MGT 450 - Final

Applied Research:

The systematic work to gain knowledge to meet a specific need

Subsidiaries:

- Subsidiaries can choose between 2 major ways to finance their operations through external sources: 1.Overseas equity markets 2.Overseas debt markets

Global Money Management and Centralized Depositories:

- 2 facts are important to keep in mind when using the centralized depository technique for global cash management: 1.A government can restrict how much capital can flow out of the country 2.There are transaction costs associated with moving money across borders, and these costs are incurred each time the money is moved

Centralized Depository:

- A central location where the cash balances of a parent and its subsidiaries are pooled - Two main advantages 1.The company earns a higher interest on higher amounts of cash 2.Pooling cash reserves reduces the total amount of cash that the company needs to hold

Total Quality Management (TQM):

- A set of management practices initially introduced by W. Edwards Deming •The focus of TQM is increasing quality and reducing errors in production or service delivery •TQM consists of systematic processes, planning, measurement, continuous improvement, and customer satisfaction

Consolidated financial statement:

- A single financial statement that brings together all the financial statements of a parent company and its subsidiaries •It must reconcile all the investment and capital accounts as well as the assets, liabilities, and operating accounts of the firms •It demonstrates that firms—although legally separate from the parent and each other—are in fact economically interdependent

Country-of-Origin Effect:

- A situation in which consumers use the country where a product was made as a barometer for evaluating the product's quality •Their perceptions of the country influence whether they perceive the product favorably or unfavorably and thus whether they'll purchase the product

Talent Management:

- Anticipating the need for human capital and setting a plan to meet it •It goes hand in hand with succession planning •Succession planning: A process whereby an organization ensures that employees are recruited and developed to fill each key role within the company

Compensation Design Issues for Global Firms

- Bonus: A form of variable pay where the employee earns additional compensation on the basis of achieved objectives - Areas that global firms must manage when designing their compensation strategy: •Setting up a worldwide compensation system •Decisions about how to compensate third-country nationals •Third-country national (TCN): An individual who is a citizen of neither the US nor the host country and who is hired by the US government or a government-sanctioned contractor to perform work in the host country •The last three areas of compensation strategy relate to questions about international benefits and related taxes, pension plans, and stock-ownership plans

Products reach consumers through a channel of distribution...

- Channel of distribution: •The series of firms or individuals who facilitate the movement of the product from the producer to the final consumer - Direct channel: •The shortest channel of distribution, consisting of just the producer and the end consumer •The consumer buys the product directly from the producer - Indirect channel: •Contains one or more intermediaries between the consumer and the producer •These intermediaries can include distributors, wholesalers, agents, brokers, retailers, international freight forwarders, and trading companies

Reverse Innovation:

- Designing a product for a developing country and bringing that innovation back to the home country •GE Healthcare completely reinvented a $10,000 medical-imaging device to create a $500 portable, imaging device for the Indian market •GE realized it had created a new product for its home market as well

How do people find opportunities?

- Disruptive technology: •A technology that can make prior technologies obsolete - Low-end disruption: •A disruptive technology that appears at the low end of an industry offering and usually does not lure customers away until it improves and becomes better than the incumbent offering - New-market disruption: •A new-market disruption targets noncustomers rather than low-end customers, thus creating a new market that was previously ignored by the dominant players of the existing market - hybrid-disruption strategies: •A combination of new-market and low-end disruption strategies

Distribution Management:

- Distribution channels in emerging markets are less developed, which means that companies may need to seek novel solutions to distributing their products - 3 distribution strategies for entering a new market: 1.Companies can do a joint-venture or partnership with a local company 2.Acquire a local company to have immediate access to large-scale distribution 3.A company can to build its own distribution from scratch

Crucial Role of SHRM in Global Firms:

- Firms that effectively manage their international HR typically outperform competitors in terms of: •Identifying new international business opportunities •Adapting to changing conditions worldwide •Sharing innovation knowledge throughout the firm •Coordinating subsidiary operations •Conducting successful cross-border acquisitions •Maintaining a high-performing, committed overseas workforce - An important challenge in many multinationals is balancing the need to coordinate units scattered around the world with the need for individual units to have the control necessary to deal effectively with local issues •Achieving the balance becomes more difficult as the level of diversity that firms are exposed to increases - Culture impacts local HRM practices in a variety of ways •How benefit packages are constructed to the hiring, termination, and promotion practices used

