Lasserre, Global Strategic Management by Macmillan International Higher Education

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BRIEF CONTENTS

Part I GLOBAL CONTEXTS

1 Globalization of Markets and Competition

2 The Emerging Global Environment

3 Globalization, Societies and Cultures

4 Globalization, Sustainable Development and Social Responsibility

Part II GLOBAL STRATEGIES

123

5 Designing a Global Strategy

124

6 Assessing Countries’ Attractiveness

167

7 Entry Strategies

194

8 Global Strategic Alliances

213

9 Global Mergers and Acquisitions

248

Part III MANAGING GLOBALLY

267

10 Global Marketing 268

11 Global Operations and Digital Networks 289

12 Global Innovation 321

13 Global Financial Management 342

14 Global Human Resource Management 369

15 Designing a Global Organization 395

Part IV CONCLUSIONS

423

16 Current and Future Trends in Globalization 424

17 Global Strategic Management in Action: Haier – The Building of a Global Champion, 1984–2016 455 Glossary 464 Index of subjects 480 Index of names 483 Index of companies and organisations 487

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LONG CONTENTS

List of figures List of tables Mini-cases and examples List of acronyms Tour of the book Companion website Acknowledgements

xvii xxi xxiv xxvii xxviii xxx xxxi

Introduction to the fourth edition

xxxii

Part I GLOBAL CONTEXTS

Chapter 1

Globalization of markets and Competition 2 Introduction 2 The phenomenon of globalization 2 Globalization from a macro perspective 6 What are the factors that push for globalization? 6 What are the factors that work against globalization? The localization push 10 Globalization at the level of the firm 13 The global/multi-local mapping 18 Summary and key points 20 Appendix 1.1 Positioning a business on global/multi-local mapping 21 Learning assignments 22 Key words 23 Web resources 23 Notes 23 References and further reading 24

Chapter 2

The Emerging Global Environment 26 Introduction 26 Emerging countries and their development 27 Emerging countries and their institutional and business environments 33 Emerging countries and global firms 38 Summary and key points 45 Appendix 2.1 A profile of the BRICS 46 Learning assignments 47 Key words 47 Web resources 48 Notes 48 References and further reading 49

Chapter 3

Globalization, Societies and Cultures 51 Introduction 51 The different facets of culture 51 National cultural differences 53

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LONG CONTENTS

Economic cultures and business systems The impact of cultures on global management Summary and key points Learning assignments Key words Web resources Notes References and further reading Chapter 4

61 64 75 76 77 77 77 78

Globalization, Sustainable Development and Social Responsibility 81 Introduction 81 Sustainable development 81 Globalization and environmental issues 84 Globalization and societal issues 90 Global corporations’ ethics and corporate social responsibility 100 Global companies and business ethics 103 Social responsibility and global firms: an ongoing challenge 107 Summary and key points 110 Appendix 4.1 Main non-governmental organizations involved in corporate social responsibility 113 Appendix 4.2 Major business ethics codes 114 Appendix 4.3 The oecd guidelines for multinational enterprises 116 Learning assignments 116 Key words 116 Web resources 117 Notes 117 References and further reading 119

Part II GLOBAL STRATEGIES

123

Chapter 5

Designing a global Strategy 124 Introduction 124 A company business strategy 125 Framework for a global strategy 128 Global strategies and the multi-business firm 146 Global strategies and the small and medium-sized enterprise (sme) 147 Born global 150 Summary and key points 156 Appendix 5.1 Measuring corporate globalization 158 Appendix 5.2 Selected government support programs 162 Learning assignments 162 Key words 163 Web resources 163 Notes 164 References and further reading 165

Chapter 6

Assessing Countries’ Attractiveness 167 Introduction 167 Why is a country attractive? 168 Market, resources and industry opportunities 169 Assessing market opportunities 170

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Assessing resource opportunities Competitive context Socioeconomic, political and cultural distance Country risk analysis Putting it all together Summary and key points Learning assignments Key words Web resources Notes References and further reading Appendix 6.1 Models and sources of countries’ assessments Appendix 6.2 Comparison of turkey and egypt, 2014

174 176 179 180 181 186 187 187 187 188 188 189 191

Chapter 7

Entry Strategies 194 Introduction 194 why enter? Defining strategic objectives for a country presence 195 when to enter? First mover, follower, or acquirer? 197 entry modes: how to enter? 197 comparing entry modes 203 choosing an entry mode 204 Summary and key points 207 Learning assignments 210 Key words 210 Web resource 211 Notes 211 References and further reading 211

Chapter 8

Global Strategic Alliances 213 Introduction 213 Framework for analysis 213 Strategic alliances in a global context 217 Global alliances versus local alliances 218 Understanding the strategic context and spelling out the strategic value of an alliance 220 Partner analysis 222 Negotiation and design 228 Implementation 234 Global multilateral alliances 235 Alliance constellation management 237 Partner selection 237 Joint venture decay and failure 240 Summary and key points 243 Learning assignments 244 Key words 244 Web resources 245 Notes 245 References and further reading 245

Chapter 9

Global Mergers and Acquisitions 248 Introduction 248 The rationale for cross-border M&As 248

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xiii

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LONG CONTENTS

Cross-border acquisitions performance 251 Pre-acquisition 253 Integration framework 257 Integrating the companies: the transition phase 260 Integrating the companies: the consolidation phase 262 Summary and key points 264 Learning assignments 264 Key words 265 Web resources 265 Notes 265 References and further reading 266

Part III MANAGING GLOBALLY

267

Chapter 10 Global Marketing 268 Introduction 268 Customer behavior, convergence and global segmentation 268 Product standardization 270 Global branding 271 Advertising 274 Global pricing 275 Global account management 277 Global solution selling 279 Global marketing positioning 281 Fair trade marketing 282 Global marketing and its limits 282 Summary and key points 284 Learning assignments 286 Key words 286 Web resources 287 Notes 287 References and further reading 287 Chapter 11 Global Operations and Digital Networks 289 Introduction 289 The globalization of value chains: offshore production and outsourcing 290 Selecting operational sites 291 Global manufacturing networks 292 Global sourcing 295 Global logistics 298 The global management of infrastructure projects 300 The internet and global operations 302 Summary and key points 313 Learning assignments 317 Key words 318 Web resources 318 Notes 318 References and further reading 319

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Chapter 12 Global Innovation 321 Introduction 321 The international product life cycle model 321 Globalization of R&D: benefits and constraints 324 Management of global R&D networks 325 International transfer of technology 329 Global knowledge management 330 Summary and key points 336 Learning assignments 338 Key words 338 Web resource 338 Notes 339 References and further reading 339 Chapter 13 Global Financial Management 342 Introduction 342 Currency risk 343 Project finance 346 Global capital structure 349 Trade finance 354 Global financial management and taxation 356 Summary and key points 356 Appendix 13.1 Description of risk linked to infrastructure assets 358 Appendix 13.2 A pulp mill project in indonesia – an example of cash flow adjustment 361 Appendix 13.3 Development banks providing project equity financing 364 Appendix 13.4 Official export credit agencies for oecd member countries 365 Learning assignments 366 Key words 367 Web resources 367 Notes 368 References and further reading 368 Chapter 14 Global Human Resource Management 369 Introduction 369 Assignment of personnel: the global human resource wheel 371 Expatriate management 372 Localization 380 Skills development 384 Summary and key points 388 Learning assignments 391 Key words 392 Web resources 392 Notes 392 References and further reading 393 Chapter 15 Designing a Global Organization 395 Introduction 395 The merry-go-round organizational challenge 395 The international division model 398 The global functional model 398

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LONG CONTENTS

The geographical models The multi-business global product division models The matrix models Alternative structural models Regional headquarters in global management Summary and key points Learning assignments Key words Appendix 15.1 Types of organizational design Web resources Notes References and further reading

Part IV CONCLUSIONS

400 403 405 409 412 417 418 418 419 420 420 420

423

Chapter 16 Current and Future Trends in Globalization 424 Introduction 424 Global challenges 425 Demography and migration 427 Asymmetric development 428 Regional blocs 430 Sustainable development 431 Technological developments 433 Global risks 434 Ethnic, religious and cultural friction 434 The future of global corporations 438 Summary and key points 442 Appendix 16.1 Description of global risks and trends 2016 444 Appendix 16.2 A simplified methodology for elaborating scenarios 446 Appendix 16.3 Five global scenarios 448 Learning assignments 450 Key words 450 Web resources 450 Notes 450 References and further reading 452 Chapter 17 Global Strategic Management in Action: Haier – The Building of a Global Champion, 1984–2016 455 Introduction 455 Phases 1 and 2: brand building and diversification (1984–1998) 456 The competitive battlefield of china in the 1990s 457 Phases 3 and 4: internationalization and global brand strategy (1999–2012) 458 Phase 5: networking strategy (2012 onwards) – consolidating global leadership 461 Learning assignments 462 Notes 463 Glossary 464 Index of subjects 480 Index of names 483 Index of companies and organisations 487

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pter

Globalization of markets and competition

Learning objectives By the end of the chapter you should be able to: • Define globalization from a macro environment perspective • Identify the forces pushing towards globalization and the forces pushing for localization • Define what globalization means for firms • Identify the various steps of globalization for firms • Make a distinction between multinational and global firms • Spell out the benefits and pitfalls of globalization • Position an industry or a business on the global/multi-local mapping

Introduction Chapter 1 defines what ‘globalization’ means, firstly from a geopolitical and economic point of view, and secondly for business enterprises. It looks at the many political, technological, social and economic factors that have driven globalization, as well as those restraining it. It describes how many companies have evolved, over time, from ‘national’ to becoming ‘international’, then ‘multinational’ and finally ‘global’ firms. Based on an example, the chapter looks at how a multinational company having foreign subsidiaries can become global by extending its operations worldwide and adopting a competitive configuration through strong coordination and integration of its international activities across borders. The benefits and constraints of globalization are both described. Some factors still push towards a local approach to management, on a country-by-country basis, and the factors inducing this localization are analyzed. Finally the global/multi-local mapping matrix is presented as a tool to position industries, companies and businesses according to the relative importance they place on global versus local approaches. The chapter ends by introducing some of the societal issues associated with globalization.

THE PHENOMENON OF GLOBALIZATION

Since the 1960s, international trade, investment and migration have all grown much faster than the world economy. Firms have multiplied their presence outside their country of origin, employing more and more people and selling and buying technology internationally (see Table 1.1). More and more products are sold in similar stores, with similar features and carrying a common brand across the globe. Factories that were prosperous in the Western world have been closed and transferred to lower-cost countries. English is now considered the lingua franca for major business transactions. Events happening in one location are visible in real time everywhere thanks to the internet and social networks such as Facebook or Twitter. This is what is commonly referred to as the process of ‘globalization’. In today’s business world, managers, politicians, journalists and academics commonly refer to concepts such as ‘globalization’, ‘global industries’, ‘global competition’, ‘global strategies’ and so on.

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Table 1.1 Globalization data 2014 prices

(US$ bn)

Index (base 100 in 1982 at constant rate) 1982

1990

2000

Average growth rate 1983–2014

2014

World GDP

77,283

100

162

189

347

4.0%

Trade (export of goods and services)

23,409

100

166

217

546

5.4%

Foreign direct investment (inward stock)

26,039

100

203

553

1,723

9.3%

Foreign direct investment (inflows) Cross-border mergers and acquisitions

1,228

100

273

1403

1,025

7.5%

399

100

497

2,880

759

6.5%

Sales of foreign affiliates of multinationals*

36,356

100

171

405

702

6.3%

Assets of foreign affiliates of multinationals*

102,040

100

234

700

2,558

10.7%

Exports of foreign affiliates of multinationals* Royalties Employment of foreign affiliates *(number) Daily foreign exchange transactions

7,803

100

141

353

583

5.7%

310

100

232

461

1,639

9.1%

75,075

100

136

267

430

4.7%

5,343

100

135

476

6.7%

* Multinational companies are defined as firms having more than 50% equity in wholly owned enterprises abroad or at least 10% equity in joint ventures. Source: Data from UNCTAD (2015), Table I.5, and Bank for International Settlements (2014).

While those terms are widely used, their exact meaning is often not well understood. For some people, globalization is considered to be the intrusion of foreigners into local communities. Its effect is viewed as a destruction of the social fabric within nations. For others, it means freedom of movement, entrepreneurship, an exchange of cultures and harmonization. As far as the corporate world is concerned, some are certain it means ‘to expand the company’s presence abroad’; for others, it means ‘standardizing a product and selling it to the world’; for others still, it denotes an approach to management in which decision making is centralized at corporate headquarters. There are many reasons for this confusion. One relates to the fact that the phenomenon of globalization describes macroeconomic changes and political change, while for the business world it denotes a strategic and managerial issue. While the concept of globalization is relatively new, the phenomenon is not. There have been periods in history when the world was without borders, and citizens, products and money could move around freely. Theories have been developed to explain and advocate free trade and globalization from the macro point of view, and to explain the process of globalization from the business point of view (Insert 1.1). As far as the business world is concerned, before the 1970s the most frequently used terminology, when referring to integrated operating across the world, was ‘international’, ‘multinational’ or occasionally ‘trans-national’. Even if we ignore the East India Company, which started in the early seventeenth century, modern corporations such as Unilever, Nestlé and Procter & Gamble were operating all over the world by the end of the nineteenth century. They are known as multinational companies, but nobody would have called them global 50 years ago. The global concept appeared in the early 1970s and progressively invaded boardrooms, classrooms and editorial offices. What is the exact meaning of globalization? What forces generated it? And what are the consequences for firms? There is no one well-established definition of globalization. Here we will posit as a working definition: ‘The process by which people, products, information and money can move freely across borders’. As a consequence, markets may tend to converge, providing opportunities for the standardization of products, for production centers to be (re)located to more economical places around the world, and

