Alternative Models of the MNC Figure 1.

Centralised Hub Decentralised Federation

most key assets most key assets
and resources and resources
centralised decentralised

loose control,
tight control through financial flows:
centralised capital out,
decision-making, dividends back
product flows from
centre Out
foreign subsidiaries are treated as foreign subsidiaries are treated as
delivery pipelines to their market
Integrated Network independent national businesses

distributed, specialised large flows of components,

resources and capabilities products, resources, people and
Information among interdependent
units

complex coordination processes and

cooperation in a shared decision making

Source: Adapted from Bartlett/Beamish 2014, p. 281, p. 285.

The MNC as an Intra- and Inter-Organisational Network Figure 1.2

Company G
(Country G)
Company C
WOS B (Country C)
(Country B)
Company H
(Distributor WOS A WOS C
for Country H) (Country A) (Country C)
Joint Venture K
(Marketing/Sales
for Country K)
HQ
Company J
Partial
(System Supplier
Ownership
from Country J) WOS F WOS D
(Country F) (Country D)
Company K
(Country K)
HQ = Headquarters WOS E
(Country E)
Contract
WOS = Wholly-owned Subsidiary Mfg.
Partial
= Intra-organisational Network Ownership
Company L
(Country L)
Joint Venture L
Company M (Manufacturing in Partial
(Country M) Country L) Ownership

Source: Adapted from Schmid/Kutschker 2003, p. 165.

1
The Structure of the MNC as a Differentiated Network Figure 1.3

Subsidiary 1 Subsidiary 2

Differentiated
(Horizontal)
Company Headquarters-
Linkages
Headquarters Subsidiary
between
Relationships
Subsidiaries

Subsidiary 3 Subsidiary 4

Source: Adapted from Nohria/Ghoshal 1997, p. 14.

Geographic Spread and Functional Diversity of BP’s Worldwide Operations (as of Figure 1.4
Dec. 31, 2013; without Operations of Rosneft)

Upstream: Production of liquids (oil) or gas Downstream: Refinery

Upstream: Exploration Downstream: Production of petrochemicals

Source: BP 2014a, pp. 4-5.

2
Value Chain of BP Figure 1.5

Finding Developing Transporting Manufacturing Marketing

(Exploration) & Extracting & Trading & Sales
acquisition of development of movement of refining, process- selling fuel for
exploration rights; fields and hydrocarbons ing and blending transportation (e.g
search for hydro- production using pipelines, of hydrocarbons via gas stations),
carbons beneath activities to bring trucks and trains to make fuels, energy, lubricants
the earth's the hydrocarbons and capturing lubricants and and petrochemi-
surface to the surface value via trading petrochemicals cals as input for
other products

Upstream Midstream Downstream

Source: Adapted from BP 2014a, pp. 2-3.

The Integration/Responsiveness-Framework Figure 2.1

Global Transnational
Global Integration

high
Organisation Organisation
Forces for

International Multinational
low
Organisation Organisation

low high
Forces for
Local Responsiveness

Source: Adapted from Bartlett/Ghoshal 1989, p. 438.

3
Selected Characteristics of the Four MNC Types Table 2.1

International Global Multinational Transnational

Role of Subsidiary sale of implementation identification differentiated

HQ products of HQ strategies and exploitation contribution to the
of local worldwide
opportunities competitive
advantages of the
MNC
Network Model centralised centralised decentralised integrated
hub hub federation network

Vertical Product Flows high, sequential high, sequential low bidirectional

Inter-subsidiary Product Flows low low low high
Centralisation of Decisions high high low medium
(decentralised
centralisation)
Management Transfers, Visits, low high low high
Joint Working Teams
Centres of Excellence low low low high
Product Modification low low high high
Local Production low low high medium
Dependency strong strong in- inter-
dependence dependence dependence dependence

Source: Summarised and adapted from Macharzina 1993, p. 83, p. 102; Har-
zing 2000, p. 113; Bartlett/Beamish 2014, pp. 198-201.