Currency Fluctuations:

- If 2 subsidiaries of the same multinational firm do a currency exchange, then they can use an internal forward rate 1.Internal forward rate: •Company-generated forecast of future spot exchange rates •This rate may differ from the forward exchange rate quoted by the foreign exchange market 2.Spot exchange rate: •The exchange rate for trades that take place immediately (i.e., "on the spot")

Decentralized financial organization structure:

- Subsidiaries or regions make financing or investment decisions for their region, taking advantage of local knowledge and moving quickly to respond to opportunities or uncertainties

International Staffing and Placement

- In the global economy, managers need to decide between using expatriates or hiring locals when staffing international locations •Expatriate: A person who is living in a country other than his or her home (native) country - Four predictors of a manager's ability to succeed as an expatriate: 1.Self-orientation 2.Others orientation 3.Perceptual ability 4.Cultural toughness - Factors that contribute to expatriate failure in US-headquartered multinational firms: •The expatriate's spouse is unable to adapt to a foreign culture, or there are other family-related reasons •The expatriate is unable to adjust to the new culture or lacks personal or emotional maturity to function well in the new country •The expatriate is unable to handle the larger overseas responsibilities - Managers may want to choose an expatriate when the following factors are true: •Company-specific technology or knowledge is important •Confidentiality in the staff position is an issue •There is a need for speed (i.e., assigning an expatriate is usually faster than hiring a local) •Work rules regarding local workers are restrictive •The corporate strategy is focused on global integration - Managers may want to staff the position with a local hire when the following factors are true: •The need to interact with local customers, suppliers, employees, or officials is paramount •The corporate strategy is focused on multidomestic or market-oriented operations •Cost is an issue (i.e., expatriates often bring high relocation/travel costs) •Immigration rules regarding foreign workers are restrictive. •There are large cultural distances between the host country and candidate expatriates

Marketing Mix:

- It is a combination of the four Ps (product, price, promotion, and place) that can be customized for different countries - A company's marketing mix will often be different for different countries based on: •A country's culture and local preferences •A country's economic level •What a country's consumers can afford •A country's distribution channels and media

Stock-out:

- Means that there is no more stock of the company's product •The product is unavailable to customers who want to buy it

Resourcing the New Venture with People, Money, and Action People

- Money •Bootstrapping: •Exploiting a new business opportunity with limited funds - Different types of bootstrapping: •Owner financing •Sweat equity •Minimization of the accounts receivable •Joint utilization •Delaying payment •Minimizing inventory •Subsidy finance •Personal debt - Angel investor: •An affluent individual who provides capital for a business start-up - Venture capitalist: •A person or investment firm that makes venture investments and brings managerial and technical expertise as well as capital to their investments - Action •Bias for action: •The propensity to act or decide without customary analysis or sufficient information

Elements of a Pay System

- Nonmonetary Pay: benefits that don't involve tangible value - Direct Pay: employee's base wage - Indirect Pay: everything from legally required programs to health insurance, retirement, housing, etc. - Basic Pay: cash wages paid to the employee. Because paying a wage is a standard practice, the competitive advantage can only come by paying a higher amount. - Incentive Pay: a bonus paid when specified performance objectives are met. May inspire employees to set and achieve a higher performance level and is an excellent motivator to accomplish firm goals. - Stock Options: a right to buy a piece of the business that may be given to an employee to reward excellent service. An employee who owns a share of the business is far more likely to go the extra mile for the operation. - Bonuses: gifts given occasionally to reward exceptional performance or for special occasions. Bonuses can show that an employer appreciates its employees and ensures that good performance or special events are rewarded.