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I GLOBAL CONTEXTS

Insert 1.1: Theories of Globalization Macro theories: free trade and globalization The theory of comparative advantage, proposed in the early nineteenth century, stated that under free trade, nations will maximize wealth if they export the goods for which they have a relative advantage (Ricardo, 1967). The idea is that countries should concentrate on the production of those goods and services at which they are most efficient and export them, whilst buying in other products from abroad. The total global production of goods and services will then be higher than when separate countries try to produce everything themselves. As a theoretical example, imagine two similar industrial parks, one in Malaysia and the other based in the Philippines, both with 10,000 workers, and both producing electrical products. Both sites employ 5000 workers (half their total effort) to produce computer motherboards and 5000 workers to make videogame consoles. The Malaysian operation is able to produce 10 million motherboards per year and the Philippines’ 8 million, while the Malaysians produce 200,000 consoles to the Philippines’ 250,000. Malaysia has, therefore, demonstrated a comparative advantage over the Philippines for motherboards and Philippines has a comparative advantage over Malaysia for consoles. The total global output in the current situation will be 18 million motherboards and 450,000 consoles per year. For better results, Malaysia should concentrate on producing motherboards and trading them, while the Philippines should focus its efforts on consoles. In this situation the global output rises to 20 million motherboards and 500,00 consoles, marking an 11% increase in both motherboards and consoles. World-system theories suggest that globalization is the product of nationalistic, capitalistic, colonial and international expansion (Wallerstein, 1974, 2000; Robinson, 2004). For instance, from the sixteenth century the colonial expansion of Spain, Portugal, the Netherlands, Britain and France created a global market for a certain number of commodities. Later, the USA and Japan themselves became colonial imperialistic global powers. In other words, since the appearance of modern shipping vessels and navigation systems, truly global trade has become possible. Marxism views globalization as the result of the tendency of the return on capital to decrease, forcing capitalists to find new territories to exploit. Lenin argued that the ultimate stage of capitalism was imperialism.(Marx and Engels, 1848; Lenin, 1917). The argument is that the profits of firms tend to decrease because of intense competition. Firms react by merging and looking for markets outside their national boundaries, creating global oligopolies, for example Lafarge Holcim, Apple, Samsung. Network society theories see globalization as the result of the vested interests of a transnational capitalistic class (managers, politicians, bureaucrats, bankers), as well as of supranational organizations such as the WTO, UN and EU (Castells, 1996; Sklair, 2000). Advances in telecommunications and the rise of the internet have made it possible for business to be done globally, both in terms of financial transactions and internationally connected production systems. Technological cultural theories propose that information technologies have led to a convergence of culture (Robertson, 1992; Ritzer, 1993). Very similar in essence to McLuhan’s ‘Global Village’ concept,1 these theories state that thanks to technology, people in different countries increasingly tend to share a common culture and consumer choices, making global product design and production possible and desirable. World 3.0 This theory, developed by Professor Pankaj Ghemawat,2 holds that humanity has followed four stages of social, political and economic organization and trade. The first stage (World 0. 0) refers to the prehistoric period in which societies were organized into thousands of tribes surviving by hunting and gathering, and where human interactions were limited to those between the members of tribes with practically no external trade. The second stage (World 1.0) refers to the formation of political entities in the forms of cities or empires (China, Sumer, Aztec),

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governing several thousands to millions of peoples (mainly farmers) under a political power structure (an empire or kingdom). Mostly economically self-sufficient, these states introduced some international, but limited exchange mechanisms (such as trade via the Silk Road). World 2.0 started in the seventeenth century with the colonial expansion of European powers and the creation of nation states. The first multinationals, such as the British East India Company, extended their reach as far as Asia. During the nineteenth century, thanks to transportation and communication innovations, multinational firms from Europe, America and Japan developed. After a decline between the two world wars, global development exploded and saw the formation of the modern business juggernauts such as Nestlé, General Electric and Siemens that we see today. The driving force of World 2.0 in the post-war years was a progressive deregulation and integration of markets. World 3.0 is predicted to evolve, following the global financial crisis of 2008, as a world that is characterized by a high level of market integration but also a high level of government regulation in what has been called semiglobalization.

Micro theories: corporate globalization Transaction cost theories posit that multinational firms result from the economic benefits of internalizing costs of transaction rather than relying on contracts to regulate contact with international economic agents (Buckley and Casson, 1976). Resource-based theories suggest that firms take advantage of their proprietary assets (technology, capital ) to expand their presence in international markets (Barney, 1991). Resource seeking theories explain the global expansion of firms by their desire to obtain resources they don’t have (Dunning, 1993).

for R&D laboratories to be distributed across countries. As we will see, this implies a more centralized management of firms. Before examining the many aspects of corporate life impacted by the phenomenon of globalization, we will first look at the macroeconomic, technological and political factors that have generated such a global environment, and then look at how firms have changed their operations to take advantages of the new opportunities this environment offers.

Insert 1.2: Some global definitions Globalization is the process by which people, products, information and money can move freely across borders. Global industries are industries in which, in order to survive, competitors need to operate in the key world markets in an integrated and coordinated way. Industries such as aerospace, computers, telecommunication equipment, appliances, power generation, large industrial projects, insurance and re-insurance and corporate data transmission are examples of what a global industry means. In these sectors it is difficult to sustain competition if one does not cover (nearly) the whole world as a market, and if one does not integrate operations to make them cost and time effective. Multinational companies are the companies that operate in various countries outside their countries of origin. Global companies are multinational companies that operate in the main markets of the world in an integrated and coordinated way. Companies such as HSBC, Apple, Nestlé, Unilever and Nokia are global companies.

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‘Born global’ companies have become multinational immediately upon or soon after being founded. Globalizing is the phenomenon whereby the competitive structure of industries changes progressively from multinational to global. Industries such as telecommunications, processed food, personal care and retail are in the process of globalization. Global integration and coordination are the organizational structure and management processes by which various activities scattered across the world are made interdependent. As examples, global manufacturing integration implies the specialization of factories and the cross-shipment of parts between different production sites; global product development requires the coordination of various research centers and marketing teams; global account management demands that different country subsidiaries provide a service according to a plan negotiated centrally and so on.

GLOBALIZATION FROM A MACRO PERSPECTIVE Historically the world has experienced various periods of intense trade across continents and free movement of people and capital, in particular during the nineteenth century after the Napoleonic wars. After a decrease due to the two world wars of the twentieth century, several factors generated the emergence of the new economic environment that we call ‘global’.3 During the 1950s and the 1960s the convergence of several political, technological, social and competitive factors began to shape this new environment.4

WHAT ARE THE FACTORS THAT PUSH FOR GLOBALIZATION? Political factors: liberalization of trade and investments The main political factor has been the stabilization of post-war peace in Organisation for Economic Cooperation and Development (OECD) countries that allowed the development of free trade among nations. Two main organizations have been the source of trade liberalization – the General Agreement on Tariffs and Trade (GATT) (replaced by the World Trade Organization (WTO) in 1995) and the European Union – to which one may add the progressive opening of emerging nations to foreign investments. The GATT, founded in 1946 by 23 nations, initiated a series of negotiations, called ‘rounds’, aimed at reducing tariff concessions to encourage the liberalization of trade. The Kennedy Round in the mid1960s, the Tokyo Round in the early 1970s, the Uruguay Round in late 1980s, and the Doha Round in 2001 created an environment that fostered international trade, as shown in Figure 1.1. The European Community (EC) was established on 25 March 1957 by the Treaty of Rome, which was signed by Belgium, France, Italy, Germany, Luxembourg and the Netherlands. The aim was to create a common market, and economic and political integration among the six member states. As a result goods, people and financial flows could move freely across countries. During the 1970s, the EC was enlarged with the entry of the UK, Ireland and Denmark, followed by Spain, Portugal and Greece in the 1980s, Sweden, Austria and Finland in the 1990s, and Poland, Lithuania, Latvia, Czech Republic, Slovakia, Slovenia, Malta, Hungary, Estonia, Cyprus, Romania, Bulgaria and Croatia in the early 2000s. In 1993 a Single Market which eliminated most legal and bureaucratic barriers was established among the member states. In 1999 a single currency, the euro, was adopted by 19 countries, and passport-free travelling without any border controls was allowed between 26 countries as part of the Schengen Agreement signed in 1985. Companies could integrate their operations across Europe to take advantage of a market of 500 million customers and gain economies of scale by specializing and concentrating their operations.

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% 45 40

25000

China tariff rates

20000

35 30 Weighted tariff rates, all products (%)

Trade (US+EU+Japan)

25 20 15 10 5 0 1988

Tariffs (US+EU+Japan+UK)

1992

1996

Uruguay Round

2000

5000

China trade

2004

2008

15000 Trade ($ billion) 10000

2012

Doha Round China Joint WTO

Figure 1.1 Tariff reductions and international trade Source: Created using data from various World Bank Indicators.

In addition, from 1948 to 2008 the number of preferential trade agreements notified to the GATT/WTO increased from practically none to around 200 per year in the first decade of the twenty-first century. Finally, in parallel with what was happening in the industrialized countries, the developing nations progressively adopted more positive attitudes towards foreign direct investment (FDI). At first, investment laws were designed to attract foreign investors in order to induce them to produce locally, but over the years the legislation has evolved toward a more open stance, favoring cross-border investments. Between 1992 and 2012, 2592 regulatory changes favorable to FDI were introduced worldwide, compared to 359 unfavorable changes.5

Technological factors: transport, communication, education, science and production technology Another set of ‘push factors’ for globalization are related to technological progress that lowered the cost of transport and communication as well as the unit cost of production through economies of scale or the localization of productive capacities and sourcing in low-cost economies. Air, rail and road transport and the use of containers in maritime transport have reduced the cost of shipping goods from country to country as well as, in the case of air transport, enabling the travel of managers. The development of telecommunications has reduced the cost of information exchange between business units scattered around the globe (Figure 1.2). On the scientific front, from 2000 to 2007 the number of international students in the OECD countries increased by 59% to reach 2.5 million while the number of international co-authored scientific articles increased by 50%.6 Progress in manufacturing technology gave tremendous impetus to the need to concentrate production in world-class factories benefitting from huge economies of scale, thus encouraging the rationalization and integration of production systems. Besides manufacturing concentration, companies have been able to source components or services from low-cost countries, either by setting up their own operations or by purchasing locally. Another source of economies of scale comes from the need to quickly amortize research and development (R&D) expenditure. Companies are confronted with dual pressures: R&D budgets are increasing

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(a)

% 100 90 80

Ocean Freight (Tramp Price Index)

70 60 50 40 30

World Air Transport (Index revenues /ton)

20 10 0 1980

(b)

1990 a) International transport costs (Base 100 = 1980)

2000

2010

2012

% 100 90 80 70 60 50 40 30 20 10 0 2008

b) Fixed broadband price as a percentage of gross national income (GNI) (Base 100 = 2008)

Figure 1.2 International transportation and communication costs Sources: Author’s own, using data from United Nations, World Trade Report 2008; International Telecommunication Union, Measuring the Information Society Report, 2014.

and the time elapsing between invention and commercialization is becoming shorter. For instance, it took 52 years for television to move from invention to large-scale commercial adoption and production, but the same step took nine years for the first personal computer (IBM 610) and just three years for the iPhone. For major appliances, it took seven years in the 1950s and 1960s to introduce a new model versus two years in the 1970s. The life cycle of Intel’s 286 microprocessor was seven years while the 486 lasted five years.7 As a consequence, companies need to launch products and services at the same time in all major markets in order to be able to recoup their investments. Finally the advent of the internet has fostered the immediate transfer of media, social networking, and the long distance communication and on-line transactions that constitute the backbone of global communities today.

Social factors: convergence of consumer needs International air transport and the diffusion of lifestyles by movies and TV series have increased the brand awareness of consumers worldwide. Brands like Sony, Nike, Levi or Coca-Cola are known nearly everywhere. Kenichi Ohmae,8 in his book Triad Power, has discussed the ‘Californization of society’ – teenagers in São Paulo, Bombay, Milan or Los Angeles listening to the same music, using the same

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iPhone or iPad and wearing the same pair of blue jeans and using Facebook, Instagram and YouTube. The convergence of customer behavior and needs is also facilitated by the urbanization and industrialization of societies. The less cultural and the more technical the product, the more likely that it can be standardized and appeal to consumers in all countries: smartphones, PCs, elevators, cranes, robots and internet platforms are products for which national differences do not matter much.

Competitive factors The 1960s saw the emergence of Japanese competitors in markets that traditionally had been dominated by American or European companies. Japanese firms, and later Korean firms, adopted a global approach at the very beginning of their international expansion. One of the reasons was that they did not have many national subsidiaries and their international expansion coincided with the opening of trade barriers. Right at the beginning they designed products for the world market, creating global brands such as ‘Sony’, ‘Panasonic’ and ‘Hyundai’, and their efficient production systems gave them a cost advantage in electronics and automotive parts. Competitors had to adopt a similar strategy to survive. During the 1990s emerging competitors from China, India and Brazil also entered the global game. China became ‘the factory of the world’ by offering offshore low-cost production sites. In other parts of the emerging world, local manufacturers in Thailand, Indonesia, Vietnam, Turkey and Mexico provided OECD industries and retailers with low-cost garments, toys, tools and furniture.9 Another competitive force that pushed companies to globalize was the globalization of customers. During the 1970s, Citibank created a Global Account Management Unit to service corporate customers with international subsidiaries. Similar phenomena developed in the IT, telecom and consulting sectors, and also in the luxury segment of fashion and perfumes. Figure 1.3 summarizes these political, technological, social and competitive ‘push factors’ that have fostered globalization.

Political factors • GATT/WTO • EU • Deregulation of FDI • Regional trade agreements Reduce trade and investment barriers

Technology factors

Social factors

• Transport • Telecommunication • Internet • Education • Science • Production technology Reduce the cost of integration Favor transfer of technology Increase economies of scale

Globalization

• Convergence of customers’ needs • Emails, social networks, videos online • Movies, series Favor product standardization and global brands

Competitive factors • New global players • Multinational customers • Economies of scale Induce integration and coordination

Figure 1.3 Globalization push factors

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WHAT ARE THE FACTORS THAT WORK AGAINST GLOBALIZATION? THE LOCALIZATION PUSH As mentioned earlier, globalization is associated with some degree of standardization of products and practices plus a high level of coordination and integration of activities in a company’s value chain. Factors that oppose standardization, coordination and integration therefore work against globalization. One can group those factors into four main categories: cultural, commercial, technical and legal.

1 Cultural factors: attitudes, tastes, behavior and social codes When the consumption of a product or a service is linked to traditions and national or religious values, global standardization is not effective. Some products – for instance, Kretek (tobacco and clove) cigarettes in Indonesia or the Pachinko (pinball) game in Japan – are unique to one society and their globalization is nearly impossible, although one can argue that with innovative marketing it may not be. For example, Beaujolais nouveau wine, the arrival of which was typically a Burgundian and Parisian bistro event before the 1970s, is now available in Tokyo, Paris or New York on the same day; while Halloween (trick or treat) masquerades, a traditional US festivity, are now common in Europe. This shows that even highly culture-specific items can be appreciated by customers all over the world. However, it remains true that food and drink tastes, social interactions in business negotiations, attitudes towards hygiene, cosmetics or gifts vary from culture to culture, thus hampering a global product design or approach. In the Asia Pacific region, for instance, personal relationship building rather than legal contracts is the normal way to conduct business. One has to spend time and effort in building these personal ties, which in a US context would be largely considered a waste of time. Religion may play an important role in limiting the effects of globalization, particularly in the domains of national cuisine or cultural products (such as films). Nationalism can also be considered as an obstacle to globalization to the extent that it promotes a return to trade protectionism and a retreat from international agreements in certain societies (as shown by Brexit).

2 Commercial factors: distribution, customization and responsiveness In some sectors, distribution networks and practices differ from country to country and as a consequence the ways of managing the network, motivating dealers and distributors, pricing, and negotiation are hardly amenable to global coordination. For instance, the marketing and distribution of pharmaceutical products differs according to the country’s health system. In some countries, such as Japan, doctors sell medicine, while in other countries pharmacists sell to patients who get a refund (or not) from their insurance company, while in yet other cases pharmaceutical products are delivered freely to the patient. Responsiveness to customers’ demands, as well as customization, are other factors which almost by definition defeat standardization. Private savings or current accounts to individuals, loans to small and medium-sized enterprises (SMEs), mortgages, consulting activities and individual architectural designs are activities in which a local presence and a fast reaction to customers’ requirements are needed for competitive success. Although some practices, processes or methodologies can be standardized on a worldwide basis (consulting, engineering, architecture or auditing, for example), specific customer requests have to be taken into consideration, thus limiting globalization.