4
Three Levels of the I/R-Framework Figure 2.2

Strategy of Subsidiary
n
io gh
at hi
gr NC
te
In in M
w
lo

low high
National Adaptation

Strategic Orientation of MNC

n
t io
ra gh trans-
t eg hi global
national
l In
o ba
Gl lo
w inter- multi-
national national

low high
Local Responsiveness

External Environment
r n
fo tio gh
es ra hi
rc eg
Fo l Int
a
ob lo
w
Gl
low high
Forces for Local Responsiveness

Source: Morschett 2007, p. 396.

AAA-Framework with Profiles of Two Companies Figure 2.3

Adaptation Aggregation

Philips Medical
Systems

GE Healthcare

Arbitrage

Source: Adapted from Ghemawat 2007, p. 66.

5
Selected Characteristics of the Three Dimensions of International Strategy Table 2.2

Adaptation Aggregation Arbitrage

Competitive Advantage to achieve local relevance to achieve scale and to achieve absolute
Why should we globalize at through national focus scope economies through economies through
all? while exploiting some international international specialization
economies of scale standardization

Configuration mainly in foreign countries that are similar to the home in a more diverse set of
Where should we locate base, to limit the effects of cultural, administrative, countries, to exploit some
operations overseas? geographic, and economic distance elements of distance

Coordination by country, with emphasis by business, region, or by function, with emphasis

How should we connect on achieving local customers, with emphasis on vertical relationships,
international operations? presence within borders on horizontal relation- even across organizational
ships for cross-border boundaries
economies of scale

Controls excessive excessive standardization, narrowing

What types of extremes variety or complexity with emphasis on scale spreads
should we watch for?

Source: Ghemawat 2007, p. 61.

Level of Globalisation by Retail Sector in 2012 Table 2.3

Retail Revenue from

Average Countries Single-Country Operators
Foreign Operations
Top 250 24.3% 10.0 36.8%

Fashion Goods 29.8% 22.2 23.8%

Hardlines & Leisure
26.6% 13.1 26.9%
Goods
Fast-moving
23.3% 5.1 44.5%
Consumer Goods
Diversified 22.6% 10.3 36.8%

Source: Deloitte 2014, p. 24.

6
Forces for Global Integration and Local Responsiveness in Different Retail Sectors Figure 2.4

 Consumer Electronics  Food

 Appliances  Media (Music, DVDs)
high  Fashion  Cosmetics
Global Integration

 Drug Stores
Forces for

 Telecommunication

 Furniture
 Home Improvement
low  Books

low high
Forces for
Local Responsiveness

Retailers and Their Strategic Orientation Table 2.4

Hollister 7-Eleven REWE Group Alnatura

Brand globally standardised globally standardised locally integrated locally integrated

between global
Marketing
globally standardised standardisation and locally integrated -
Strategy
local integration
between global
Store Layout globally standardised standardisation and locally integrated globally standardised
local integration
between global between global
Assortment globally standardised standardisation and locally integrated standardisation and
local integration local integration
between global
globally standardised
Distribution Globally standardised locally integrated standardisation and
with local Integration
local integration

7
Role Typology by Bartlett/Ghoshal Figure 3.1

Strategic
Local Organisation

high Contributor
Competence of

Leader

Black
low Implementer
Hole

low high
Strategic Importance of Local Environment

Source: Adapted from Bartlett/Ghoshal 1986, p. 90.

Role Typology by White/Poynter Figure 3.2

Strategic
Product Strategic Rationalised Independent
Specialist Independent Manufacturer
global
global

Market Scope
Market Scope

Product
Specialist
local
local

Miniature Replica Marketing Miniature Replica

Adopter Adapter Innovator Satellite Adopter Adapter Innovator

limited unconstrained low high

Product Scope Value Added Scope

Source: Adapted from White/Poynter 1984, p. 60.

8
Role Typology by Gupta/Govindarajan Figure 3.3
to the Rest of the Corporation
from the Local Subsidiary

Global Integrated
Outflow of Knowledge

high Innovator Player

(Knowledge Provider) (Knowledge Networker)

Local
Implementor
low Innovator
(Knowledge User)
(Knowledge Independent)

low high
Inflow of Knowledge
from the Rest of the Corporation to the Local Subsidiary

(The terminology of Randøy/Li (1998) is displayed in brackets.)