Innovation Contests:

- One method by which a company can manage and run open innovation is to use a contest or "challenge" method - The advantages of the open innovation contest approach include the following: •Reduced cost of R&D •Faster product development time •Access to experts from around the world •Bigger breakthroughs

The Intrapreneurial Organization

- One that seeks to systematically promote the spirit of intrapreneurship in targeted parts of the organization - Methods that have been used by businesses to foster intrapreneurship: • Intrapreneurial employees are able to participate in the rewards of what they create • The firm treats intrapreneurial teams as a profit center, rather than as a cost center • Team members can choose the projects on which they work or the alliances they join • Employees have access to training to help them learn new skills • Internal enterprises are recognized within the organization and have official standing • The organization defines and supports a system of contractual agreements between internal enterprises • The intrapreneurship plan includes a method for settling disputes that may arise around the internal enterprise and employees - The intrapreneurial organization can take on one or a combination of two forms: 1.Coexistence 2.Structural-separation

Key HR Elements:

- Selection and Placement - Job Design - Compensation and Rewards - Diversity Management

HR as a Strategic Partner

- Strategic human resources management (SHRM): •An organizational approach to human resources management (HRM) with a concern for the effects of HRM practices on firm performance •SHRM is not just a function of the human resources (HR) department •All managers and executives need to be involved because the role of people is so vital to a company's competitive advantage •When organizations enable, develop, and motivate human capital, they improve accounting profits as well as shareholder value in the process - High-performance work system (HPWS): •A set of management practices that attempts to create an environment within an organization in which the employee has greater involvement and responsibility Questions that HRM should be prepared to answer in this new world: - Competence •To what extent does our company have the required knowledge, skills, and abilities to implement its strategy? - Consequence •To what extent does our company have the right measures, rewards, and incentives in place to align people's efforts with the company strategy? - Governance •To what extent does our company have the right structures, communications systems, and policies to create a high-performing organization? - Learning and Leadership •To what extent can our company respond to uncertainty and learn and adapt to change quickly?

World Intellectual Property Organization (WIPO):

- The global nongovernmental organization tasked with coordinating and marshalling efforts to harmonize intellectual property rights among countries and regions - WIPO seeks to: •Harmonize national intellectual property legislation and procedures •Provide services for international applications for industrial property rights •Exchange intellectual property information •Provide legal and technical assistance to developing and other countries •Facilitate the resolution of private intellectual property disputes •Marshal information technology as a tool for storing, accessing, and using valuable intellectual property information

Licensing:

- The owner of an asset granting the right to use the asset to another while continuing to retain ownership of the asset - An important way of creating value with assets •In licensing IP rights, the IP owner gives permission to use the IP but retains ownership of the IP •The IP protection varies by country

Supply-chain Management:

- The planning and management of all activities involved in sourcing and procurement, conversion, and logistics •It includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers, and integrates supply-and-demand management within and across companies - Activities in the supply chain 1.Demand management 2.Procurement 3.Inventory management 4.Warehousing and material handling 5.Production planning and control 6.Packaging 7.Transportation management 8.Order management 9.Distribution network design 10.Product-return management

Capital Budgeting:

- The process of financing long-term outlays such as are used for plant expansion or research and development •During the capital-budgeting process, firms examine the initial investment that will be required, the cost of capital, and the amount of cash flow or other gains which the project will provide

Benefits of Good Talent Management

- Three talent-management practices, in particular, correlated highly with exceptional financial performance: 1. Creating globally consistent talent-evaluation processes 2. Achieving cultural diversity in a global setting 3. Developing and managing global leaders

Global Production and Supply-chain Management:

- When deciding where and how to produce products for international markets, companies have a choice of three strategies: 1.Manufacture in the United States and then export 2.Global Components with local assembly 3.Local production - Companies that decide to build a local plant have to decide in which country to locate the plant, the criteria: 1.Political stability 2.Statutory/Legal environments 3.Infrastructure quality 4.Foreign-investment incentives 5.Local telecommunications and utility infrastructure 6.Workforce quality 7.Security and privacy 8.Compensation costs 9.Tax and regulatory costs 10.Communication costs

Global Brand:

-The brand name of a product that has worldwide recognition •Some of the most recognized brands in the world include Coca-Cola, IBM, GE, and McDonald's -The advantage •Economies of scale in production and packaging, which lower marketing costs while leveraging power and scope -The disadvantage •Consumer needs differ across countries, as do legal and competitive environments

Two main theories of how to reward employees:

1. Rewarding individual performance, through plans such as commissions-sales schemes and merit-based pay 2. Organizations should reward team performance, without regard for individual accomplishment

The four Ps:

1.Product: •Any physical good or intangible service that is offered for sale 2.Price: •The amount of money that the consumer pays for the product 3.Promotion: •All the activities that inform and encourage consumers to buy a given product, including advertising (whether print, radio, television, online, billboard, poster, or mobile), coupons, rebates, and personal sales 4.Place: •The location at which the company offers its products for sale