3 Technical factors: standards, spatial presence, transportation and languages Technical standards in electrical, civil, chemical or mechanical engineering can create a burden for global companies. The economies of scale and cost benefits of global integration and standardization

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cannot be exploited fully when technical standards vary greatly. In certain cases, standards can be changed without major modification – for instance, mobile telephony does not represent a major hurdle for global manufacturing. In other instances, standards are not that easy to accommodate and require a specific local production line. This is mainly the case for beer or foods, for instance. Spatial presence is a requirement for those industries which need to occupy a physical space in order to create and distribute their products and services. Retail banking, retailing, hotels, local telephones services, hospitals, entertainment, car dealerships are examples of industries where the services have to be produced locally. There are still some advantages in globalizing certain tasks (such as the back office functions of accounting, data processing, global sourcing, transfer of best practices), but the location constraint still limits globalization benefits. In the future, e-commerce is likely to reduce the spatial constraint considerably, particularly when it comes to non-physical services such as banking or movies on demand. E-commerce in physical products can also eliminate the spatial constraint as far as the customer interface is concerned, but it is still hampered by logistical constraints. The example of Amazon demonstrates that it is possible for a customer in Paris or in Rio de Janeiro to order a book but the customer will have to bear shipping costs that may eliminate the basic cost advantage of the e-bookstore. This is the reason why Amazon has established 82 fulfillment centers outside the USA, thus moving toward a more multinational business design. The impediments of transportation are important if the cost of transport cancels out the benefits of concentrating production. Bulk commodities such as cement or basic chemicals are more economically produced in local plants than in global centralized units, despite the scale economies that could be gained: the cost and the risks of transport cancel out the benefits of centralized production. Similarly, when production systems are not scale-intensive and small productive units can achieve similar costs to large plants – in plastic molding, for instance – there are no major benefits in building a global production system. Finally, language can be an additional constraint to global approaches. This can be significant when it comes to customer services, of which training services, personal banking, personal telecommunication and retailing are examples. However, there are two major trends that can reduce language constraints. English has become more and more the ‘global language’, and industries such as graduate business training or high-level consulting can use English without bothering with translation.

4 Legal factors: regulation and national security issues Governments impose regulatory constraints that often work against globalization, either because they limit the free flow of personnel (regulation on working permits), cash (exchange controls, tax), goods (customs duties, quotas), or data (censorship, the internet and controls on electronic data interchange), or because they impose localization constraints (local content, local ownership and joint venture policies). Over the years, thanks to the GATT/WTO, multilateral agreements (EU, ASEAN, NAFTA and so on), and International Monetary Fund (IMF) requests, government legislation is leaning towards more open contexts that favor globalization. However, some constraints still exist. Some sectors such as telecommunications, media, banking and insurance are still tightly controlled and some countries (such as China and India) or regional blocks (EU) still impose local content requirements. Finally, governments are deeply concerned with national security and will prevent foreigners gaining too much control of their defence or strategic sector industries. In the defence sector, for instance, where R&D costs are huge and economies of scale significant, globalization would appear to be fully justified, but is in fact limited because of national security constraints. Since the 2001 Twin Towers destruction in

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New York followed by a series of terrorist attacks in London, Madrid, Moscow, Beirut, Nairobi and Paris, governments have adopted measures that constrain the movement of people and products. Security becomes priority. Figure 1.4 summarizes these localization push factors.

Cultural factors • Attitudes, tastes • Behavior • Social codes Reduce the benefits of standardization

Technology factors • Standards • Transportation • Spatial presence • Language

Commercial factors Localization

• Distribution networks • Customization • Responsiveness Require differentiated approaches to sales and marketing

Reduce the benefits of economies of scale, centralization and standardization

Legal factors • Regulations • National security Limit free flow of people, goods, data, cash Impose localization constraints

Figure 1.4 Localization push factors

The Benefits of Localization The benefits of localization, instead of a global integrated and coordinated approach, are essentially customer-oriented benefits that give firms increased market power and ultimately an increased market share. Those benefits are proximity, flexibility and quick response time.

• Proximity is the capability to be close to the market, to understand the customer’s value curve. • Flexibility is the capability to adapt to customer demands in the various dimensions of the marketing mix: product/service design, distribution, branding, pricing and services. Ultimately, flexibility leads to customization.

• Quick response time is the ability to respond at once to specific customers’ demands. These three benefits are closely interrelated: proximity provides the basis for flexibility and flexibility provides the basis for a quick response time. All three give a competitive advantage when local cultural, technical, commercial and legal contexts vary so much from country to country.

The Benefits and Pitfalls of Globalization: The Macro Picture In 1817, David Ricardo in his theory of comparative advantage10 showed that it was beneficial to nations to specialize and trade goods in which they had a comparative advantage. This laid the foundation of

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trade theory, which itself is the underlying foundation of globalization: in a perfect global setting where goods, people, data and money flow freely, companies can adopt an integrated and coordinated approach to their operations and the competitive battlefield would be the world. Since Ricardo’s time, partisans and adversaries of free trade have exchanged heated debates about the pro and cons of globalization for society. Table 1.2 summarizes those arguments.

Table 1.2 The societal benefits of globalization Arguments in favor of globalization

Arguments against globalization

Creates overall wealth for all nations because specialization increases trade

Imposes a massive strain on labor forces both in developed countries (job destruction) and developing countries (sweatshops, child labor)

Reduces inflation because of cost efficiencies

Standardizes customer tastes. Reduces diversity

Benefits customers because of price reductions arising from cost efficiencies

Induces concentration of power in a few global corporations

Better allocation of natural, financial and human resources

Harms the environment because of unrestrained exploitation of natural resources such as forests

Reduces corruption because of free-market trade

Reduces the capacity for nations to protect their national interests, cultures and values

Introduces a ‘law of the jungle’ leading to domination by the strongest multinational

The globalization debate gained political visibility during the 1990s. In Europe, the Treaty of Maastricht (signed in 1992) adopted the euro as a single currency, generating a heated debate on the loss of sovereignty and the advantages of further political and economic integration. In 1995, the North America Free Trade Agreement (NAFTA) created similar discussion. In Asia, after the 1997 financial crisis, globalization was questioned and, at the end of that decade, the WTO at the Seattle ministerial conference could not set up an agenda for launching another trade round because of public criticism of the whole concept of globalization. Since 2000 and particularly after the world ‘subprime’ crisis of 2008, there has been growing debate about the future of globalization. Some, such as Alan Rugman and others, have announced the ‘end of globalization’,11 a concept that will be discussed in Chapter 15. Despite all this political turmoil, some analysts think that the world is becoming progressively more integrated. According to the consulting firm McKinsey,12 by 1997 the value of truly global markets represented approximately $6 trillion out of a total world output of $28 trillion (21%). In 1999, the firm anticipated that by 2030 the proportion of global markets would amount to $73 trillion out of $91 trillion (80%). However, as will be seen in Chapter 15, this forecast may be challenged.

GLOBALIZATION AT THE LEVEL OF THE FIRM As mentioned previously, many firms from Western Europe extended their operations outside their country of origin into the Americas, Asia or Africa, most of them in the form of colonial implantations, from the seventeenth century onwards. Arab merchants penetrated the Southeast Asian region in order to organize trade. Following the industrial revolution, large corporations started the capitalistic movement of international investments in infrastructure projects and in the setting up of subsidiaries. The first wave of modern multinational expansion began in 1880 and declined after the First World War. This wave was made of ‘free-standing’ firms, legally incorporated in their native country but extending rapidly internationally via the creation of local subsidiaries. Except for the resource-based multinational,

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each local subsidiary was self-standing. By the end of the nineteenth century, firms such as Nestlé, Lever Brothers (Unilever), General Electric and Bayer were representative of this generation of multinational corporations. A second wave of corporate international expansion through local subsidiaries took place after the Second World War, launched by US and European companies and augmented later by Japanese companies. In the 1960s local subsidiaries were extended to more and more countries but started to progressively lose their autonomy and become part of an integrated global network.13 Classically, over time firms have followed a sequential evolution, from being exporters, to the setting up of foreign subsidiaries, to the integration of operations across the world. From local, they became international, then multinational and now global. More recently, ‘born global’ companies have assumed a global setting from the beginning,14 a development that will be discussed in Chapter 5. To illustrate the traditional phenomenon of globalization let us take the simplified example of Otis Elevator Company.

EXAMPLE 1.1 Otis Elevators Otis Elevator Company started in 1853 in New York and was soon selling elevators in Canada and Europe as well. In the 1960s it had many plants, service operations and sales offices all over Europe, where the company grew organically as well as by acquisition. Each subsidiary fought for a share of local markets. Competitors were either local national companies or subsidiaries of rival multinational companies. The Otis subsidiaries managed all the activities of the value chain (marketing, design, production, installation OTIS UK Design

Production Marketing

and service). For instance, the French subsidiary designed elevators for the French market, manufactured them in French factories, sold them with French sales forces and maintained them with a French after-sales organization – the management was essentially French. In Germany, Otis designed, manufactured, sold, installed and serviced elevators for the German market; and the same applied in nearly every major country – see Figure 1.5. In smaller countries, products or components were exported from major countries’ OTIS GERMANY

Service

Design

Production Marketing

Service

Competes against UK and multinational competitors

Competes against German and multinational competitors

for the UK market

for the German market OTIS ITALY

OTIS FRANCE Design

Production Marketing

Service

Design

Production Marketing

Service

Competes against French and multinational competitors

Competes against Italian and multinational competitors

for the French market

for the Italian market

Figure 1.5 A multinational competitive configuration – Otis Elevators in the 1960s

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subsidiaries. The operations were self-contained in each country and the results were evaluated on a country-by-country basis. Such a situation had prevailed since the early 1900s. It corresponds to what was referred as a multinational or multi-domestic world, in which multinational companies like Otis were competing in each main market of the planet. By the end of the 1960s several key elements played a role in changing this competitive structure. One country manager at Otis perceived that the European business context was changing. First, the Treaty of Rome in 1957 had created the European Economic Community (EEC), at that time called the Common Market. This meant that tariff barriers across Europe were coming down; it became viable to produce components in one country and export them to other countries. This allowed the company to concentrate on the production of components in a network of specialized factories across Europe, each of them making one product category or one component. Components could be cross-shipped for ultimate installation in the various client countries. In 2015 Otis operated all over the world as 6 regional organizations, with 200 factories and 12 engineering facilities.

The benefits of such a system were obvious – by concentrating production the company could benefit from economies of scale, and some of the reduction in costs could be passed to the customers in the form of lower prices, leading to higher market share. Products could be designed for an entire market (standardized). Instead of having country segmentation one would have pan-European segmentation based on utilization, that is, high-rise buildings, lowrise buildings and so on. Standardization would be possible only if customers in Europe – architects, engineers, real estate developers, housing departments and so on – shared a common view about what an elevator should be. Despite the differences in housing organization across countries, elevators were essentially technical products with very little cultural content and therefore able to be standardized. Only selling methods would vary from country to country. The Otis management perceived this as an opportunity to gain market share in Europe and engaged in the pan-European strategy depicted in Figure 1.6 in which design centers and factories were specialized and interdependent.

OTIS UK

OTIS GERMANY

Design

Production

Marketing

Production

Service Marketing

Local market

Service

Local market OTIS EUROPE

Design

Production

Marketing

Service

Local market

OTIS FRANCE

Marketing

Local market

OTIS ITALY

Figure 1.6 A global competitive configuration – Otis today

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Service

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From a management point of view this was a radical change: country managers were no longer responsible for the whole value chain, but only for part of it. They were obliged to coordinate with other countries through the European headquarters. This led to a very successful story. By 1975, Otis had captured 40% of the European market, while containing Japanese penetration, and competitors were obliged to adopt a similar

strategy if they wanted to survive. This concept was further expanded and today Otis is organized by product line on a worldwide basis. There are still country subsidiaries, which take care of installation, maintenance, public relations and personnel, but product development and manufacturing are coordinated globally by product line. From being a ‘multinational’, Otis has become the ‘global’ company shown in Figure 1.6.

The phenomenon of an active coordinated and integrated presence in the main regions of the world is what ‘global company’ means. It is important to observe that this change gave Otis a competitive advantage and that competitors were obliged to adopt a similar approach if they wanted to survive. Globalization is neither a consultant’s fad nor a management buzzword, it is a competitive imperative in an increasing number of industries. The development of information technologies, the fluidity of capital markets, the advent of megamergers in the telecoms, computer, oil, pharmaceutical, power and car industries – all of these demonstrate that business firms are increasingly behaving as if they were already living in a global world. (See Insert 1.2, Some Global Definitions.) Historically, the globalization process, according to the stage theory of internationalization,15 can be best described as shown in Figure 1.7. It has evolved in three steps: (1) international trade: export and sourcing; (2) multinational investments: setting up value-adding activities in different countries; and (3) integration and coordination of activities across region and countries.

Global integration (Global)

Internationalization (Multinational) Export (Trade) Centuries ago

Started in seventeenth century but mainly early twentieth century

1960s and later

Figure 1.7 The three steps in globalization

The Benefits and Pitfalls of Globalization for Business The benefits of globalization can be assessed from two points of view: the business or competitive perspective and the macro, socioeconomic perspective. The benefits viewed from the macro/socioeconomic perspective have been discussed earlier, so this section will focus on the benefits to a corporation of adopting a global strategy.

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Business and competitive benefits can be grouped into four categories: cost, learning, timing, and arbitrage.

• Cost benefits. These come, on the one hand, from economies of scale owing to the standardization of products and processes as well as increased bargaining power over suppliers of raw materials, components, equipment and services; and, on the other hand, from the ability to organize a logistic and sourcing network based on location factors. Examples of economies of scale through standardization are numerous. Otis Elevators was able to lower the cost, and hence the price to consumers of elevators in Europe, by 30% by introducing a pan-European manufacturing system.

• Timing benefits. These come from a coordinated approach to product launching in the early stage of the product life cycle. In a multinational setting, each subsidiary is more or less free to adopt products for its own market. This is sometimes called ‘the shopping caddy’ approach to product adoption. Such an approach generates inefficiencies in the management of the product life cycle since the optimal volume is obtained only after a lengthy process of product adoption by all subsidiaries. A classic example of the deficiency of the ‘shopping caddy’ approach is Philips America’s refusal to adopt the V2000 video system, developed by Philips’ mother company in the Netherlands. As a result, this innovation was not able to gain the volume of sales it needed in the most important world market and lost competitiveness compared to Japanese manufacturers such as Sony and Matsushita. In the late 1960s, the ‘international product life cycle’ theory of multinational product introduction postulated the progressive adoption of products over time according to the level of economic and scientific development of countries (see Figure 12.1). Such a theory is no longer valid. When industries globalize, waiting too long to launch a product can be fatal, particularly if the product has a short life cycle, which is more and more frequently the case. For example, Microsoft launched Windows 2000 at the same time everywhere in the world.