Source: Gupta/Govindarajan 1991.

Role Typology by Andersson/Forsgren Figure 3.4

Forward Mutually
high
Vertical Integrated
Internal Sales

Backward
low External
Vertical

low high
Internal Purchases

Source: Andersson/Forsgren 1994, p. 15.

9
The Top-10 Retailers in the World by Retail Revenues 2012 (in billion USD) Figure 3.5

Walmart 469.2
Tesco 101.3
Cosco Wholesale 99.1
Carrefour 98.8
Kroger 96.8
Schwarz Group 87.2
Metro 85.8
The Home Depot 74.8
Aldi 73.0
Target 72.0

0 100 200 300 400 500

Source: Deloitte 2014.

10
Internationalisation of Walmart Table 3.1

Entry Retail Units

Country Form of Entry
Year (May 2014)

50:50 joint venture with local retailer Cifra; acquisition of majority stake in
1991 Mexico 2,207
1997; extension to 60% in 2000
1994 Canada 390 acquisition of 122 stores of local retailer Woolco
1995 Brazil 556 acquisition of 118 stores of local retailer Bompreco
1995 Argentina 105 opening own stores
joint venture; opening of own stores; 2006 major acquisition 108 stores
1996 China 402 from foreign retailer Trust-Mart (tripling Walmart's size); 2012 acquisition
of a majority stake in online supermarket Yihoadian
acquisition of 21 stores of local retailer Wertkauf; followed by acquisition
1997 Germany 0 of 74 stores of Intermarché in 1999; market exit in 2006 (by selling its
then 85 stores to Metro) in 2006
South acquisition of 4 stores (and 6 undeveloped sites);
1998 0
Korea market exit in 2006 (by selling its then 16 stores to Shinsegae).
1999 UK 577 acquisition of local retail company ASDA with 229 stores
acquisition of a 6.1% stake in local retail company Seiyu with 370 stores;
2002 Japan 439 acquisition of majority interest in 2005; turning Seiyu in a wholly-owned
subsidiary in 2008
acquisition of 33.3% of Central American Retail Holding Company with
Central
2005 668 363 stores in Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua,
America
increased to 51% in 2006
2009 Chile 386 acquisition of local retail company D&S with 224 stores
joint venture with local company Bharti Enterprises, complete take-over
2009 India 20
in 2014
acquisition of majority stake in Massmart Holdings with 288 stores in 14
2011 Africa 578
African countries (focus on South Africa)

Source: Gathered from diverse sources; Walmart 2014a; Walmart 2014b,

p. 61.

11
Alternative Motives for Internationalisation Figure 4.1

Market (Natural) Resource

Seeking Seeking

Strategic Asset
Efficiency
(or Capability)
Seeking
Seeking

Follow-
the-
Leader

Hourly Labour Cost in Industry in Selected European Countries 2013 (in EUR) Figure 4.2

Norway 53.3

Sweden 45.1

France 36.8

Germany 36.5

Austria 33.8

Italy 28.0

United Kingdom 22.5

Czech Republic 10.2

Slovakia 9.2

Hungary 8.0

Poland 7.6

Romania 4.7

Bulgaria 3.4

0 10 20 30 40 50 60

Source: Eurostat 2014.

12
Ranking of the Most Innovative Countries Table 4.1

Innovation and Innovation and

Country Rank Country Rank
Sophistication Score Sophistication Score
Switzerland 1 5.72 Denmark 11 5.14
Finland 2 5.65 Austria 12 5.14
Japan 3 5.62 Singapore 13 5.14
Germany 4 5.59 Qatar 14 5.08
Sweden 5 5.46 Belgium 15 5.07
United States 6 5.43 Norway 16 5.07
Netherlands 7 5.36 Luxembourg 17 4.84
Israel 8 5.23 France 18 4.84
Taiwan 9 5.22 Hong Kong 19 4.83
United Kingdom 10 5.15 Korea, Rep. 20 4.82

Source: World Economic Forum 2013, p. 16.