Standardized or Customized Products:

1.Straight product extension: •Taking the company's current products and selling them in other countries without making changes to the product 2.Product adaptation: •The company strategy of modifying an existing product in a way that makes it better fit local needs 3.Product invention: •Creating an entirely new product for a given local market •Companies go back to the drawing board and rethink how best to design a product for a specific country or region

Tax Haven:

A country that has very advantageous (i.e., low) corporate income taxes

Intrapreneurship

A form of entrepreneurship that takes place in a business that is already in existence

Innovation Hub:

A geographic region that contains a cluster of company R&D centers, universities, and government research institutes in close proximity - Hubs are known for the cross-pollination of ideas that takes place when employees of one firm talk with employees of another

Situational interview

A job interview where the candidate is asked to describe in specific and behavioral detail how he would respond to a hypothetical situation

Fronting loan:

A loan made between a parent company and its subsidiary through a financial intermediary such as a bank

Current-rate method:

A method of foreign currency translation in which items in the subsidiaries' financial statements are translated at the current exchange rate (i.e., the rate on the date when the statements are prepared) into the currency of the parent corporation

Temporal Method:

A method of foreign currency translation that uses exchange rates based on the rate at which the assets and liabilities were originally acquired or incurred

Balanced Scorecard:

A performance-management tool that helps managers define the performance categories that relate to the company's strategy

Intrapreneur

A person within an established business who takes direct responsibility for turning an idea into a profitable finished product through assertive risk taking and innovation

Process:

A series of linked activities (steps, tasks, or sub-processes) that produce an intended result

Social Network

A social structure made of nodes (which are generally individuals or organizations) that are connected by ties; a set of relationships among people

Multilateral netting:

A technique that companies use to reduce the costs of cross-border payments between 3 or more subsidiaries; if only 2 participate, the technique is known as bilateral netting

Centralized financial organization structure:

All finance decisions are performed at headquarters, which sets guidelines for subsidiaries to follow, pools funds, leverages the benefits of scale for investment and borrowing, and hires knowledgeable staff to make the most effective, firm-wide decisions

Global Equity Market:

All the stock exchanges worldwide where firms can buy and sell stock for financing and investment

Born-global firm

Also commonly called a global start-up, a business organization that, from inception, seeks to derive significant competitive advantage from the use of resources and the sale of outputs in multiple countries

Bottom of the pyramid (BOP)

Also known as the base of the pyramid, the market represents the four billion to five billion people living on less than $2 per day, typically in emerging economies - Twelve principles of bop innovation 1.Focus on value and on delivering performance for the price 2.Innovate 3.Make the solution scalable 4.Aim to conserve resources 5.Identify functionality 6.Think in terms of process innovations 7.Reduce the skills required to do the job 8.Educate consumers in the use of products 9.Design products and services to operate in very tough infrastructure environments 10.Make the interface simple and the learning curve short 11.Innovate in distribution 12.Challenge assumptions

Job Evaluations:

An analysis of the internal value of a job that is intended to identify how critical a given job is to the success of the organization

Knowledge Spillover:

An informal exchange of ideas among individuals that helps individuals understand the state of the art in their field

Invention:

Brings an idea into tangible reality by embodying it as a product or process

Counterfeit Markets:

Commerce areas where vendors purposely deceive buyers by altering products and then selling them as branded products at a bargain cost

Gray Markets:

Commerce areas where, because of price differences across countries, consumers are able to cross international borders to legally purchase products at lower prices than in their home country

Entrepreneurial process

Consists of: 1. Identifying entrepreneurial opportunities 2. Planning and preparing the venture 3. Resourcing the venture and taking action

Factor-driven economies:

Economies that are highly sensitive to world economic cycles, commodity price trends, and exchange rate fluctuations; typical in countries that compete on the basis of unskilled labor and natural resources

Innovation-driven economies:

Economies that are typical in countries that compete on business sophistication and innovation

Efficiency-driven economies:

Economies that are typical in countries that compete on the basis of production processes and increased product quality

Innovation:

Generates revenue from a product or process

Open Innovation:

Generating new business ideas through input from employees beyond a company's R&D department and even going outside the firm to enlist contributions from experts, customers, suppliers, and competitors

User-led Innovation:

Innovation by consumers and end users, who are using (or want to use) the product in new ways beyond what the company originally intended

Process Innovation:

Implementing a new or significantly improved process

Free rider:

Individuals or firms that benefit from a shared resource or the actions of others without paying or contributing their fair share of the costs

Safety Stock:

Inventory the company holds to help ensure that it won't run out of products if there is a delay or crisis in a distant manufacturing region

Transnational Investment:

Investing capital in foreign markets

Sharia:

Islamic law; in terms of finance, prohibits charging interest on money and other common business activities, including short selling

Trade Credit:

Lets the customer (in this case, the subsidiary buying the goods or services) defer payment on the good or services for a specified period of time, typically thirty or ninety days

Decentralized-marketing organizational structure:

Local regional headquarters have the power to make marketing decisions affecting their region

2 Phases of Global Start-up Assessment

Phase 1: •Deciding if a firm should become a global start-up Phase 2: •Deciding what the firm needs to do to make that happen

Debt Financing:

Raising capital by borrowing the money and agreeing to repay the entire amount plus agreed-on interest at a specific date in the future

Equity Financing:

Raising capital by selling shares of stock

Transactional financing:

Seeking capital from a foreign sources

Innovative employee-recognition programs:

Special programs that reward exceptional employee performance

International Financial Reporting Standards (IFRS):

Standards that are developed by the International Accounting Standards Board (IASB) for reporting company financial results and that are followed by over one hundred nations throughout the world

Generally Accepted Accounting Principles (GAAP):

Standards that are developed by the US Financial Accounting Standards Board (FASB) for reporting company financial results and that all US companies or companies operating in the US must follow

Indirect taxes:

Taxes that are shifted to another person or entity, like the value-added tax (VAT) and goods-and services tax (GST), which are levied on the seller but are passed on and paid by buyers

Human Capital

The collective sum of the attributes, life experiences, knowledge, inventiveness, energy, and enthusiasm that a company's employees choose to invest in their work

Centralized-marketing organizational structure:

The home-country headquarters retains decision-making power for marketing in all countries

Research and Development (R&D):

The intertwined processes of research (to identify new knowledge and ideas) and development (turning the ideas into tangible products or processes)

International Accounting Standards Board (IASB):

The major entity proposing international standards of accounting

Stock Market:

The organized trading of securities through exchanges

Forward Exchange Rate:

The rate at which two parties agree to exchange currency and execute a deal at some specific point in the future, usually 30 days, 60 days, 90 days, or 180 days in the future

Social Capital

The resources—such as ideas, information, money, and trust—that one is able to access through one's social network

Financial Structure:

The ways in which a multinational firm's assets are financed, including short-term borrowing as well as long-term debt and equity

Basic Research:

The work of scientists and others who pursue their investigations without commercial goals, focusing on unraveling the secrets of nature and finding new knowledge

Pay for Performance

Ties pay directly to an individual's performance in meeting specific business goals or objectives

Hedging:

Using financial instruments to reduce adverse price movements by taking an offsetting position

Gainsharing:

•A form of pay for performance in which an organization shares the financial gains with employees, such that employees receive a portion of the profit achieved from their efforts (sometimes called profit sharing) •Companies should identify the types of teams they have, parallel, work, project, or partnership, and then choose the pay options that are most appropriate

The Business Plan

•A formal statement of a set of business goals, the reasons why they are believed attainable, and the plan for reaching those goals •It may also contain background information about the organization or team attempting to reach those goals -Contents of a typical business plan: •Executive summary •Company description •Products and services •Market analysis •Proprietary position •Marketing and sales plan •Management team •Operations plan •Finances

Entrepreneur

•A person who engages in entrepreneurship •Entrepreneurs build for-profit and nonprofit ventures •Work hard and are driven by an intense commitment and determined perseverance •See the cup half full, rather than half empty •Strive for integrity •Burn with the competitive desire to excel and win •Are dissatisfied with the status quo and seek opportunities to improve almost any situation they encounter •Use failure as a tool for learning and eschew perfection in favor of effectiveness •Believe they can personally make an enormous difference in the final outcome of their ventures and their lives

social entrepreneur

•A person who founds an organization (either for-profit or nonprofit) whose focus is to implement innovative solutions to societal problems •They aim to create large-scale social change through the ventures they create •Entrepreneurial ventures can operate at any level: •local, national, or international