• Learning benefits. These accrue from the coordinated transfer of information, best practices and people across subsidiaries. Such transfer eliminates the costly ‘reinvention of the wheel’ and facilitates the accumulation of experience and knowledge. In Thailand, Unilever formulated and implemented an innovative strategy to produce and market ice cream. The Thai experience served as a template for other countries in the Asia Pacific region, giving the company a first-mover advantage. This example illustrates the benefits that can be gained from a coordinated transfer of best practice.

• Arbitrage benefits. These come from the advantages that a company can gain by using the resources in one country for the benefit of its subsidiary in another country. These can be direct competitive advantages or indirect cost advantages. A competitive advantage can be gained by playing a ‘global chess game’: for instance, engaging in a price war in one country in order to tie up the resources of competitors in that country, thus depriving them of cash flow which could be used elsewhere. This strategy was used by Goodyear, the US tyre giant, in the early 1970s when the French company Michelin moved into North America. Goodyear, which had a small market share in Europe, engaged in a price war that Michelin was obliged to counter by lowering its prices, and de facto reducing its financing scope for its American expansion. Another type of arbitrage comes from differential cost elements such as taxes, interest and possibly risk reduction through the pooling of currencies. Those four benefits are real but achieving them is subject to certain conditions, and their adoption has to be measured against the real competitive advantage they provide to the firms adopting them. The benefits in cost reduction obtained by economies of scale are contingent upon the market responsiveness to standardization and whether customers are price sensitive. If customers are not responsive and prefer tailored products and services to standardization, a global approach is less appropriate. A similar reasoning applies to the benefits of timing. As for purchasing power, it may be limited for culturally sensitive services such as advertising.

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The benefits of learning are positive if the experience gained in one country is applicable to another. If this is not the case, there is a timing deficit: the time spent in realizing that one has made a mistake plus the time to learn the new environment. At Euro Disneyland near Paris, two years were lost because the transfer of knowledge from Florida and California did not help the European operation. The benefits of arbitrage can be offset by the cost of managing the arbitrage and any legal barriers to it that may exist. In the case of tax arbitrage, governments are very careful to make sure that global companies do not abuse their arbitrage power. Despite those limitations, more and more companies recognize the competitive benefits of globalization. However, one should be aware there are still some factors that work against globalization and in favor of localization.

THE GLOBAL/MULTI-LOCAL MAPPING The two sets of forces – globalization and localization – shape the competitive structure of industries and induce companies to configure their worldwide business systems with the right mix of coordination, integration and decentralization. Global/multi-local mapping is a tool that has been developed to position industries and industry segments according to the relative importance of each set of forces. Figure 1.8 represents a mapping for various industries, while Figure 1.9 does the same for various segments of the banking industry. The mapping in Figures 1.8 and 1.9 reveals that industries and segments can be broadly positioned into three types of competitive situations:

• Type I: Global forces dominate and firms in those industries can sustain competitive advantage by operating across the world on a coordinated way. There are few advantages to push for local adaptation of products, services and approaches. efficiency, speed, arbitrage and learning are the competitive drivers. These industries are global, as in the case of microchips, bulk chemicals or civil aircraft.

• Type II: Local forces dominate and flexibility, proximity and quick response are determining capabilities for competitive advantage. Firms can operate independently in different countries; their approaches are different from country to country. Food retailing, consumer banking or voice telephony fall in this category.

• Type III: In these industries there is a mix of global and local forces at play and competitiveness cannot be achieved without achieving the benefits of global coordination and, at the same time, the benefits of flexibility, proximity and quick response time. This positioning is increasingly becoming the dominant competitive battleground for a vast majority of sectors. Yes Telecommunication equipment

Civil aircraft

Global industries in which firms can sustain competitive advantages only if:

Microprocessors Institutional banking Bulk chemicals

Corporate banking Automobile Paint

they are present in the key countries of the world they integrate and coordinate their activities across the world in a centralized manner

Package tours

National Public services No

Retail banking Catering

Food retail

Global-local industries in which firms can sustain competitive advantages independently within the boundaries of countries in which they operate

Figure 1.8 Global-local mapping: different industries have different competitive requirements

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Yes

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Yes

Investment banking

Wealth management Global corporate accounts Credit cards

Global approach dominates

Trade finance Commercial banking Retail banking Saving accounts Personal insurance

No No

Local approach dominates

Yes

Figure 1.9 Global-local mapping: different segments have different competitive requirements – example of banking

Global/multi-local mapping can be used to assess a situation at a point in time or to anticipate evolution over time. It can also serve as mapping for the various activities of the value chain. As we will see in Chapters 7, 8 and 14, a good understanding of industry positioning will help the formulation of business and country strategies, as well as the implementation of an effective organizational design. In Appendix 1.1 there is a questionnaire that will help analysts and managers to position their business on the global/multi-local mapping matrix.

Mini-Case 1.1 Mobile telephony industry Mobile telephony expanded rapidly during the first decades of the 2000s. From 2005 to 2015 the number of mobile subscribers in the world grew from 2 billion (32% of the world’s population) to 6.3 billion (86% of the world population). According to the International Telecommunication Union (ITU) the distribution of customers is: Asia Pacific 3.37 billion, Americas 1 billion, Europe 757 million, Rest of the world 808 million. The industry is divided broadly into three major sub-industries: (1) infrastructure manufacturers, (2) mobile phone producers, and (3) mobile services operators.

Infrastructure manufacturers The industry of network equipment manufacturing generated $126 billion of revenues worldwide in 2012. It is dominated by major US, European and Asian producers: Ericsson from Sweden, Huawei and ZTE from China, Motorola and Cisco

from the USA and Nokia Alcatel Lucent (Finnish, French, US). Economies of scale and capital intensity drive the economics of this industry. Over recent years it has experienced a lot of consolidation through mergers and acquisitions.

Mobile phone producers In 2014 the industry produced 1.878 billion units of mobile phones – a 56% increase since 2009. With 41% of market share, three major companies dominate this industry; Samsung (21%), Nokia/ Microsoft (10%) and Apple (10%). The smartphone segment represents 53% of that market, up from 40% in 2012, and is divided between three operating systems (Android, IOS and Windows). Smartphones are constantly upgraded to reduce weight, improve battery durability, add features, and adapt to the internet access technology (3G, 4G).

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Mobile operators The global revenues generated by mobile operators were $1150 billion in 2012. Around the world, mobile services are operated mainly by local telephone companies with their own national brands. Some operators, such as Vodafone from the UK which operates in 16 countries or Orange (France) which operates in 19 countries, have developed their presence internationally by acquiring or participating in the capital of local operators. Most of the consumers use prepaid services for their usage. Operators offer various prepay schemes, as well as add-ons (internet access, mobile banking, emails, games and so on), according to the characteristics of their markets. Customers are divided into individual accounts (roughly 60–95% according to the country) and corporate accounts (10–35%). Some of the corporate accounts are multinational firms that want to benefit from a ‘global’ offer. Mobile operators purchase their own network equipment and control its installation. They also procure large quantities of handsets that they include in their prepaid contracts at discounted

prices. Apart from Japan and Korea, which use a standard of their own, they operate under one of the two major standards: Global Standard Mobile (GSM) with around 80% penetration, and CDMA (15%). The key activities of mobile phone operators are: 1. Procurement of network infrastructure, hardware and software as well as mobile phones. 2. Network installation and maintenance carried out by equipment vendors plus local infrastructure companies under the control of the service provider. 3. Software developments for new applications and services. From 2008 to 2011 around 300,000 applications for mobile phones and smartphones have been developed in the world. The main applications are games, news and social networking. 4. Marketing and brand management. In each country there is a variety of local brands. Multinational players try to use their global brand (e.g. Orange), although advertising is country specific. 5. Administration, marketing, sales and distribution.

Questions 1 Using your knowledge, the data provided and the global/multi-local mapping, can you decide whether mobile telephony is a global industry? 2 Can you do the analysis for each component of the industry? 3 For mobile operators, which activities are global and which are local?

SUMMARY AND KEY POINTS 1 Globalization is the process by which people, products, information and money can move freely across borders

a Four factors are pushing globalization: • Political: liberalization of trade and investment reduces trade barriers • Technological: technology reduces the cost of coordination and increases economies of scale • Social: convergence of customer choices encourages standardization and global branding • Competitive: emergence of new competitors induces integration companies to compete on all fronts with strong coordination b Four driving forces are acting against globalization: • Cultural: differences in taste, behavior and social codes reduce the benefits of standardization of products or services • Commercial: differences in distribution channels and customer interfaces require differentiated approaches to sales and marketing • Technical: differences in standards, transportation and language constraints reduce the benefits of economies of scale, centralization and standardization • Legal: differences in regulations and security measures limit free flow of resources and impose localization constraints

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2 A global company can be defined as a company that operates in the main markets of the world in an integrated and coordinated way. A global company carries out one activity (e.g. manufacturing) or a component of the activity (e.g. manufacturing one sub-part only) of the value chain in one country which serves the company’s worldwide market. A multinational company is a company that operates in the many markets of the world with little or no integration and coordination among operations 3 Localization has three benefits:

a Proximity b Flexibility c Quick response time to customers 4 Globalization has four benefits:

a b c d

Cost Timing Learning Arbitrage

5 Global/multi-local mapping is used for identifying the competitive requirements of an industry or a business segment and can assist companies in formulating business and country strategies

Appendix 1.1 Positioning a Business on Global/Multi-local Mapping Assign a score for each question from 1 to 3 (2 points = halfway between the two opposites listed) 1point =

3points =

To what extent do customers have similar demands for functionality and design across countries?

Very different

Very similar

To what extent do products or services have a high proportion of standard components across countries?

Low proportion of standard components

High proportion of standard components

To what extent are customers (or distributors) themselves operating in different countries and buying centrally your products or services?

Buying locally

Buying centrally

To what extent are significant economies of scale in your industry important for the cost of the product (i.e. one needs very high volume to obtain low cost)?

Low economies of scale

High economies of scale

To what extent is the speed of introducing new products worldwide important for competitiveness?

Speed is not that important

Speed is very important

To what extent are the sales of your product or service based on technical or cultural factors?

Highly cultural

Highly technical

To what extent can experience gained in other countries by a ‘sister’ subsidiary be successfully applied in other countries?

No great benefits

Yes, highly beneficial

To what extent do competitors in your industry operate in a ‘standardized’ way across countries and are successful in doing so?

Competitors are localizing

Competitors are successful in standardized approaches

To what extent can pricing be different from country to country without introducing dysfunctionalities?

Pricing has to be consistent across borders

Pricing can be very different

To what extent does distribution channel management differ from country to country?

Not so different

Yes, very different

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1point =

3points =

To what extent do business regulations and contexts differ from country to country, requiring big differences in local practices?

Not too different

Highly different

To what extent do products or services require a high degree of interaction with customers (customization)?

Low customization

High customization

To what extent are transportation costs high compared to the product costs?

Not so high

Very high

To what extent is the customer interface critical for success?

Not critical

Very critical

Questions 1 to 8 represent the importance of global forces while questions 9 to 14 represent the importance of local forces. Divide global forces total by 8 and local total by 6. It is then possible to map a business in the following matrix:

Global approach dominates

(Questions 1 to 8 total score ÷ 8)

Local approach dominates (Questions 9 to 14 total score ÷ 6)

Learning assignments 1 Among the enterprises that you know, can you identify one that qualifies as a global company? Why? 2 In Figure 1.8, why are saving accounts positioned low on global approach and high on local approach while investment banking is high on global approach and low on local approach? 3 In Figure 1.8, food retailing is positioned as a local business, with a very low globalization score. However, in the press, companies like Tesco, Walmart or Carrefour are described as ‘global retailers’. Explain this discrepancy. 4 What are the social factors that have pushed for globalization and which have been pushing against it? 5 What are the benefits of having a local approach? 6 When the Otis Elevator Company introduced the change described in Example 1.1 (p. 14), there was a lot of resistance from the various heads of the European subsidiaries. Why? What arguments do you think the people hostile to globalization used? 7 Can Apple be classified as a global firm? Why did you make that assessment?

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Key words • Arbitrage benefits

• Global/multi-local mapping

• Comparative advantage

• Globalization

• Global companies

• International product life cycle

• Global industries

• Multinational companies

Web resources http://knowledge.insead.edu/ INSEAD http://www.business-week-global.com/ Businessweek magazine http://www.mckinseyquarterly.com/ McKinsey Quarterly http://unctad.org/en/Pages/Home.aspx UNCTAD https://www.bcgperspectives.com/ Boston Consulting Group http://www.wto.org/ Provides information about the WTO http://www.imf.org/ Provides statistics and papers from the IMF

Companion website Visit the companion website at www.palgravehighered.com/lasserre-gsm-4e for a multitude of weblinks and resources, self-test questions for revision and a searchable glossary.

Notes 1 McLuhan (1962). 2 Ghemawat (2011). 3 James (2001). 4 Yip (1992). 5 UNCTAD (2008, 2015). 6 UNCTAD (2008). 7 Baker and Hart (1999); Qualls et al. (1981); Michel et al. (1996). 8 Ohmae (1985). 9 OECD (2010). 10 Ricardo (1967). 11 Rugman (2000); James (2001); Langlet (2013). 12 Lowell and Fraser (1999).

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13 Jones (2005). 14 Chetty and Campbell-Hunt (2003); Li, Qian and Qian (2015); Tanev (2012. 15 Johanson and Vahlne (1977).

References and further reading Books and articles Baker, M. and Hart, S. (1999) Product Strategy and Management (London: Prentice-Hall). Bank for International Settlements (2014) 84th Annual Report, Bank for International Settlements, http://www.bis.org/publ/arpdf/ ar2014e.pdf, accessed 4 May 2017. Bartlett, C.A. and Ghoshal, S. (1989) Managing Across Borders: The Transnational Solution (Boston, MA: Harvard Business School Press). Barney, J.B. (1991) ‘Firm resources and sustainable competitive advantage’, Journal of Management, 17(1), pp. 99–120. Buckley, P. and Casson, M. (1976) The Future of the Multinational Enterprise (London: Macmillan). Castells, M. (1996) The Rise of the Network Society, Vol. I of The Information Age: Economy, Society, Culture (Oxford: Blackwell).

International Bank for Reconstruction and Development (2007) Global Economic Prospects, Managing the New Wave of Globalization (Washington: World Bank). James, H. (2001) The End of Globalization: Lessons from the Great Depression (Cambridge, MA: Harvard University Press). Johanson, J. and Vahlne, J.E. (1977) ‘The internationalization process of the firm’, Journal of International Business Studies, 8(1), pp. 23–32. Jones, G. (2005) Multinationals and Global Capitalism: From the Nineteenth to the Twentyfirst Century (Oxford: Oxford University Press). Langlet, F. (2013) La Fin de la Mondialisation (Paris: Fayard). Lenin , V. (1917) Imperialism, the Highest Stage of Capitalism. Available in Penguin Classics, 2010.