SAP Revenue Categories in 2013 Table 4.2

Revenue categories %

+ Cloud subscriptions and support 4

+ Software 27
+ Support 52
Software and software-related services revenue 83
+ Consulting 13
+ Other services 4
Professional service and other services revenue 17
Total revenue 100
one-time revenue recurring revenue

Source: SAP 2014, p. 1.

13
Software Company Ranking in 2012 Table 4.3

Rank Company Country Sales (in Profits (in Assets (in Market
billion USD) billion USD) billion USD) Value (in
billion USD)

1 Microsoft United States 83.3 22.8 153.5 343.8

2 Oracle United States 37.9 11.1 86.6 185

3 SAP Germany 22.3 4.4 37.3 97.1

4 Vmware United States 5.2 1 12.3 48.2

5 Symantec United States 6.8 0.9 13.3 14

6 CA United States 4.6 1 11.8 14.1

7 Fiserv United States 4.8 0.7 9.7 14.6

8 HCL Technologies India 4.7 0.7 4.2 16.6

9 Intuit United States 4.2 0.7 4.7 22.4

Amadeus IT
10 Spain 4.1 0.7 7.5 18.9
Holdings

Source: PWC 2013.

SAP’s Product Portfolio Figure 4.3

Source: SAP 2012, p. 9.

14
SAP’s Internationalisation Strategy Table 4.4

Internationalisation Localisation Translation

technical enablement of a system to business solutions are not viable speak the language of the locals
operate globally without localisation of content

 multilanguage support  local best business practices

 code pages/unicodes  legal requirements and statutory
 time zones reporting
 multiple currencies
 calendars

Source: SAP 2012, p. 10.

SAP’s R&D Activities Figure 4.4

Development Centre Con-Innovation Labs

SAP Research Locations Sybase Research and Development Locations

Source: SAP 2012.

15
SAP Brand Architecture Figure 4.5

SAP

mySAP Business Suite

mySAP CRM mySAP SRM mySAP PLM mySAP SCM

Global FDI Flows by Region (in billion USD) Table 5.1

Region FDI inflows FDI outflows

2010 2011 2012 2010 2011 2012
World 1409 1652 1351 1505 1678 1391
Developed economies 696 820 561 1030 1183 909
Developing economies 637 735 703 413 422 426
Africa 44 48 50 9 5 14
Asia 401 436 407 284 311 308
East and South-East Asia 313 343 326 254 271 275
South Asia 29 44 34 16 13 9
West Asia 59 49 47 13 26 24
Latin America and the Caribbean 190 249 244 119 105 103
Oceania 3 2 2 1 1 1
Transition economies 75 96 87 62 73 55
Structurally weak, vulnerable and small economies 45 56 60 12 10 10
Least developed economies 19 21 26 3.0 3.0 5.0
Landlocked developing countries 27 34 35 9.3 5.5 3.1
Small island developing States 4.7 5.6 6.2 0.3 1.8 1.8
Memorandum: percentage share in world FDI flows
Developed economies 49.4 49.7 41.5 68.4 70.5 65,4
Developing economies 45.2 44.5 52.0 27.5 25.2 30.6
Africa 3.1 2.9 3.7 0.6 0.3 1.0
Asia 28.4 26.4 30.1 18.9 18.5 22.2
East and South-East Asia 22.2 20.8 24.1 16.9 16.2 19.8
South Asia 2.0 2.7 2.5 1.1 0.8 0.7
West Asia 4.2 3.0 3.5 0.9 1.6 1.7
Latin America and the Caribbean 13.5 15.1 18.1 7.9 6.3 7.4
Oceania 0.2 0.1 0.2 0.0 0.1 0.0
Transition economies 5.3 5.8 6.5 4.1 4.3 4.0
Structurally weak, vulnerable and small economies 3.2 3.4 4.4 0.8 0.6 0.7
Least developed economies 1.3 1.3 1.9 0.2 0.2 0.4
Landlocked developing countries 1.9 2.1 2.6 0.6 0.3 0.2
Small island developing States 0.3 0.3 0.5 0.0 0.1 0.1

Source: UNCTAD 2013.

16
The Fortune Global 500 by Location Figure 5.1

271

415
Developed Regions
477 477 476

109 Emerging Markets, excl. China

31 120 Greater China

12 54
21 22 12
2 1
1980 1990 2000 2010 2025
(projected)

Emerging Markets
5% 5% 5% 17% 46%
Total Share

Source: McKinsey Global Institute 2013.

