, the first-
come first-served rulewill apply. Hence, email or tell methe name of the
target company to me as soon as you can so as to raise the odds you will
receive your first choice.

Content: The content of your work will vary according to the characteristics
and circumstances of the company and its industry. However, at minimum,
you need to include the following items:

• Identification of current international strategy:

○ What is the company’s current/recent strategy in relation to
the international scope of its activities and to the basis on
which it has attempted to establish competitive advantage
over its rivals?

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 • Evaluation of current performance:
○ How successful is the current international strategy in terms
of the recent performance of the company? (You can
includeanalysis of available financial data, which examines the
company over time and in relation to its industry or against at
least one key competitor.) Ideally, you should identify how
the company’s international strategy affects its performance –
what are the measurable and non-measurable consequences of
the choices it has made?

• Appraisal of internal resources and capabilities:

○ What is the basis of the company’s competitive advantage?

How easy is it for the company to replicate this competitive
advantage in overseas markets?

○ On the basis of an appraisal of the company’s resources and

capabilities, what do you perceive to be the principal strengths
and weaknesses of the company vis-à-vis its choice of
international strategy?

• Appraisal of the industry and general environments:

○ What are the globalization drivers in this industry? How

strong are they relative to the forces for national
differentiation?

○ What are the principal developments in the company’s

industry environment, in terms of the factors that will
influence the overall attractiveness of the industry and the
determinants of relative success of companies in it?

○ Here you will want to use industry and general environment

analyses. (see suggestions for your analyses in the appendix).

• Key issues arising

○ What are the most urgent problems/issues/opportunities that
need attention through international strategy, based on your
analyses?

• Recommendations

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 • What would you recommend to the CEO about the international
dimension of the company’s future?

• How do you envisage the company’s international strategy being

amended in order to achieve a better match between, on one hand,
the requirements of the external environments it faces and, on the
other, the company’s internal potential for creating and deploying
competitive advantage?

• How would you establish the priority of your recommendations in

terms of urgency, impact, and time horizon?

Sources: For larger companies, you will be able to rely heavily on published
data, including annual reports, quarterly filings, newspaper articles, media
releases, analysts’ reports, and so on. It is important to probe the thinking
that lies behind the company’s international strategy: examine carefully
any statements by the company CEO or chairman that may touch on this
topic. There is no requirement to do in-person interviews, though feel free
to approach the company in question for information if you wish.

Advice: Remember that this is an assignment about the international

dimension of a company’s business. It is easy to become focused on making
all types of recommendations about a company’s domestic business or
corporate strategy while forgetting its international dimensions. Please
don’t fall into that trap. I am looking for your use of course frameworks
and course concepts first and foremost. If your analysis of the company’s
international position requires some attention to their domestic corporate or
business strategies, fine, but concentrate your analysis on international
operations.

Hints for Doing Well: The following advice has been culled from my
experience with similar projects, and is offered to you so that you avoid
some errors that other MBA students have made, mostly through
inadvertence.

• Integrate your key findings into your final paper – don’t outsource to
appendices.

• Industry analysis is a key element of this project. Conduct it at the industry

level. Please don’t avoid it. Papers that do not include it (or that do not do
it thoroughly) won’t do well.

• Choose an attractive project – if you select something too big, you won’t get
deep enough. If you choose something too small, you’ll get bored.
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 • Give some thought to alternative explanations for the situation you’ve
encountered. What has the company tried and rejected, can you create a
rationale for the behavior you’ve observed, etc.

Output: The project principal output is a written report that will be no more
than 15 pages long (plus charts, tables, etc.) and is due Wednesday, April
29th(the last day of class). Depending on the logistics/class size, I may have
students do a brief presentation of their findings.

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Appendix: Helping You Analyze National and
Industry Environments
1) Country Analyses

Here are some issues to think about in your country analyses:

• Key industry clusters and sectors (e.g., Porter’s four

“diamond” elements)
• Political, regulatory, and legal environments (e.g.,
privatization, taxation, entry requirements, preferential trade
agreements, etc.)
• Macroeconomic indicators (e.g., GNP, inflation, foreign debt,
etc.)
• Capital controls (e.g., repatriation, currency flows, etc.)
• Risks (e.g., political stability, exchange rate exposure, etc.)
• Social conditions (e.g., population density, wealth
distribution, radicalism, etc.)
• Social stability (e.g., conflicts, riots, demonstrations, crises,
assassinations, guerrilla warfare, internal security forces,
ethnic tension)
• Government (e.g., political parties/factions, relevant
legislation, constitutional changes, executive power)
• National institutions (e.g., primary types of business
structures and ownership/governance approaches, etc.)
• Raw and basic materials (e.g., energy, food, minerals, etc.)
• Physical and technical infrastructure (e.g., the ability to
support its technology needs via Internet hosts and ISPs,
access to computing technology, computer literacy, reliable
power, etc.)
• Demographics and population characteristics (e.g., the age
distribution and what effect trends will have on such future
needs as retirements and education, education level and
skills available vs. net exporter or intellectual capital, cost of
living and wage structure, etc.)
• Employment laws (e.g., employee discrimination, sexual
harassment, union, wages, hours of work, child labor,
benefits, paid leave, family medical leave, pensions, profit
sharing, health and safety)

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 • Legal strictures and expectations for workforce inclusion
(e.g., diversity, power distance)
• Human, business, and environmental concerns of the local
citizenry
• Social cultures (e.g., business etiquette), value expectations,
ethical norms, moral issues, attitudes toward xenophobia,
nationalism, corruption, nepotism
• Market requirements (e.g., standardization vs. localization)
• Relationships with non-governmental organizations (e.g.,
IMF, Transparency International, UN, World Bank, etc.)

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2) Industry Analysis
Here are some issues to think about in your industry analysis:
○ Historical trends, time lines, and projections of key events (e.g.,
market demand and growth patterns)
○ Competitors, nature of rivalry, and bases for competing today
(e.g., five forces, market entry/exit, sector analysis, value
propositions and/or value chain, etc.)
○ Global supply chain and distribution channels
○ Unique characteristics (e.g., asset intensity, leading indicators,
intangibles and intellectual property, etc.)
○ Conventional metrics used (e.g., cost structure vs. revenues and
volumes breakdown, ratio analysis, “red flags,” etc.) that are
unique to the industry
○ Typical core competencies and competitive advantages (e.g., best
practices for product positioning, branding, etc.)
○ Environmental/growth opportunities and threats (e.g., market
penetration, market development, product development,
diversification, integration, etc.)
○ Most important stakeholders (e.g., financiers, customers,
suppliers, employees, government, society interest groups and
the press, etc.)
○ Social/ethical trends and issues (e.g., environment, poverty,
human rights, etc.)
○ International trade patterns and projections (e.g., methods of
exporting/importing, contract manufacturing/sourcing, franchising,
licensing, etc.)
○ Technical influences, challenges, and changes including
innovations, patents, R&D, etc.

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