Li, L., Gongming, Q. and Zhengming, Q. (2015) ‘Speed of internationalization: mutual effects Chetty, S. and Campbell-Hunt, C. (2003) ‘A strategic of individual- and company-level antecedents’, approach to internationalization: a traditional Global Strategy Journal, 5(4), pp. 303–20. versus a “born-global” approach’, Journal of Lowell, L.B. and Fraser, J.N. (1999) ‘Getting to International Marketing, 12(1), pp. 57–81. global’, McKinsey Quarterly, 4, pp. 68–81. Dunning, J. (1993) Multinational Enterprises and the McLuhan, M. (1962) The Gutenberg Galaxy: The Global Economy (Wokingham: Addison-Wesley). Making of Typographic Man (Toronto: Toronto Fraser, J.N. and Oppenheim, J. (1997) ‘What’s new University Press). about globalization?’, McKinsey Quarterly, 2, Marx, K. and Engels, F., ‘Manifesto of the pp. 168–79. Communist Party’, 1848, reproduced in Ghemawat, P. (2011) World 3.00, Global Prosperity and How to Achieve it (Boston, MA: Harvard Business Review Press). Goodwin, J. (2001) Otis: Giving Rise to the Modern City (Chicago: Ivan R. Dee). Harvard Business School (1994) Global Strategies: Insights from the World’s Leading Thinkers (Boston, MA: Harvard Business School Press). (This book contains a collection of Harvard Business Review (HBR) articles.) Humes, S. (1993) Managing the Multinational: Confronting the Global–Local Dilemma (London: Prentice-Hall).

Marx and Engels Selected Works, New York: International Publishers, 1968. Michel, D., Salle, R. and Valla, J. (1996) Marketing Industriel (Paris: Economica). Micklethwait, J. and Wooldridge, A. (2000) A Future Perfect: The Challenge and Hidden Promise of Globalization (London: Heinemann). Mirza, H. (ed.) (1998) Global Competitive Strategies in World Economy: Multilateralism Regionalization and the Transnational Firm (Cheltenham: Edward Elgar). OECD (2010) Measuring Globalization: OECD Economic Globalisation Indicators (Paris: OECD).

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Ohmae, K. (1985) Becoming a Triad Power (New York: McKinsey). Peng, M. (2001) ‘The resource-based view and international business’, Journal of Management, 27, pp. 803–29.

Tanev, S. (2012) ‘Global from the start: the characteristics of born-global firms in the technology sector’, Technology Innovation Management Review, 2(3), pp. 5–8.

UNCTAD (2008) ‘Countries continue to compete for FDI but not unconditionally’, Investment Porter, M.E. (ed.) (1986) Competition in Global Brief no. 3, UNCTAD. Industries (Boston, MA: Harvard Business School Press). UNCTAD (2015) World Investment Report 2015: Reforming International Investment Governance Porter, M.E. (1998) The Competitive Advantage of (United Nations). Nations (New York: Free Press). Prado-Wagner, C. (2014) ‘Trends on telecommunication/ICT services regulation and costs and tariff policies’, Report to the ITU/ BDT Regional Economic and Financial Forum of Telecommunications/ICT for Asia Pacific, Yangon, Myanmar, 1–2 September, https:// www.itu.int/en/ITU-D/Regulatory-Market/ Documents/Myanmar/Session5_Prado_ costing%20trends.pdf (accessed 6 June 2017). Prahalad, C.K. and Doz, Y.L. (1987) The Multinational Mission: Balancing Local Demands and Global Vision (New York: Free Press).

Wallerstein, I. (1974) The Modern World System, vol. I (New York: Academic Press). Wallerstein, I. (2000) ‘Globalization or the Age of Transition?’ International Sociology, 15(2), pp. 249–65. WTO (World Trade Organization) (2008) World Trade Report 2008: Trade in a Globalizing World (Geneva: WTO). Yip, G. (1992) Total Global Strategy: Managing for World Wide Competitive Advantage (Englewood Cliffs, NJ: Prentice-Hall).

Qualls, W., Olshavsky, R.W. and Michaels, R.E. JOURNALS (1981) ‘Shortening of the PLC: an empirical test’, BUSINESS Journal of Marketing, 45(4), pp. 76–80. Business Week Rangan, S. and Lawrence, R.Z. (1999) A Prism Economist on Globalization (Washington, DC: Brookings Financial Times Institution). Fortune Ricardo, D. (1967) On the Principles of Political International Management Economy and Taxation (Homewood, IL: Irwin). Ritzer, G. (1993) The McDonaldization of Society (London: Sage).

SEMI-ACADEMIC

California Management Review Columbia Journal of World Business European Management Journal Robinson, W.I. (2004) A Theory of Global Capitalism: Harvard Business Review Production, Class and State in a Transnational Multinational Business World (Baltimore, MD: The Johns Hopkins Sloan Management Review University Press). Robertson, R. (1992) Globalization: Social Theory and Global Culture (Thousand Oaks, CA: Sage).

Rugman, A. (2000) The End of Globalization: A New ACADEMIC and Radical Analysis of Globalization and What it Global Strategy Journal International Human Resources Management Means for Business (London: Random House). Sklair, L. (2000) The Transnational Capitalist Class Journal of International Business Studies Strategic Management Journal (London: Blackwell).

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INDEX of SUBJECTS

A Absorption mode of integration, 258, 265, 464 Acculturation, 332, 373–374, 378–379, 389, 392, 394, 464 Advertising agency, 107, 274, 286, 464 Alliance, 133, 143–144, 157, 162, 209, 213–238, 242–246, 254, 464, 466–468, 470–471, 473, 476–479 Arbitrage, 17–18, 21, 23, 142, 233, 275–276, 278, 284–286, 464 Arbitrage benefits, 17, 23 Asymmetric development, 425, 428, 442, 450, 464

B Back office, 11, 136, 291, 294–295, 318, 464 Best practices, 11, 17, 215, 235, 254, 258–259, 267, 273, 321, 331, 333, 337–338, 340, 385, 391, 401, 410, 412, 416, 439, 464–465 Black swans, 424 Blue Ocean Strategy, 139–140, 465 Bond market, 353 Born global, 6, 14, 150–151, 165–166, 465 BOT, 279–280, 302, 316–318, 329, 356, 465 Bottom of the pyramid, 33, 37–38, 47, 400, 465 Brexit, 10, 345, 366, 385, 424, 430 Bribe, 90–91, 93, 100, 111, 116, 465 BRICs, 28, 29, 31, 32 Bruntland Report, 81 Business etiquette, 68, 76–77, 465 Business strategy, 123–127, 156, 163, 177, 203, 288, 308, 335, 465, 471 Business systems snalysis, 61–64

480

CAGE framework, 179, 187, 466 Californization, 8, 268, 286, 466 Capabilities fit, 213–214, 222–223, 225–226, 239, 244, 252, 466 Career plan, 376, 390, 392, 466 Center of excellence, 332, 338, 466 Child labour, 96, 120–121 Clash of Civilization, 51 Clusters, 53, 57, 59, 75, 129, 134, 156, 166, 172–173, 177–178, 183, 187, 312, 324, 335–337, 466

Co-location, 326–327, 332, 338, 466 Codes of Conduct, 51–52, 81, 93, 106, 120–121, 470 Combination, 37, 113, 136, 171, 175–176, 183, 195, 197, 209, 247, 271, 281, 292, 302, 309, 324, 328, 330, 338, 379, 384–385, 433, 446–447, 449, 462, 466 Comparative advantage, 4, 12, 23, 36, 466–467 Compensation, 62, 202, 211, 372, 374, 376–377, 379, 381, 383, 390, 392, 409, 467, 477 Competitive context, 126, 145, 167–168, 176, 181, 186, 196, 400, 404–405, 466 Conference of the Parties (COP), 85 Constellations, 236, 244, 467 Convergence, 4, 6, 8–9, 20, 79, 267–269, 284, 286, 411, 437, 466–467 Corporate culture, 52, 77, 140, 144–145, 227, 240, 382, 467 Corporate Social responsibility, 82, 100–101, 103, 105, 113–116, 121, 467 Corporate strategy, 125–126, 146, 156, 163, 467, 471 Corruption, 1, 13, 33–35, 43, 45, 47, 74, 81–82, 84, 90–95, 98, 100, 102–103, 105, 107, 110–112, 114–116, 118, 120–121, 179–180, 185, 187, 190, 193, 437, 444, 465, 467, 479 Cost leadership, 124, 135, 139, 146, 157, 163, 468 Cost of living, 171, 291, 376–377 Country ‘diamond’, 177, 187 Country life cycle, 173, 187, 468 Country risk analysis, 123, 167, 180, 187, 468 Crosslisting, 342, 349, 351, 358, 367 Cultural fit, 209, 213–214, 222–223, 226–227, 239, 244, 252, 468 Cultural heritage, 56, 65, 77, 468 Customer value curve, 171, 269, 286, 468 Cybercrime, 436, 443, 450

D Death valley’, 209, 233–234, 239–240, 244 Deglobalization, 426, 450, 469

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Differentiation, 37, 52, 55, 124, 126, 136, 139, 146, 157, 163, 177, 227, 253–254, 271, 305, 344, 357, 449, 458–459, 469 Distribution function, 315, 318, 469 Dotted-lines relationship, 469 Due diligence, 200, 248, 252, 254–255, 264–265, 469

E E-Procurement, 296–298, 305, 315, 317 Ease of Doing Business, 33, 36, 45, 47, 74, 169, 183, 185, 188, 193 Eco-friendly, 82, 84, 88, 111, 469 Economic cultures, 53, 61, 77, 469 Electronic Data Interchange (EDI), 289, 296, 318, 469 Electronic marketplaces, 296, 318, 470 Emerging countries champions, 47, 470 Emerging country, 27, 37, 43, 47, 200, 391 Entry modes, 197–198, 203–204, 210–211, 470 Environmental Preferable Purchasing (EPP), 88 Environmental crisis, 117, 470 Ethics, 81, 93–95, 100–101, 103, 106–107, 111, 114–115, 117, 119, 121, 368, 375, 470 Expatriate package, 376, 378 Expatriates, 138, 199, 332, 369, 371–375, 380–383, 390, 392–394, 399, 414, 470 Explicit knowledge, 330, 338, 466, 470 Externalization, 330, 338, 470 Extractive agenda, 225, 239, 244, 470

F Fair process, 244, 246, 262, 265–266, 470 First mover, 142, 163, 196–197, 208, 210, 212, 470, 478 Fit Analysis, 200, 223, 225–227, 239, 254, 466, 471 Five forces, 176–177 Franchise, 198, 200, 209–210, 312, 334, 471 Front office, 294–295, 314, 318, 471

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G Gini index, 74 Global /Multi-local mapping, 18–19 Global accounts, 276, 278, 285–286, 471 Global business strategy, 125, 163, 471 Global Capability Index, 131, 156, 160–161, 163, 471 Global chess, 17, 142, 471 Global companies, 5, 10, 18, 23, 51, 64, 81, 93, 95, 103, 110, 112–113, 124, 141–142, 145, 235, 267, 274–275, 296, 321–322, 325, 328–332, 342, 356–357, 375, 380–381, 418, 471 Global corporate strategy, 125, 146, 163, 471 Global hub, 292, 314, 395, 417–418, 471 Global industries, 2, 5, 18, 23, 166, 419, 471 Global leaders development, 392, 472 Global managers, 81, 369, 371–372, 381, 384–392, 472 Global positioning, 124, 128, 133, 135–136, 144, 146, 156–157, 163, 374, 472 Global Revenue Index, 124, 131–132, 156, 158, 160, 163, 472 Global solution selling, 267–268, 279–280, 285–286, 472 Global Supply Chains, 298 Global warming, 82–85, 102, 110–111, 428, 431, 443, 450, 472 Globalization, 7, 9–27, 37, 51, 53, 55, 57, 61, 65, 67, 69, 71, 73, 75, 77, 79, 81–85, 87, 89–91, 93, 95, 97, 99, 101–103, 105, 107, 109, 111, 113, 115, 117, 119, 121, 123–124, 128, 131, 133, 137–138, 143, 146, 148, 157–158, 161, 214, 218, 246–247, 250, 267–268, 288–290, 305–307, 310–311, 317, 319–320, 322, 324, 329, 336, 349, 355, 368, 385, 397, 403, 408, 414–415, 419, 421, 423–427, 429–431, 433–443, 445, 447–455, 469, 472–473 Government incentives, 43, 123, 178 Grand Tour, 183, 187, 472

H Hedging, 243, 267, 342–348, 356–357, 367, 468, 472 Hierarchy of needs, 268–269, 286, 472 Hostage Risk, 302 Hub, 134, 146, 158, 174, 187, 196, 208, 292, 314, 395, 411, 415, 417–418, 471–472

Human rights, 1, 81–82, 84, 95, 97–99, 102, 105–106, 108, 110, 112–117, 119, 121, 307, 472, 477

I Incentives, 42–43, 123, 149, 169, 176, 178, 186–187, 189, 227, 258, 291, 348, 368, 379, 381, 473 Individualism, 54–55, 62, 75, 77, 228, 382, 473 Individualized corporation, 438–440, 443, 450, 473 Industry 4.0, 308–309 Industry analysis, 176–177, 186–187, 473 Industry culture, 52, 77, 227, 473 Infrastructures, 151, 169, 176, 292 Innovation, 17, 25, 114, 127, 145, 154–155, 157, 166, 169, 197, 203, 210, 218, 221, 254, 267, 291, 293–294, 307–308, 313, 321–327, 329, 331, 333–341, 399, 401, 403–404, 406, 421, 428–429, 452, 456, 461, 469, 473, 475 Institutional voids, 35, 37, 45, 47 Integration process, 244, 257–258, 260–261, 264–265, 438–439, 443, 473 Intellectual property, 40, 267, 321, 333, 335, 338, 340, 473 Interface management, 244, 260, 265, 473 Internal stickiness, 331, 338, 340, 473 International divisions, 418 International product life cycle, 17, 23, 321–322, 336, 338, 473 Internet, 4, 8–9, 11, 19–20, 47, 103, 134, 150–151, 171, 192, 196, 219, 243, 250, 253, 263, 267–268, 275, 289, 295–296, 299, 302–311, 315–320, 380, 400, 416, 435, 437, 445, 449–450, 461–462, 465, 469–470, 477, 479 Islamic finance, 348–349, 368

J Joint venture, 11, 40, 65, 82, 93–94, 107–108, 151, 195–198, 200–201, 203–206, 208–210, 213, 219, 221–223, 228–232, 234, 238–244, 246, 329–330, 333, 336, 356, 388, 458–460, 462, 470, 473–474 Joint venture decay, 209, 240, 244, 473 Joint venture for market entry, 222, 238, 244, 474

K Knowledge management, 305, 308–309, 321–322, 328, 330–331, 333, 337–338, 394, 474

L Learning alliances, 219–220, 228–229, 234, 237, 244, 474 Liability of Foreigness, 142, 149, 164, 166 Licensing, 41, 65, 102, 123, 138, 144, 157, 177, 194, 198, 200, 202, 204–205, 210–211, 237, 241, 272, 329, 334, 470, 474 Local managers, 93, 371, 380, 383, 388–389, 391–392, 400 Locally recruited personnel, 380 Location, 11, 17, 135, 137, 140–141, 143, 157, 169, 174, 177, 186, 190, 196–197, 208, 267, 289–291, 313, 317–319, 324–327, 331–333, 335–336, 338, 344, 361, 379, 433, 466, 472, 474 Logistics, 40, 47, 136–139, 143, 173, 176, 215, 254, 261, 270, 282, 286, 289–293, 296, 298–301, 307, 312–315, 317–319, 329, 400, 405, 407–408, 413, 461, 474