Characteristics of Emerging Country MNCs and Traditional MNCs Table 5.2

Feature Emerging Market MNCs Traditional MNCs

Speed of Internationalization accelerated gradual
weak: upgrading of resources strong: required resources available
Competitive Advantages
required in-house
strong: firms are used to unstable weak: firms are used to stable
Political Capabilities
political environments political environments
In Search of dual path: simultaneous entry into single path: from less to more distant
Markets developed and developing countries countries
into less developed countries as
In Search of
Expansion Path home country development raises into less developed countries
Lower Costs
production costs

In Search of
into more developed countries into similar developed countries
Strategic Assets

external growth: alliances, joint internal growth: wholly owned

Preferred Entry Mode
ventures, acquisitions subsidiaries
high, because of their recent and
relatively limited international
presence, which enables them to low, because of their ingrained
Organizational Adaptability
adapt technologies to small-scale structure and cultures
markets, excel at projects execution
and adopt new technology quickly

Source: Guillén/García-Canal 2011, p. 17.

17
 Figure 5.2
Development of Emerging Country Multinationals

Comparative and competitive advantage

= Increased: China?
• technological capabilities Clothing, autos, electronics,
• value added in manufacturing software?
• export competitiveness
Indian software industry
WIPRO, InfoSs, TCS, etc.

S. Korea, Taiwan, Singapore, H-K

Clothing → Steel → Autos + Electronics

Japan:
Clothing Steel Autos Electronics ?

1940s 1950s 1960s 1970s 1980s 1990s 2000s

Source: Rugman/Collinson 2012, p. 654.

Value Creation Strategies of Emerging Country Multinationals Table 5.3

Transferability between Markets

high low
I (Exploiters) II (Defenders)
Resource Firm Example Resource Firm Example
 know-how Astrid y Gastón, Concha  market share
(marketing, brand & y Toro, Bimbo, Pollo
distribution Campero
high

 market knowledge América Móvil, Cemex  customer-driven Tenaris

Availability for the Firm

 innovative capability Tenaris  competitor-driven América Móvil, Cemex,

Politec
 know-how Petrobas  market-driven Petrobas
(production)
IV (Others) III (Resource Developers)
Resource Firm example
 leading Bimbo, Politec, Natura
technology/knowledge
low

EMNCs use another form of access to resources  financial resources Cemex

lacked (e.g., imports)
 know-how (marketing: Bimbo
brand & distribution
 natural resources Vale, Petrobas

Source: Losada Otalora/Casanova 2012, p. 9.

18
Firm-Specific Advantages of Emerging Country Multinationals Table 5.4

Globalising… Assets Capabilities Connections Reputation

strategic alliances,
patents, licenses, IPR. low-end (maintenance)
Innovation and buyer and supplier links. credibility, trust, track
specialised tools, to high-end (blue-sky
Technology R&D networks/global record, recognition
hardware, software, etc. R&D) expertise
capability inputs
reputation for quality,
formal co-branding,
own valued brands, brand management price, innovation, etc.,
supplier or buyer,
Marketing and Brands logos, trademarks, protection, development market positioning,
distribution, and retailing
awards, etc. of expertise brand recognition,
affiliations
market presence

Source: Rugman/Collinson 2012, p. 656.

Characteristics of the LLL-Framework Table 5.5

Criterion LLL-Framework
Resource Utilisation resources accessed through linkage with external firms
Geographic Scope locations tapped as part of international network
Make or Buy? bias towards operations created through external linkage
Learning learning achieved through repetition of linkage and leverage
Process of Internationalisation proceeds incrementally through linkage
Organisation global integration sought as latecomer advantage
Driving Paradigm capturing of latecomer advantage
Time Frame cumulative development process

Source: Adapted from Mathews 2006, p. 21.