Accounting Standards:

•A system of rules and principles that prescribe the format and content of financial statements •Different countries have different accounting practices

Forward Contract:

•An agreement in which a firm agrees to pay a specific rate at the beginning of the contract for delivery at a future date •The firm will pay that rate regardless of what the current exchange rate is at the date of the final settlement

Global Entrepreneurship Monitor (GEM):

•An annual assessment of the national level of entrepreneurial activity across countries •Started as a partnership between London Business School and Babson College

Workforce Scorecard

•An application of the Balanced Scorecard concept to an organization's human capital to identify and measure the behaviors, skills, mind-sets, and results required for the workforce to contribute to the company's success •The Workforce Scorecard is vital because most organizations have much better control and accountability over their raw materials than they do over their workforce

Attracting the Right Workers

•Attracting the right workers—the ones who will be enthusiastic about their work •Enthusiasm for the job—employee's goals and aspirations also match those of the company •The added benefit of hiring workers who match your organizational culture and are engaged in their work: •They will be less likely to leave your company just to get a higher salary

Global Sourcing:

•Buying the raw materials or components that go into a company's products from around the world, not just from the headquarters' country •When making global-sourcing decisions, firms face a choice of whether to sole-source or to multisource - Sole-source: To buy raw materials, components, or services from one supplier exclusively, rather than buying from two or more suppliers - Sole-sourcing advantages •Price discounts based on higher volume •Rewards for loyalty during tough times •Exclusivity brings differentiation •Greater influence with a supplier - Sole-sourcing disadvantages: •Higher risk of disruption •Supplier has more negotiating power on price - Multi-sourcing advantages •More flexibility in times of disruption •Negotiating lower rates by pitting one supplier against another - Multi-sourcing disadvantages •Quality across suppliers may be less uniform •Less influence with each supplier •Higher coordination and management costs

Currency Risk:

•Currency risk is the risk of a change in the exchange rate that will adversely affect the company •Companies can mitigate currency risk by engaging in hedging

Entrepreneurship Across Borders

•Entrepreneurship differs in various countries •It is easier to do business in some countries than others •this will likely have an impact on the level of entrepreneurship in each country •Citizens of different countries vary in terms of their attitudes toward entrepreneurs and entrepreneurship •A country where people viewed entrepreneurs as positive role models and entrepreneurship as a viable career alternative might encourage others to become entrepreneurs •A country's stage of development influences its nature of entrepreneurial activity

Chapter 11: Opening Case on InfoSys

•Founded in 1981 by 7 Indian entrepreneurs with US$250 •Building & implementing great ideas that drive progress for clients & enhance lives through enterprise solutions • Now US$10.8.B rev & $34B market cap •Leveraged Indian Gov't's economic liberalization in early 1990's •Reduced trade barriers, embraced globalization •InfoSys exploited domestic strengths & relationships to expand globally •GDN (Global Delivery Model) - strategy of breaking task into small parts and distributing to the best talent - max value generated with least risks •Today Global presence with 72 offices & 94 development centers employing 175K people •Invests heavily in R&D and workforce development •Low client and employee turnover (19 of 20 clients return) •Must provide high-end service to compete with Large Multinationals such as IBM and Accenture 1.What kind of people would do well working for InfoSys? Do you think, for instance, that you would need a good understanding of international business to do well in InfoSys? •Individuals who are enthusiastic, passionate about their work, and have good knowledge of the local culture would be suited to work for infoSys. •It is important to have a good understanding of international business as the company operates in numerous countries. •However, this must also be combined with in-depth local knowledge. 2.Moving its workforce around the world to maximize opportunities and minimize costs has meant that Infosys must navigate worker regulations in many countries. How should the firm work with government policymakers especially with regards to work visas? •The Infosys entrepreneurs were well positioned to take advantage of the Indian government's efforts at economic liberalization in the early 1990s. •Under this program, the government systematically reduced trade barriers and embraced globalization. •Infosys exploited the opportunity and utilized its domestic strengths and relationships to begin its global ascent which is continuing today.