M Maastricht (Treaty of), 13 Macroeconomic indicators, 474 Market opportunities, 37, 148, 150, 167, 169–170, 186–187, 190, 474 Market segmentation, 171, 187, 474 Marketing positioning, 281, 285–286, 474 Matrix, 2, 19, 22, 145–147, 158, 267, 273, 370, 395–398, 403–411, 414–415, 417–419, 421, 461, 474, 476 Megacities, 427, 442, 450, 474 Mentoring, 379, 390–392, 474 Metanational, 321, 331, 333, 338, 340, 438, 440, 443, 450, 452, 475 Middle class, 27–30, 37–38, 45, 47–49, 72, 171–173, 186, 189, 195, 445, 470, 475 Middle-class Effect, 171 Missions, 376, 392, 475 Modularization, 271, 286, 475 Multi-cultural teams, 64–65, 67, 76 Multinational companies, 3, 5, 14, 23, 41, 56, 95, 99–100, 119, 138, 148, 276, 278, 368, 471, 475

N National/ethnic culture, 77 Negotiations, 1, 6, 10, 51, 64–66, 68–69, 71, 76, 78, 106, 150, 200, 232–234, 281, 302, 334, 356, 403 Network architecture, 293, 313, 318, 475 Network effects, 141, 150, 164, 269

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Networked organization, 325, 338, 440, 443, 475

Project finance, 342–343, 346, 356–357, 360, 368

OEM, 39, 41, 46–47, 127–128, 175, 415, 417, 459–460, 475 Offshoring, 39–40, 47, 289–290, 294, 309, 313, 320, 475 Offsourcing, 39–40, 47, 475 Options, 107, 203, 211–212, 219, 224–225, 247, 253, 344–345, 348, 357, 367, 475–476 Organizational culture, 74, 79, 267, 397, 412, 418, 476 Organizational fit, 209, 213, 222–223, 227, 239–240, 244, 476 Organizational processes, 397, 418, 476 Organizational structure, 6, 142, 145, 215, 227, 262, 397–398, 402, 410–411, 414–415, 417–418, 421, 446, 467, 472, 476, 479

Real option, 194, 203, 210, 476 Regional headquarters, 64, 76, 127, 144, 147, 198, 281, 385, 388, 391, 395, 400, 412–415, 418, 421, 477 Regionalization, 24, 430, 450, 477 Representative offices, 138, 144, 148, 197, 203, 208, 210, 382, 477 Retention, 257, 381, 390, 392, 477 Roles, 56, 231, 260, 262, 289, 292–293, 314, 317, 328, 380, 384–385, 387, 391–392, 395, 397, 400, 410, 412–413, 415, 418, 438–439, 443, 472–473, 475–477

Tacit knowledge, 330–332, 338, 470, 478 Tax evasion, 81, 99–100, 436, 444 Technology transfer, 88, 116, 200, 202, 219, 221, 231, 267, 321, 329–330, 337–338, 340, 478 Tenure, 376–379 Trade finance, 19, 342–343, 354, 356, 358 Transfer, Adapt, Create model, 143 Transnational, l, 4, 24–25, 49, 108, 115, 120, 122, 124, 131, 145, 158, 165, 189–190, 267, 374, 395, 397, 403, 410–411, 414–415, 418, 420, 426, 436, 438, 454, 479 Transnational Index, 124, 131, 158 Turnkey project, 279, 300, 316, 318, 479

Scenarios, 424–425, 431–432, 436, 441, 443, 446, 448–454, 477 Segmentation, 15, 37, 136, 171–173, 187, 268, 270, 273, 286, 291, 474, 477 Sharing agenda, 225, 244, 477 Silent language, 51, 53, 75–78 Skills, 62, 94, 137, 148, 166, 184, 196, 199–200, 209, 220, 231–232, 235, 240–241, 282, 292–293, 314, 327, 369–370, 373–376, 379–380, 384–387, 389–393, 411, 418, 439–440, 452, 472, 477 Small and medium-sized enterprise (SME), 147 Smart Factory, 309, 477 Socialization, 328, 330–331, 338, 426, 442, 477 Socially responsible investment (SRI), 117 Sprinkler model, 274, 284, 286, 478 Stand-alone value, 256, 265, 478 Strategic fit, 209, 213–214, 222–225, 238, 241, 244, 252, 478 Strategic role, 314, 318, 478 Sub-optimization, 276, 285–286, 419, 478 Symbiotic mode of integration, 258, 264–265, 478 Synergies value, 244, 256, 265, 478

Uncertainty avoidance, 54–55, 58, 75, 77, 479

P Partner analysis, 200 Partner selection, 200, 209, 214, 237 Pay and Productivity, 175 Performance evaluation, 227, 326, 337, 381–382, 391, 397 Piggybacking, 141, 148, 150, 162, 296, 476 Plant competencies, 314, 318, 476 Polish plumber, 385 Political partner, 238, 244 Post-acquisition process, 252–253, 265, 476 Power distance, 54, 58–59, 75, 77, 476 Pre-acquisition process, 252–253, 265, 476 Preservation mode of integration, 258, 265, 476 Procurement, 20, 39–40, 70–71, 94–95, 120, 136–137, 140, 175, 198, 203, 210, 215–216, 219, 231, 260, 267, 279, 285, 289, 292–293, 295–298, 301, 304–305, 307–308, 313–315, 317–318, 358, 457, 470, 476 Professional culture, 52, 77, 476

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V Valuation, 123, 189, 214, 219, 230, 232, 248, 252–256, 264–266, 343, 346–347, 357, 367–368, 476, 478–479 Value chain, 10, 16, 19, 21, 37, 39, 124, 126, 129, 136–139, 143, 148, 156–157, 163–164, 225, 293, 311–312, 314, 455, 461, 466, 477, 479 Value curve, 12, 134–135, 139, 156, 163, 171, 173, 269, 281, 285–286, 468, 479 Value proposition, 101, 124–126, 129, 134–136, 139, 156–157, 163–164, 254, 409, 465, 479 Venturing agenda, 225, 239, 244, 479

W Waterfall mode, 314 Weak signals, 424 Web, 2.0, 303, 308, 319–320, 479 Wholly owned operations, 194, 197, 210, 479 Window of opportunity, 196–197, 199, 208, 210, 212, 479

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INDEX OF NAMES

A Aaker, David, 287 Abid Aslam, 189 Abida, Rib, 189 Ablett, Jonathan, 452 Ackenhusen, Mary, 420 Adarkar, Ashwin, 211 Adil, Asif, 211, 245 Adler, Nancy, 78, 393 Aguar, Marcos, 48 Akadar, Adhwin, 245 Albert, Michel, 53, 61, 64, 78 Alexander, Marcus, 165, 263 Allen, Thomas, 339, 340, 420, 454 Almodóvar, Paloma, 166 Ammer, John., 368 Amsalem, Michel, 339 Andersen, Torben, 394 Anderson, Erin, 118, 119, 122, 211 Ansoff, Igor, 450, 452 Anwar Habiba, 368 Ariño, Africa, 245 Arnold, David, 211 Ashkenas, Ronald, 266 Asin, Amy, 247, 266 Attali Jacques, 451, 452 Augier, Mie, 339 Austin, James, 188

B Badaracco Joseph, 118, 119 Baden, Fuller, Charles, 237, 246 Bader, T, 164, 165 Bailey Warren, 368 Baker, Michael, 23, 24 Banerjee, Neela, 119 Bank, John, 211 Barnett, Carole, 421 Barnevick Percy, 386, 408, 421 Barney, Jay, 5 Barsoux, Jean, Louis, 51, 64, 79, 393 Barth, Karen, 287 Bartholomew, Susan, 393 Bartlett, Christopher, 24, 145–146, 164–165, 384, 393, 395, 420, 421, 438, 440, 451, 452, 473, 479 Bartmess, Andrew, 319 Bazigos Michael, 420, 421 Beamish, Paul, 211 Beneviste, Guy, 452 Berger, Peter, 53, 61, 64, 78 Besanko, David, 126, 165 Besouri, Christopher, 48

Birkinshaw, Jujian, 287, 421 Bjorkman, Ingmar, 394 Bleeke, Joel, 245, 265–266 Bloch, Nicolas, 49 Bloom, Helen, 394 Boele, Richard, 121–122 Bolt, Olivia, 452 Borcuch, Artur, 307, 319 Boutellier, Roman, 339–340 Bowonder, B, 339 Brake, Terence, 78, 205 Brett Jeanne, 78 Brewer, Thomas, 188, 250 Brodbeck, Felix, 78 Brown Lester, 71, 271, 382, 408, 452 Buckley, Peter, 5, 24, 164, 166 Budhwar, Pawan, 393 Bughin, Jacques, 319–320 Burns, Jennifer, 96, 119

C Cadbury, Adrian, 100, 118–119 Cadot, Olivier, 119 Campbell, Andrew, 24, 165, 463 Capron, Laurence, 245, 246, 266 Casson, Mark., 5, 24 Castells, Manuel, 4, 24 Cave, Bill, 319 Cavusgil, Tamer, 49, 211 Cerny, Keith, 319 Chaddick, Brad, 188–189 Chalkiti, Kalotina, 393 Chattopadhyay Amitava, 37, 49 Chenh, Simon, 189 Chesbrough, Henry, 339 Chetty Sylvie, 24 Chhokar, Jagdeep, 78 Chiesa, Vittorio, 339 Chu, Chi, Ning, 78 Chui, Michael, 319, 320 Chung, Peter, 368 Ciarlante Deana, 269, 288 Cladderton, Lisa, 421 Clyde, Smith, Deborah, 421 Coltman, Tim, 319 Connely, Catherine, 211 Contractor, Farok, 99, 118–119, 211, 356, 360, 368 Court David., 48, 82, 307 Cowking, Philippa, 273, 288 Crawford, Robert, 96, 119, 408, 421, 463 Cunha, Olao, 171, 172, 189 Cunningham, Mark, 246

D Dambal, Anirudha, 339 Danis, Wade, 319 Dastmalchian, Ali, 78 David, Arnold, 12, 51, 96, 287, 466 Davidson, William, 165, 246, 265, 266 Davies, H, 246, 392–393 Davis, Stanley, 421 Dawar, Niraj, 37, 49 de Bettignies, Henri, Claude, 388, 393 de la Torre, Jose, 245–246, 265, 266 de Meyer, Arnoud, 246, 266, 291, 293, 317, 319, 324, 339, 340 De Smet, Aaron, 421 Deloumeaux, Lydia, 319 DeMonaco, Lawrence, 266 Deng Xiao Ping, 32 Dent, Stephen, 72, 96, 245–246 DePamphilis, Donald, 266 Devinney, Timothy, 319 Devlin Clarian, 452 Dewhurst, Martin, 420–421 Dhingra, Dhruv, 320 Doherty, Bob, 287–288 Donalson, Thomas, 118–119 Dore, Ronald, 53, 61, 64, 78 Doremus, Paul, 165, 452 Dorfman, Peter, 78 Dornier, Philippe, Pierre, 319 Dos Santos, Jose, 332, 340, 438, 452 Dowling, Peter, 393 Doz, Yves, 25, 145, 164–166, 218, 222, 224, 235–236, 245–246, 324, 331, 339–340, 370, 393, 421, 438, 440, 451, 452, 467 Dragonetti, Nicolas, 287, 288 Dranove, David, 165 Dunchin, Faye, 119 Dunfee, Thomas, 118, 120 Dunning, John, 24, 128, 164–165 Durrieu, François, 246

E Eccles, Robert, 265–266 Edstrom, Anders, 374, 375, 393 Eiteman David, 368 Engels, Friedrich, 4, 24 Engle, Allen, 393 Enrique Luiz, 452 Erdmenger, Christoph, 117, 120 Ernst David, 96, 163, 211, 245, 246, 266, 291, 319 Eun, Cheol, 368

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Evans, Paul, 305, 306, 379, 393 Evans, Philip, 319

Gupta, Vipin, 49, 78 Gwartney, James, 49

Fadiman, Jeffrey, 117, 119 Falck1, Olivier, 119 Fang, Tony, 69, 78 Farndale, Elaine, 394 Farrell, Diana, 49, 189 Faulkner David, 165 Fender, Michel, 319 Ferdows, Kasra, 291, 293, 317, 319 Festing, Marion, 393 Finlay, Paul, 166 Flamant, Anne, Claire, 421 Florescu, Elizabeth, 451, 452 Francis, Duzanne, 266, 424 Franko, Larry, 421 Fraser, Jane, 23, 24, 49 Freeling, Anthony, 274, 287, 288 Friedheim, Cyrus, 246 Friedman, Thomas, 101, 452 Frynas, George, 166 Fukuyama Francis, 424, 450, 452

Habeck, Max, 257, 265, 266 Hadjikhani, Amjad, 118, 119 Hagel, John, 451, 452 Haigh, Ronald, 291, 319 Halevy, Tammy, 246 Hall, Edward, 53, 77, 78 Hamel, Gary, 165, 218, 222, 224, 235, 236, 245, 246, 451–452, 467 Hammond, Allen, 452 Hampden, Turner, Charles, 53, 55, 78, 79 Hanges, Paul, 78 Hankinson, Graham, 273, 288 Harbison, John, 247, 266 Harding, David, 452 Harrigan, Kathryn, 245, 246 Harris, Jonathan, 421 Hart, Susan, 23, 24 Harter, Jim, 420–421 Harvey, Michael, 452 Harzing, Anne, Wil, 393 Haspeslagh, Philippe, 246, 257, 259, 265, 266, 464 Hawawini, Gabriel, 265, 266, 368 Hazan, Eric, 320 Hebert, Louis, 245, 246 Heblich, Stephan, 118, 119 Heck, Nick Van, 166 Heenan, David, 145, 164, 165 Heike, Fabig, 121, 122 Heilbroner, Robert, 452 Hennart, JeanFrançois, 368 Hennebel, Ludovic, 97, 120 Hess, David, 118, 120 Heywood, Suzanne, 421 Hofstede, Gert, 53, 54, 77, 78, 382, 393 Hogan, Harold, 421 Holliday, Charles., 89, 117, 120 Holmes, Gary, 257, 265, 266 Holstein, Williams., 392–393 House, Robert, 78, 103, 130, 162, 237, 298, 310, 334, 344, 377, 453 Howell, Llewellyn, 188, 189 Hsieh, Tsun, yan, 392, 393 Humes, Samuel, 24 Huntington, Samuel, 51, 53, 57, 77, 79, 434, 451, 452 Husted, Bryan., 117, 120 Huston, Larry, 340 Hwang, Peter, 211 Hyde, Dana, 265, 266