19
Ownership Structure and Business Sectors within the Tata Group Figure 5.3

Companies of the Tata

Public Trusts Free Float
Group
Sir Dorabji
JN Tata Private Institutional
Tata and Sir Ratan
Endow- Investors Investors
Allied Tata Trust
ment (3%) (18%)
Trusts

13% 66% 21%

Holding

Tata Sons Tata Industries

98 Companies/7 Cusiness Sectors

31.9 Materials

17.0 Engineering Products

and Services
9.9 Information Technology
(Sector-Wise Revenues and Communication
in billion USD) 4.3 Energy

2.8 Chemicals

2.1 Services

2.1 Consumer Products

Source: Schuster/Holtbrügge 2011.

20
Transaction Cost Reasoning for Different Modes of Internationalisation Figure 6.1

Wholly-owned
Transaction Export Cooperation Subsidiary
Costs

S1 S2 Specificity
(Uncertainty, Frequency)

Source: Adapted from Welch/Benito/Petersen 2007, p. 26.

The OLI Decision Process for Foreign Operation Modes Figure 6.2

Decision Internationalisation Location Internalisation

Type Decision Decision Decision

Location
yes yes yes
Ownership Advantages Internalisation
FDI
Advantages? in Host Advantages?
Country?

no no no

Decision No Produce at Contractual

International Home, Arrangements,
Activities then Export e.g. Licensing

Source: Adapted from Sudarsanam 2003, p. 201; Welch/Benito/Petersen 2007,

p. 31.

21
The Information Processing Approach Figure 7.1

External Context
• e.g. Uncertainty
• e.g. Relationship Features of
with Partners Organisational Design
• e.g. MNC Size Information- Information- • e.g. Organisation Structure
Processing Processing • e.g. Formalisation/
MNC Strategy Requirements Capacities Standardisation
• e.g. Degree of • e.g. Informal Coordination
Internationalisation Mechanisms
• e.g. Strategic Objectives
• e.g. Diversification Effectiveness as
Function of the Fit

Source: Adapted from Egelhoff 1991, p. 345; Wolf/Egelhoff 2001, p. 122.

Categories of Market Barriers Figure 6.3

Non- Autonomous
Legislative Body/Executive Forces Governmental Private
Institutions Sector

Non-Tariff Barriers

Tariffs Quantitative Regulations, Policies, Buy Local Local Buying

Restrictions Procedures Campaigns

Increase in World Trade between 1980 and 2013 (in billion USD) Table 7.1

Year World Europe Asia

1980 2,034 897 324
2013 18,784 6,636 6,285

Source: WTO World Trade Report 2014.

22
India’s Steps to Open the Market Table 7.2

Year Event

January 1997 India allows foreign direct investments (FDI) in cash & carry (wholesale) with 100% ownership.

2001 India liberalises the insurance sector. Investment through FDI can be a maximum of 26%.

The Indian Government opens the defence industry to the private sector. It permits 100% equity with a
May 2001
maximum of 26% FDI component.

March 2002 The Cabinet of India allows 100% FDI in the advertising and film industry, up from the present limit of 74%.

June 2002 The Indian Government first allows 26% FDI in news and current affairs in print media.

The Indian Government opens up the retail sector by permitting FDI up to 51% in single-brand retail trading
February 2006
companies.
Up to 100% FDI are permitted in certain agricultural activities (inter alia floriculture, horticulture, apiculture,
March 2011 cultivation of vegetables and mushrooms under controlled conditions, animal husbandry, pisciculture,
aquaculture, tea production).
India allows up to 51% FDI in multi-brand retail trading and 100% FDI in single-brand retail trading subject to
November 2011
33% purchases from domestic sources.
The Indian Government permits foreign airlines to make up to 49% FDI in scheduled and non-scheduled air
September 2012
transport services.
The Indian Government rescinds the limit of 74% on foreign ownership in mobile services operations and
July 2013
allows these companies to be wholly owned by foreign investors.

August 2013 The Indian Government approved 100% FDI in the telecom sector.

January 2014 The Reserve Bank of India relaxes FDI regulations to facilitate great FDI inflows into the country.

Source: Financial Express 2002; People’s World 2002; The Hindu 2011; Ce-
dar Consulting 2012; The Economic Times 2012; The Metropolitan
Corporate Counsel 2012; CIO 2013; Indian Defence Review 2013;
The Economic Times 2013; India TV News 2014; The Economic
Times 2014.