Reasons for adopting one standard internationally:

•If different accounting standards are used, it's difficult for investors or lenders to compare the financial health of two companies •If a single international standard is used, multinational firms won't have to prepare different reports for the different countries in which they operate

Chapter 14: Case Opening on Col. Sanders is No Chicken

•KFC was 1st American Fast Food restaurant to enter China •Opened in Beijing in 1987, McDonalds opened in 1990 •Some marketing mistakes ("Eat your fingers off"), company grew •Today, KFC has 6,715 restaurants in China - $2B in revenue •Main factor for success - Localization Strategy •China requires local partner - KFC partnered with connections to gov't •When JVs were no longer rq'd, KFC's leadership team knew culture •No expats - China has love/hate relationship with Westerners •Served bamboo shoots vs coleslaw, Peking duck sandwiches •Ads paid homage to Chinese family traditions •Eating at KFC is more about convenience than Western food •Yum owns distribution centers - expanded into 402 cities 1.Do you think that Yum's other restaurants—Pizza Hut and Taco Bell—would be successful in China? Why or why not? What would help them be more successful? •Yum's other restaurants like Taco Bell and Pizza Hut would be successful in China provided they adopt localization strategy. •Incorporating flavours that cater to the Chinese tastes would lead to their popularity. 2.What advice would you give KFC about how to continue its growth in China? •In order to continue its growth in China, KFC should continue its localization strategy and develop flavours that are liked by the local population. •It should also continue to incorporate traditional Chinese values in its advertisements. 3.How might KFC's presence in China help the restaurant in other markets? •The Chinese are considered to uphold traditional values and culture. •The presence of KFC in the Chinese market shows the restaurants' ability to serve both Western and non-Western customers. •It adds to the brand's value and can help it to capture other similar Asian markets as well.

Chapter 13: Opening Case on A Tale of Emerging Market-Based Innovation

•Limited disposable income in Emerging Markets (make <$1.5K) •Huge market potential but needs/pricing is different •Selling US products at cheaper prices doesn't work •Unilever in Brazil (CPG - Consumer Packaged Goods) •81% market share for washing powders •P&G is a threat (strong R&D + marketing) •Concerns about targeting low-end (river washers) •Unilever is more comfortable serving hi-end mkt with "premium-quality products •Low-end shops at local "Mom & Pop" stores - different distribution model •Launched "Ala" brand powdered soap - designed for river washing •Sold in small sizes (easy to transport and stock) - "sachet marketing" •Sold for $0.02 - $0.24 each 1.View the YouTube video on Unilever's Ala in Brazil (http://www.youtube.com/watch?v=WhmYtfL6s_8). Given that Unilever is viewed as being highly innovative in Brazil, does the video confirm this reputation? Why or why not? •The video confirms this reputation because the general impression is that a good product is necessarily expensive. •However, Ala advertisement shows that a good product can also be low-priced. •It shows great innovation on the part of Unilever in providing such a product to the not-so-rich in Brazil. 2.Do you think that small, entrepreneurial ventures could be as effectively innovative as an enormous firm like P&G in emerging markets? •Yes, small entrepreneurial ventures can be as effectively innovative as enormous firms as long as they understand customer needs. •Small firms can target low-end consumers in emerging markets and develop basic products for them. •These do not require huge investments but sell just as well. 3.Visit Trendwatching.com's web page on "Sachet Marketing" at http://trendwatching.com/trends/sachet_marketing.htm. Why might the concept of a sachet be relevant in international business beyond soap or laundry detergent? •The concept of a sachet is quite relevant in international business simply for its sheer volume of consumers. •As the webpage says, two-thirds of the world's population makes less than $1,500 or less a year and hence there is a huge market of low-end consumers who are not necessarily interested in bulky and expensive products.