G Gahuri, Pervez, 78 Galbraith, Jay, 374–375, 393 Gasman, Olivier, 340 Gassmann, Olivier, 339 Gatignon, Hubert, 211 Gee, Francesca, 245, 246 Geertz, Clifford, 52, 78 Gerch, Ulrich, 189 Geringer. Michael, 245–246 Gersh, Ulrich, 49 Ghadar, Fariboz, 266 Ghauri, Perez, 118, 119, 211 Ghemawat Pankaj, 23, 24, 164, 165, 179, 188, 189, 191, 393, 466 Ghoshal, Sumantra, 24, 145–146, 164, 165, 266, 384, 393, 402, 420, 421, 438, 440, 451, 452, 473, 479 Ghosn, Carlos, 215, 217, 228, 231, 245, 246, 309, 387 Giddy, Ian, 368 Glen, Jack, 212 Glenn, Jerome, 449, 451, 452 Gomez Casseres, Benjamin, 236, 245, 246 Gompers, Paul, 211 Goodwin Jason, 15, 24 Goold, Michael, 164–165 Gravelle, Jane, 118, 119 Gregersen, Hal, 374, 375, 380, 392, 393 Greve, Henrich, 232, 245, 246 Gröschl, Stefan, 393 Guey, Huey Li, 420, 421 Guisinger, Stephen, 188, 189 Gupta, AnilK, 49, 78

I Ifzal, Ali, 48, 49 Inglehart, Ronald, 79 Inkpen, Andrew, 246 Isono, James, 266

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J Jackson, Terence., 79 James, Harold, 23, 24, 189, 374 Jaruzelski, Barry, 339, 340 Jasperen, Frederick, 212 Javidan, Mansour, 78 Jemison, William, 246, 257, 259, 265, 266, 464 Jenkins, Rhys, 118, 120 Joachimsthaler, Erich, 287 Johanson, Jan, 24 Johnsson, Latham, Gerd, 84, 119 Jokinen Tiina, 386, 393 Jones Geoffrey, 24 Jones, Jeannette, 166 Jordan, Lisa, 453

K Kandemir, Destan, 49 Kandemir, Destan, 49 Kang, Jun, Koo, 368 Kaplan, Norton, 453 Karch, Nancy, 287 Karmokolias, Yannis, 212 Katsoulakos, P, 118, 120 Kaufmann, Daniel, 118, 120 Kawelis, Pavos, 319 Keller, William, 165, 274, 452 Keller, William., 287, 288 Kelly, Nataly, 288 Kennedy, Robert, 6, 421 Kets de Vries, 127, 386, 393, 396, 421 Khanna, Tarun, 35, 37, 48–49, 392, 393 Kharas, H, 49 Khou, Julia, 246, 266 Kiessling, Timothy, 452 Kim, Chan, 139, 140, 164, 165, 211, 246, 265, 266, 465, 469, 470 Kim, Daewan, 48, 49 Kim, Soonhee, 340 Kiss, Andrea, 319 Kitching, John, 251, 265, 266 Klincewicz, Krzysztof, 246 Knight, Gary, 96, 165 Kogut, Bruce, 211, 245, 246 Kolk, Ans, 120, 121 Koller, Thimothy, 189 Kotabe, Masaaki, 319 Kremenyuk, Victor, 79 Krishna, L.N, 245–246 Kröger, Fritz, 266 Kuemmerle, Walter, 340 Kulatilaka, Nalin, 211 Kumar, Nirmalya, 339, 340

L Lahiri, Nandini, 339, 340 Lanes, Kersten, 266 Lange, Glenn, Marie, 119

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Langlet François, 23–24 Lasserre, Philippe, 38, 48, 49, 189, 340, 368, 375, 383, 392, 394, 413, 414, 421 Latukefu, Alopi, 319 Laurent, André, 53, 56, 77, 79 Lavoie, Johanne, 393 Lawrence, Paul, 25, 52, 78–79 Lawson, Robert, 49 Leal, Donald, 118, 119, 122 Lee, Hyangsoo, 340, 349 Lehni Markus, 89, 117, 120 Leite, Carlos, 118, 120 Leonard, Barton, Dorothy, 327, 339, 340 Lessard, Donald, 265, 266, 347, 368, 468 Levitt, Theodore, 268, 288 Lewis, Richard, 58, 79 Lhabitant, François Serge, 50 Li, J, 340 Li, Jiatao, 24, 44, 295, 296, 320, 340 Lieberman, Marvin, 211, 212 Liesch, Peter, 165 Lindner, Andrew, 294, 319 Lloyd, Reason, Lester, 148, 164, 165 Lorenzoni, Gianni, 237, 246 Lorsh, Jay, 52, 79 Lowell, L. Bryan and J, 23–24 Luermann, Timothy, 211, 212 Luk, S.T.K, 393 Lund, Suzan S, 320 Luo, Yadong, 211, 212 Luostarinen, Reijo, 164, 166 Lynn. Isabella, 232, 246

M Madura Jeff, 368 Magdeleine, Jocelyn, 319 Magni Max, 48, 50 Malnight, Thomas, 278, 287, 288, 421 Mankin, Eric, 235, 246 Manyika James, 307, 320 Marceto, Alonso, 453 Marx, Karl, 4, 24 Mauborgne, Renée, 139, 140, 164, 165, 246, 265, 266, 465, 469, 470 Mauri, Alfredo, 246 Mauro, Paolo, 118, 120 Mazaroll, T, 164, 165 McDougall, Patricia, 165, 166 McLaughlin, Kathleen, 287 McLuhan Marshall, 4, 23, 24 Mead, Margaret, 52, 79 Medina, Danielle, 78 Mei, Jianping, 368 Melander, Erik, 451, 453 Mendenhall, Mark, 79, 393, 394 Meyer, Erin, 53, 54, 56, 57, 77, 79, 246, 266, 291, 293, 317, 319, 324, 339, 340, 463

Michaels, Ronald, 25 Michel, Daniel., R. Salle and, 23, 24, 370, 388 Micklethwait, John, 24 Middleton, Stuart, 165 Midgley, David, 319 Mikko, Kosone, 164, 165 Milberg, William, 318, 320 Millar, Roderick, 368 Miller, Robert, 212, 250, 253, 319 Mirza, Hafiz, 24 Mitchell, David1, 245, 246, 257, 265, 266 Mitroff, Ian, 453 Moffett, Michael, 368 Monaghan Pau, 117, 120 Montgomery, Cynthia, 421 Montgomery, David, 211, 212 Morley, Micael, 393 Moss Kanter, Rosabeth, 246 Mugha, Terryn, 148, 164, 165

N Narasimhan, Laxman, 48 Narayandas, Das, 288 Nichols, Martha, 95, 118, 120 Niron, Hashai, 164, 166 Noda, Tono, 287–288 Novicevic, Miroland, 452

O Ohmae, Kenichi, 8, 23, 25, 166, 268, 287, 288, 466 Olshavsky, Richard, 25 Oppenheim, Jeremy, 24 Ormiston, Charles, 49 Oviatt, Benjamin, 165–166

P Paauwe, Jaap, 394 Palepu, Krishna, 35, 48–49 Parker, Philip, 109, 249, 268, 287, 288 Parsons, Andrew, 79, 394 Patel, Dhiren, 452 Pauly, Louis, 165, 452 Pearce, Robert, 326, 339, 340 Pélissié du Rausas, Matthieu, 320 Peng, Mike, 25, 39, 40, 21, 212 Perlmutter, Howard, 145, 164, 165 Pernia, Ernesto, 48, 49 Peters, Tom, 420, 421 Piketty, Thomas, 451, 453 Pilat, Borcuch, Mardalena, 319 Pinson, Christian, 287, 288 Pisany, Ferry Jean, 451, 453 Piskorsi Nikolaj, 397, 421 Plas, Géraldine, 117, 120 Pope, Jeremy, 118, 121 Porter, Lyman, 394

Porter, Michael, 25, 125, 135, 136, 139, 164, 166, 176, 177, 178, 186, 188, 189, 190, 319, 320, 324, 340, 466, 468, 469 Poy Seng Ching, 383, 393 Prahalad, C.K., 25, 37, 48–49, 145, 164, 166, 181, 188, 189, 235, 246, 415, 420, 421, 465 Probert, Joselyn, 246, 266 Pucik, Vladimir, 393, 421 Puranam, Phanish, 340 Purshe, William, 266 Purushothaman Roopa, 48, 50

Q Qian, Zhengming, 24 Qualls, William, 23, 25 Quelch, John, 272, 287, 288, 394

R Raleigh, Clionadh, 451, 453 Rangan Subramanian, 25, 232, 245, 247, 319–320 Redding, Gordon, 53, 61, 78, 80, 188, 189, 191, 394 Reed Hall, Mildred, 53, 77, 78 Reich, Robert., 165, 235, 246, 452 Reinert, Uwe, 49 Reinhart, Forest L, 104, 118, 121 Rennie, Michael, 165–166 Resnick, Bruce, 368 Retchman, René, 121–122 Ricardo, David, 4, 12–13, 23, 25, 466 Ricks, David, 51, 77, 79 Rieger, F, 392, 394 Riesenbeck, Hajo, 274, 287, 288 Rigman, Tom, 212 Ritzer’s George., 25 Robertson, Roland, 25 Robinson, William., 25 Rodrik, Dani., 426, 451, 453 Rogers, Jerry, 188, 189 Ronen, Simcha, 53, 57, 79 Root, Franklin, 212, 303 Rosenweig, Philip, 394 Ross, Jerry, 246 Rossi, Carla, 340 Rottenberg, Stephanie, 392, 394 Rouse Ted, 49 Rowley, Tim, 246 Roxburg, Charles, 451, 453 Rugman, Alan, 13, 23, 25, 162, 164, 166, 430, 451, 453 Russ, Meir, 166

S Saari, David, 453 Said, Rémi, 251, 320, 385, 424 Sakkab Nabil, 340 Salacuse Jeswald, 66, 67, 78–79

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INDEX OF NAMES

Salehyan, Idean, 453 Salle, Robert, 24 Samek, Robert, 393 Santos, Indhira, 332, 340, 438, 451, 453 Scahus, Robert, 49 Schaefer, Scott, 165 Schein, Edgard, 52, 79 Schmidheiny, Stephan, 120 Schneider, Suzan, 51, 64, 79, 206–207, 212, 278 Schule, Randallr, 393 Schütte Hellmut, 45, 107, 121, 189, 268, 269, 287, 288, 408, 414, 420, 421, 463 Schwartz, Gordon, 288 Schwartz, Kevin, 340 Scullion, Hugh, 393 Seurat, Sylvère, 339, 340 Sheffield, Charles, 120, 453 Shengliang, Robert, 340 Shenkar, Oded, 53, 57, 79 Shih, Stan, 415, 416, 421 Shipilov, Andrew, 246 Shirodkar, Abhay, 339 Sigala, Marianna, 393 Sinatra, Alessandro, 247, 266 Singer, Mark, 451–452 Singh, Harbir, 247, 266, 326 Singh, Jasjit, 39, 207, 212 Singh, Satwinder, 339, 340 Sinha, Jayant, 49 Sklair, Leslie, 4, 25 Slone, Robert, 340 Smith Ring, Peter, 118 Smith Shi, Christiana, 287 Smith, Craig, 121 Smith, Kenneth, 266 Solberg, Carl Arthur, 246 Soubbotina, Talyana, 48, 49, 84, 121 Spadini, Alessandro, 397, 421 Spar, Deborah, 96, 102, 119, 246, 266 Sparrow, Paul, 393 Spekeman, Robert, 232, 245–246 Staack, Volker, 340 Stahl, Günter, 79, 375, 392, 394 Stalk, Georges, 164, 166 Stamenov, Kalin, 320 Steen, Mattheew, 165 Steinhubl, Andrew, 246, 266 Steward, Pamela, 394 Stiglitz, Joseph, 424, 450, 451, 454 Stiles, Philip, 394 Stonehill, Arthur, 368 Stopford, John, 145, 164, 166, 397, 398, 420, 421

Stoyan Tanev, 165, 166 Stumpf, Siegfried, 78, 79 Sunshine, Russell, 68, 78–79 Szulanski, Gabriel, 331, 340

T Tahilyani, Naveen, 48, 49 Taleb, Nassim, 451, 454 Tan, Ja, 49, 69 Tanev Stoyan, 24–25 Tanzi, Vito, 118, 121 Tao, Zhigang 200–4., 266 Taylor, William, 420, 421 Teece, David, 339 Terwiesch, Christian, 340 Thill, George, 327, 339, 340 Tichy, Noel, 421 Tides, Setting, 452 Tolstoy, Daniel, 247 Toulan, Omar, 287 Träm, Michael, 266 Trap, Daniel, 84, 119 Trevor, Jonathan, 394 Tribewalla, Vikas, 287, 288 Trompenaars, Alfons, 53, 55, 61, 64, 77, 79 Tung, Rosalie, 372, 392, 394

U Usunier, Jean Claude, 78

V Vahlne, Jan, Erik, 24 Vaiman, Vlad, 394 Vaish, Paresh, 211, 245 Valla, Jean Paul, 24 Van Ruysseveldt, Joris, 393 Van Tulder, Rob, 120, 121, 340 Vance, Charles, 392, 394 Vanhonacker, Wilfried, 211, 212 Varma, Suvir, 49 Verdin, Paul, 166 Vereecke, Andreé, 291, 293, 317, 319 Vernon, Raymond, 321, 322, 339, 340 Viallet, Claude, 265, 266, 368 Viscio, Albert, 247, 257, 258, 266 Vishwanath, Vijay, 49 Vitaro, Richard, 247, 266 Von Krogh, George, 247, 265, 266 von Zedtwitz, Maximilian, 339, 340

W Wack, Pierre, 451, 454 Walker, Thomas, 78

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Wallerstein, Immanuel, 4, 25 Wang, Hayan, 44, 45, 49, 416, 421 Wang, J.T, 421 Watts, Philip, 120 Webb, Allen, 118, 119 Weerawardena, Jay, 165 Wei, Shang, Jin, 118, 120, 121 Weiman, Jens, 118, 120 Welch, Lawrence, 164, 166 Wells, Louis, 145, 164, 166, 302, 319, 320, 397, 398, 420, 421 Welters, Carlijn, 120 Wheeler, David, 82, 121–122 White, James, 120, 133, 140, 185, 270, 271, 329, 336, 412, 454, 455, 457 Whitley, Richard, 53, 61, 64, 78, 80 Willes, Pierre, 421 Williamson, John., 48, 50 Williamson, Peter, 33, 39, 49, 50, 287, 288, 340, 421, 438, 452 Wilson Dominic, 48, 50, 211, 212, 245, 247 Wilson, Keeley, 324, 339, 340 Wilson, Thomas, 266 Witt, Michael, 61, 78, 80, 188, 189, 191 Woetzel, Jonathan, 320 Wong, Y.H, 392, 394, 420 Wong, Rieger, D, 392, 394 Wooldridge, Adrian, 24 Wouter, Ahina, 420, 421 Wright, Patrick, 394 Wurster, Thomas, 305, 306, 319

X Xie, Zhenzen, 340 Xu, Yi, 165, 340

Y Yahiaoui, Dorra, 393, 394 Yamagushi, Takeo, 392, 394 Yandle, Bruce, 122 Yasheng, Huang, 48 Yeung, Arthur, 421 Yip, George, 23, 25, 166, 287, 288, 306, 307, 319, 320 Yoshino, Michael, 232, 245, 247, 421 Youval, Alsmon, 48, 50 Yue, Deborah, 243, 274, 340

Z Zaheer, Srilata, 164, 166 Zeutchel, U, 78, 79 Zoubir, Yahia, 50

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INDEX of COMPANIES and ORGANISATIONS