23
Different Levels of Economic Integration Figure 7.2

high

Political Union
Degree of Economic Integration

Monetary Union

Economic Union

Common Market

Customs Union

Free Trade Area

low

Characteristics of a Common Market Figure 7.3

Common
Market

Free Movement of Free Movement of

Goods and Services Factors of Production

Free Movement Free Movement Free Movement Free Movement

of Goods of Services of Capital of Persons

24
Shares of Intra-EU Trade for the EU Member States (EU-27) 2013 (in %) Table 7.3

State Quote State Quote

Austria 69 Latvia 66
Belgium 70 Lithuania 57
Bulgaria 60 Luxembourg 81
Cyprus 58 Malta 42
Czech Republic 81 Netherlands 76
Denmark 63 Poland 75
Estonia 71 Portugal 70
Finland 55 Romania 69
France 59 Slovakia 83
Germany 57 Slovenia 69
Greece 46 Spain 63
Hungary 76 Sweden 58
Ireland 59 United Kingdom 44
Italy 53

Source: EUROSTAT 2014.

Consolidated Financial Statements of Mazda Motor Corporation and Consolidated Table 7.4
Subsidiaries

2009 2010 2011 2012 2013

Net Sales
2,535.9 2,163.9 2,325.6 2,033.0 2,205.2
(in billion Yen)
Net Sales - Domestic
620.3 575.0 541.5 560.2 588.0
(in billion Yen)
Net Sales –
North America 697.6 574.6 631.3 575.6 651.2
(in billion Yen)
Net Sales - Europe
653.4 477.3 427.4 347.3 347.9
(in billion Yen)
Net Sales – Other areas
564.6 537.0 725.5 549.9 618.1
(in billion Yen)
Global Sales Volume
1,261 1,193 1,273 1,247 1,235
(thousand of units)
Number of Employees 39,852 38,987 38,117 37,617 37,745

Source: Mazda 2014.

25
Top 10 World Motor Vehicle Producing Countries 2008-2013 (in thousand of units) Table 7.5

Top 10 (2013) 2008 2009 2010 2011 2012 2013

China 9,299 13,791 18,265 18,419 19,272 22,117
United States 8,694 5,731 7,763 8,662 10,329 11,046
Japan 11,576 7,934 9,629 8,399 9,943 9,630
Germany 6,046 5,210 5,906 6,311 5,649 5,718
South Korea 3,827 3,513 4,272 4,657 4,562 4,521
India 2,332 2,642 3,557 3,927 4,145 3,881
Brazil 3,216 3,182 3,382 3,408 3,343 3,740
Mexico 2,168 1,561 2,342 2,681 3,002 3,052
Thailand 1,394 999 1,645 1,458 2,429 2,533
Canada 2,082 1,490 2,068 2,135 2,464 2,380

Source: OICA 2014.

Top 10 Manufacturers in Mexico Based on Units Sold in 2013 Table 7.6

Rank Manufacturer Sold Units

1. Nissan 263,477
2. General Motors 201,604
3. Volkswagen 156,313
4. Ford 85,721
5. Chrysler 78,974
6. Toyota 60,740
7. Honda 58,381
8. Mazda 33,348
9. Seat 21,189
10. Renault 21,187

Source: Autoblog 2014.

26
Selection of Projects of Automobile Manufacturers in Mexico in 2014 Table 7.7

Manufacturer Project
Audi 1.3 billion USD: new production plant for Q5 model
Chrysler 164 million USD: expansion for Tigershark engines
Daimler 19 million USD: bus-assembly plant expansion
General Motors 349 million USD: new transmission plant
Honda 7 million USD: CR-V vehicles plant expansion
Mazda 770 million USD: new production plant
Mercedes-Benz 20 million USD: new assembly line expansion
Nissan 14 million USD: diesel engines
Volkswagen 118 million USD: new engine configuration

Source: Mexiconow 2014.