Chapter 12: Opening Case on Enterprise Holdings

•Operates >1M cars & trucks - largest passenger fleet in world •Car rentals serve 7,600 locations in US, Cda, Mex, CL,EU, Asia •Global strategic alliance with Europcar •Founded 1957 - Jack Taylor, 68,000 employees, $12B revenue •"Take care of customers and employees first, profits will follow" •Attract New Hires that support company objectives Cust Svc, Listening, Positive Work Ethic, Leadership, Comm. Skills, Flexibility •Hires 8,000 college grads/yr - decentralized recruiting (local) •Interns, Campus Brand Mgrs, Employee Referral Program, Web •Graduate Mgmt Trainee program (8-12 months) •Entrepreneurship - Free ride to Enterprise, WeCar program 1.How does Enterprise use SHRM to support its customer service objectives? •Enterprise looks for potential new hires who display a certain set of skills and competencies that support the company's objective of taking good care of their customers. •These skills include customer service focus, listening skills, a positive work ethic, leadership attitude, good communication skills, and flexibility. It has a team of 200 recruiters whose job is to identify potential new candidates at over one hundred college campuses each year 2.What strategies does Enterprise use to attract new employees? •Enterprise uses an internship program as a way to identify potential future employees. •The program is open to college juniors and seniors; interested interns then spend a summer working at Enterprise after graduating. •Recruiters stay in touch with interns and some even send a care package to interns during final exam time. •Enterprise also has an employee-referral program through which current employees get a financial reward if they recommend a new employee to Enterprise and that candidate is hired into a full-time position. 3.Do you think entrepreneurial employees would be motivated to work at Enterprise? Why or why not? •Entrepreneurship is a key corporate value at Enterprise. •The tradition began with founder Jack Taylor and continued through innovations introduced by Enterprise's branch managers. •It gives great encouragement to employees with entrepreneurial skills and leadership qualities, and good entrepreneurial ideas are implemented across all Enterprise operations.

Chapter 15: Case Opening on Price Pump and EXIM Bank

•Price Pump - small manufacturing company in California formed in 1932 by E. L. Price •Today, owned by the Paul family and leader in made-to-order pump industry •Reputation for quick order fulfillment and high customer satisfaction •Special purpose pumps: From cooling lasers for medical to purifying water through reverse osmosis. •Price Pump works with EXIM Bank for financing credit to enable foreign buyers to purchase US goods and export credit insurance to allow business to expand worldwide to reduce the risk of non-payment of foreign buyers. •10 yrs ago, Price Pump partnered with Mitsubishi Electric Automation to introduce a line of Variable Frequency Drives to complement broad line of centrifugal pumps •With help of EXIM over 15 yrs, Price Pump has expanded to Europe, S. America, SE Asia and Africa but foreign competition is tough. •EXIM levels the playing field - Price Pump sales have grown to $9-$10M, 25% international •US EXIM is independent federal agency and fill gaps in private export finance. 1.Do you think Price Pump would have been able to sell its products to international buyers? 2.What role did the EXIM bank play for Price Pump? 3.Do you think governmental agencies will become more involved in business matters? Why or why not?

Offshoring:

•Setting up operations in a low-cost country for the purpose of hiring local workers at lower labor rates •Offshoring differs from outsourcing in that the firm retains control of the operations and directly hires the employees

Global Competitiveness Index (GCI):

•System that ranks nations quantitatively according to a weighted index of twelve assessed pillars: 1. Institutions 2. Infrastructure 3. Macroeconomic stability, health and primary Education 4. Higher education and training 5. Goods-market efficiency 6. Labor-market efficiency 7. Financial-market 8. Sophistication 9. Technological readiness 10. Market size 11. Business sophistication 12. Innovation

Outsourcing:

•The company delegates an entire process (e.g., accounts payable) to the outsource vendor •The vendor takes control of the operations and runs the operations as they see fit •The company pays the outsource vendor for the end result; how the vendor achieves the end result is up to the vendor - Advantages of outsourcing: •Efficient processes •Access to specialized equipment that may be too expensive for a company to invest in unless that process is their chief business - Companies save on labor costs when offshoring, but the "hidden costs" can be significant

War for Talent:

•The competition between organizations to attract and retain the most able employees

Transfer price:

•The price that one subsidiary (or subunit of the company) charges another subsidiary (or subunit) for a product or service supplied to that subsidiary •Transfer pricing optimizes results for the company, but it may bring morale problems for the subsidiaries whose profits are impacted negatively from such manipulation

Market Segmentation:

•The process of dividing a larger market into smaller markets that share a common characteristic, such as age, gender, income level, or lifestyle -Understanding your target customers •Products must meet local needs in terms of cost, quality, performance, and features -Consumers in emerging countries •Rising middle class •Millionaires are everywhere •Emerging markets for business customers -Global market research •Understanding the market's culture and social trends •These factors impact which products consumers will like and which advertising appeals will resonate with them

Entrepreneurship

•The recognition of opportunities (needs, wants, problems, and challenges) and the use or creation of resources to implement innovative ideas for new, thoughtfully planned ventures