A Accenture, 280, 287, 304 Acer, 40, 136, 161, 410–411, 415–417, 420–421 Adidas, 106 Agence Française de Développement, 356 Air France, 260 Airbnb, 310, 318 Airbus, 130, 219, 236, 278, 300, 366 Alcatel, 19, 251, 263, 304 Alfa, 42, 251 Allianz, 274, 288 Alstom, 280 Alza, 229–230, 246, 253 Amazon, 11, 108, 271, 298–299, 304, 308 Amnesty International, 97–99, 106, 113–114, 119 Australian and New Zealand Academy of Management (AZAM), 165 Apple, 4–5, 19, 22, 106, 127, 141, 159, 263, 268, 271–273, 298–299, 356, 400 Asahi, 274 Asea Brown Boveri (ABB), 280, 382–383, 386, 393, 421, 438 Asia Pacific Economic Cooperation (APEC), 114, 430, 443 Asian American Free Labour Association (AAFLA), 96, 102 Asian Development Bank (ADB), 364 Asian Development Bank (ADB), 364 Aspen Institute, 113 Association Of South East Asian Nations (ASEAN), 11, 430, 443 AT&T, 144, 271, 278 AtKearney, 163, 319 Aventis, 250, 260

B Bangladesh Garments Manufacturers and Exporters, 106, 174–175, 182, 429, 460 Bank for International Settlements,, 24 Bank for International Settlements,, 3, 24, 121 Basf, 335–336, 339, 407–408, 421 Bayer, 14, 250, 253

Benetton, 202, 275–276, 288 Bharti Airtel, 251 Bhopal, 102 Blablacar, 310–311 Boeing, 130, 278, 299 Bombardier, 403–404 Booz-Allen Hamilton, 258, 340 Boston Consulting Group, 23, 41, 48, 189 Bridgestone, 131, 161 British East India Company, 5 British Petroleum (BP), 159 British Telecom (BT), 144, 278 Brookfield Global Relocation Services, 79, 392–393 BSR (Business for Social Responsibilty), 105, 118–119 Business Environment Risk Index (BERI), 190 Business Impact, 105 Business Monitor Intenational (BMI), 188, 190 Business Monitor International, 188, 190 BYD, 44–45

C Canon, 129, 438 Cap Gemini, 278, 280 Cargill, 195 Carrefour, 22, 39, 104, 132, 134, 136, 143, 194–195, 295 Caux Roundtable, 95, 101, 114 CDC Capital Partners, 335, 365 Center for Corporate Citizenship, 81–82, 103–105, 113, 120, 227, 239, 330 Centre for Asian Business Cases, 421 Chaeron Pokphand, 42 Ciba Geigy, 246 Cisco Systems, 38, 230, 263, 304 Citibank, 9, 142–143, 271, 278, 288, 410, 421 Coca Cola (Coke), 37, 272 Cochlear Pty, 151 COFACE (Compagnie Française d’Assurance pour le Commerce Extérieur), 188, 191, 355, 365 Colgate Palmolive, 371–372, 394 Columbia Studio, 25, 28–29, 34, 189, 246, 252–253, 266, 319, 417 Cornhill, 274 Corning, 236–237

Corpwatch, 101, 117, 426, 452 Council of Europe, 95

D Dabhol Power Corporation, 302, 320 Daewoo, 37, 242–243 Daimlerchrysler, 376 Dell, 318 Deloitte’s, 49 Deutsche Telecom, 304 Disneyland, 18

E Earth Policy Institute, 452 E-Bay, 318 ECGD (Export Credit Guarantee Department), 355, 366 Economic Intelligence Unit (EIU), 78–80, 122, 165–166, 189, 247, 266, 278, 280, 340, 368, 393–394, 421, 453 Economic Intelligence Unit (EIU), 190 Electrolux, 133, 136, 266, 272, 458–459 Elsewedyelectric, 42 Embraer, 27, 42, 73 Enron, 280, 302, 320 Ericsson, 19, 129, 263, 278, 288 Ernst & Young, 163, 291, 319 Essilor, 154–155 Etisalat Group, 109 EU Emissions Trading Scheme (EU ETS), 86, 119 Euromedia, 107 Euromoney, 367 Euromonitor, 49, 458 European Bank for Reconstruction and Development (EBRD), 364 European Commission (EC), 6, 119, 161, 430, 452 European Economic Community (EEC), 15, 430 European Foundation for Management Education (EFMD), 119 European Union (EU), 4, 7, 9, 11, 28, 85–87, 111, 119, 160, 174, 192, 276, 322, 356, 366, 385, 430, 443, 452 Eximbank (Export-Import Bank), 355, 366

F Facebook, 2, 9, 268, 271, 303–304, 308, 477

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INDEX of COMPANIES and ORGANISATIONS

Fatabella, 42 Federal Credit Insurance Association (FCIA), 355 Fiat, 242 Food and Agriculture Organization, 119 Forrester Research, 304 Foster, 103, 149, 237, 274, 307, 396, 449 Framatome, 202 France Telecom, 146 Francolor, 246, 266 Fraser Institute, 49 FreemarketsOnline, 320 Fuji Xerox, 229

G Gallup International Association, 90 Gartner, 304, 318 GATT (General Agreement on Tariffs and Trade ), 6–7, 9, 11 Gemplus, xxvi, 150–151 General Electric (GE), 5, 25, 14, 39, 159, 246, 251, 271, 302, 321, 460 General Motors (GM), 107, 219, 229, 241–243 Getinge, 249 GE-Snecma, 219, 233 Global Compact, xxi, 105, 115 Global Insight, Global Leadership and Organizational Behavior Effectiveness (GLOBE ), 7, 57–60, 77–78, 84, 93, 117, 131, 136, 142, 227, 268, 271, 335, 377 Global Sullivan Principles, 105 Golden Agri Resources, 42 Goodyear, 131, 142, 160, 161 Google, 104, 106, 271, 304, 308 GreenBiz, 113 Greenpeace, 101–102, 114 Gucci, 38, 276

IMD (International Institute for Management Development), 39, 190 Inditex, 311–312 IndoMedia, 107 Infosys, 27, 42 INSEAD, 23, 39, 49, 79, 80, 107, 109, 119, 121, 207, 212, 243, 246, 266, 288, 319, 334, 340, 355, 370, 386, 388, 393, 407, 420–421, 463 Institute For The Future (IFTF), 452 Intel, 8, 136, 271, 273 Intergovernmental Panel on Climate Change (IPCC), 431, 453 International Service Systems A/S (ISS), 402 International Bank for Reconstruction and Development, 453 International Chamber of Commerce (ICC), 355 International Finance Corporation, 11, 23, 101, 118, 120, 170, 367, 424, 435, 445, 450, 453 International Finance Corporation (IFC), 365 International Herald Tribune, 119 International Labor Organisation (ILO), 95–96, 98, 106, 115, 118, 120, 384

J Jardine Matheson, 202 Jollibee, 42 JP Morgan, 266 JVC, 235

K Kennedy Round, 6, 421 Kenya Flower Council, 106, 176 Kocholding, 42 Kyoto Agreement, 107, 111, 216

Haier, 27, 251, 455–463 Harvard Business School, l, 24–25, 35, 104, 135, 141, 165–166, 179, 189, 191, 211, 246, 266, 288, 319–320, 340, 394, 420–421, 452, 463 Heineken, 272 Hewlett Packard (HP), 106, 120, 278, 280, 327 HSBC, 5, 104, 106, 129, 152–153 Huawei, 42, 263, 304 Human Rights Watch, 114 Hyundai, 9, 40

3M, 106, 410, 420, 438 Maastricht (Treaty of), 13 Maghreb Arab Union (MAU), 430, 443 Mahindra & Mahindra, 38

IBM, 8, 54, 236, 262, 271, 276, 278, 280, 304, 382, 411–412

Lafarge Holcim, 4 Lenovo, 27, 262 Li & Fung, 296 Light Up The World (LUTW), 108–109 Lockheed, 102 Louis Vuitton Moet Hennessy (LVMH), 38 Lucent, 19, 251, 263, 304 Lukoil, 42

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Marks & Spencer, 25, 106, 311–312 McDonald, 136, 271, 273, 281, 295 McKinsey, 13, 23–25, 30, 48–50, 77, 117, 163, 166, 189, 211, 245–246, 251–252, 265–266, 280, 287–288, 303, 308–309, 319–320, 393–395, 397, 421, 452–453, 463 Mercedes-Benz, 28, 141, 268 Merck Sharp and Dohme (MSD), 334 Mercosur, 430, 443 Michelin, 17, 131–132, 142–143, 161, 319 Microsoft, 17, 19, 164, 263, 271–272, 276, 465 Midland Bank, 259 Millennium project, 436–438, 443, 449, 452 Miniwatts Marketing Group, 320 Mitsubishi, 40, 159, 215 Monsanto, 250, 253, 380 Moody’s Investor Service, 353 MOSOP (Movement for the Survival of the Ogoni People), 82 Motorola, 19, 44, 236, 263, 321

N National Intelligence Council (NIC), 425, 451, 453 Natura Cosméticos, 283 Natura Cosméticos, 283–284 NEC, 263 Nestlé, 3, 5, 14, 106, 129, 159, 271–272, 321, 323–326, 328, 340, 394 New York Time, 101 Nike, 8, 95–96, 102, 119, 275, 296 Nissan, 130, 159, 214–217, 220, 222, 224–228, 230–235, 245, 262, 309, 343, 387, 421 Nokia, 5, 19, 44, 129, 251, 263, 304, 440 Nortel, 263, 304 North American Free Trade Agreement (NAFTA), 11, 13, 408, 430, 443 Nummi, 219, 229, 242

O Olam International, xx, xxvi, 407 Oracle, 278, 297, 304 Orange, 20, 278, 304 Organization for Economic Cooperation and Development (OECD), 6–7, 9, 23–24, 27–29, 33, 35–36, 45, 48–49, 84, 90–94, 99, 106, 115–118, 120, 148–149, 162, 164, 166, 170, 173, 183–184, 188, 191, 290, 318–320, 348, 355, 361, 365–366, 368, 426, 428–429, 449–451, 453 Otis Elevator Company-, 14–17, 22, 24

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Oxfam Interanational, 114 Oxford Economics, 24, 78–80, 119–121, 165–166, 189, 340, 421, 436, 449, 451, 453–454

P Panasonic, 9, 458–459 Petronas, 27, 42 Peugeot, 129, 242 Pew Centter on Global Climate Change, 113 Philips, 17, 133, 136, 151 Pirelli, 131 Pixtech, 237 Political Risk Services(PRS), 191 Price Waterhouse Coopers (PWC), 451, 453 Pricewater House Cooper, 451, 453 Prince of Wales Business Leader Forum, 105 Procter & Gamble, 3, 129, 136, 396

Q Qualcomm, 251

R Ranbaxy, 27 Raytheon, 130 RCA, 182, 321 Renault, 130, 214–217, 220, 222, 224–228, 230–235, 245, 262, 309, 421 Renault Nissan, 214–217 Reuters, 106, 304, 409 Rio Tinto Zinc, 159 Rome (Treaty of), 6, 15, 93, 430 Royal Deutch Shell, 82, 102, 104, 108, 118–119, 121–122, 129, 159, 296, 371–372, 382, 436, 449, 451, 454

S Saatchi and Saatchi, 275, 278 SAIC, 243 Samsung, 4, 19, 37, 40, 124, 127–130, 217, 263, 272, 459 SAP, 280, 297, 304 Sasol, 42 Saurer, 39 Schneider Electric, 51, 64, 79, 206–207, 212, 278 Siemens, 5, 48, 129, 159, 236, 237, 278, 309, 335–336, 339, 458 Smithkline and Beecham, 259–260, 262, 266 Snecma, 219, 232, 246 Sony, 8–9, 17, 40, 129–130, 136, 246, 252–253, 266, 271–272, 321 South African Brewery, 27, 250–251, 253

South African Brewery, 250, 274 Southern African Development Community, 430 Standard and Poor’s, 353 Star Alliance, 144, 218, 236, 456–457 Starbucks, 106 Sunna Design, 150–151 Swatch, 136, 275–276, 281 Swift, 236 Swire, 202

T Tata, 36, 37 TCL, 37 Tesco, 22, 143 Teva-Allergan, 251 The Economist, 268, 452 Thomson Corporation, 235, 266, 275, 321 Time Warner, 304 Tokyo Round, 6 Total, 97, 102, 120 Toyo Ink, 246, 266 Toyota, 40, 44, 129, 159, 219, 225, 229, 242, 271 Toys R’Us, 106 Transparency International, 35, 90–94, 99–101, 114, 117–118, 120–121, 310, 467, 479 Tyco, 421

U Uber, 310–311, 318, 320 United Nation Conference on Trade and Development (UNCTAD), 3, 23, 25–27, 30, 41, 48–50, 131–132, 158–159, 166, 175, 178, 182, 188–189, 211, 250, 265, 319–320 United Nations Educational, Scientific and Cultural Organization (UNESCO), 121, 424 United Nations Choldren’s Fund (UNICEF), 95, 118, 121 Unilever, 3, 5, 14, 17, 39, 103–104, 129, 136, 272, 281, 283, 286, 382, 396–397 Union Carbide, 102 Union des Banques Suisses (UBS), 299, 377 United Nations (UN), 25, 82, 84, 97, 101, 103, 105, 115, 117, 120–121, 131, 189, 320, 333, 340, 384, 427–428, 436–437, 443, 451, 454, 472, 479 United Nations Conference on Environment and Development (UNEP ), 87–88, 117, 121, 454 United Nations Office on Drugs and Crime(UNODC), 115, 451, 454 United States Environmental

Agency (USPA), 85, 117, 121 Universal Studio, 51–52, 97–98, 105, 280, 426, 442, 472 Unocal, 97, 120 Uruguay Round, 6–7, 176, 384, 417, 430 US Agency for International Development(USAID), 365 US Fireman’s Fund, 274

V Visa, 236–237, 271 Vodafone, 20, 159, 271, 278 Volkman, 39 Volkswagen, 159, 242, 308, 329 Volvo, 230, 273

W Wal-Mart, 22, 39, 143, 271 Washington Consensus, 32–33, 49–50 Westinghouse, 202, 272 Whirlpool, 132–133, 458 World Bank, 7, 24, 29, 31–32, 34, 36, 48, 50, 74, 84, 87, 92, 95, 101, 118, 121–122, 170, 172, 174, 181, 186–190, 193, 322, 356, 365, 384, 424, 428–429, 451, 453–454 World Business Council for Sustainable Development, 81, 114, 117 World Economic Forum, 105, 175–176, 189–190, 193, 384, 424, 426, 434–435, 445, 448, 451, 454 World Resources Institute, 85–86, 122 World Trade Organisation (WTO), 4, 6–9, 11, 13, 23, 25, 319–320, 424 WPP Group/Young & Rubicam, 271, 275, 454 WWF( World Wild Fund), 84, 87, 117, 122

X Xerox, 229

Y Yahoo, 304, 307, 350 Yellow Tail, 139–140 YouTube, 9, 268, 304

Z Zain, 251, 253 Zanussi, 266, 272 Zara, 311–312 Zee Entertainment, 402 Zenith, 321

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