Selected Free Trade Agreements of Mexico Table 7.8

Duty-free Trade in the Local Content

Agreement Member States
Automotive Sector Requirement
North American Free Trade
Mexico, USA, Canada since 01.01.2004 62.5%
Agreement (NAFTA)
Middle East Free Trade Area
Mexico, European Union since 01.01.2007 50%
(MEFTA)
since 01.01.2007/ 60% Argentina and
Mercosur/ACE-55 Mexico, Argentina, Brazil
19.03.2012 Brazil, 35% Mexico
Economic Partnership
Agreement Mexico, Japan since 01.04.2011 65%
(AAE, by its initials in Spanish)

Source: AHK Mexiko 2012, p. 25.

27
Global Competitiveness Index Ranking 2013-2014 Table 8.1

Country/ Country/
Rank Score Rank Score
Economy Economy
Switzerland 1 5.67 Austria 16 5.15
Singapore 2 5.61 Belgium 17 5.13
Finland 3 5.54 New Zealand 18 5.11
Germany 4 5.51 U. Arab Emirates 19 5.11
United States 5 5.48 Saudi Arabia 20 5.10
Sweden 6 5.48 Australia 21 5.09
Hong Kong SAR 7 5.47 Luxembourg 22 5.09
Netherlands 8 5.42 France 23 5.05
Japan 9 5.40 Malaysia 24 5.03
United Kingdom 10 5.37 Korea, Rep. 25 5.01
Norway 11 5.33 Brunei 26 4.95
Taiwan 12 5.29 Israel 27 4.94
Qatar 13 5.24 Ireland 28 4.92
Canada 14 5.20 China 29 4.84
Denmark 15 5.18 Puerto Rico 30 4.67

Source: World Economic Forum 2013, p. 15.

Determinants of National Competitive Advantage: Porter’s Diamond Model Figure 8.1

• local context that encourages

appropriate forms of investment and
sustained upgrading
Firm Strategy, • vigorous competition among locally
Chance Structure and based rivals
Rivalry

• sophisticated and
demanding local customer(s)
Factor Demand • unusual local demand in
Conditions Conditions specialised segments that
can be served globally
• customer needs that
• factor (input) quantity anticipate those elsewhere
and cost
- natural resources
- human resources Related and
- capital resources Supporting Government
- physical infrastructure Industries
- administrative infrastructure • presence of capable, locally based
- information infrastructure suppliers
- scientific and technological • presence of competitive
infrastructure related industries
• factor quality
• factor specialisation

Source: Porter 1990a, p. 127.

28
The Generalised Double Diamond Figure 8.2

Firm Strategy,
Structure and
Rivalry International
Diamond

Factor Demand
Conditions Conditions

Domestic
Diamond
Related and
Supporting
Industries

Source: Adapted from Moon/Rugman/Verbeke 1998, p. 138.

Actors in Regional Clusters Figure 8.3

Production
Product Markets
Factors Government Companies

Institutions for
Collaboration
Specific Qualified
Suppliers Customers
Research Financial
Community Institutions

Research
Legal and Transportation and
Social Institutions/
Regulatory Communication
Capital Technology/
Environment Infrastructure
R&D

Source: Adapted from Sölvell/Lindqvist/Ketels 2003, p. 18; Andersson et al.

2004, p. 31.

29
Cluster Lifecycle Figure 8.4

Size/Attractiveness/
Productivity of the Cluster

Personal Relationships,
Informal Information-/
Knowledge Transfer

Attraction of Inflexibility
Related Firms and
Specialised
Work Force

Emergence of
Related
Specialised Institutions
Suppliers,
Services
Companies,
Specialised Transformation by
Personnel Adaption/
Pioneers/ Innovation
Spin-offs Formal and Informal Relationships

Time
Decline/
Emergence Growth Maturity
Transformation

Source: Adapted from Schramm-Klein 2005, p. 542; Menzel/Fornahl 2010,

p. 218.

GFCI 15 Industry Sector Sub-Indices Top 10 Table 8.2

Investment Government & Professional

Rank Banking Insurance
Management Regulatory Services

1 New York (-) New York (-) London (-) New York (+2) London (-)

2 London (-) Hong Kong (-) New York (-) London (-1) New York (-)

3 Hong Kong (+1) London (-) Hong Kong (-) Singapore (-) Hong Kong (-)

4 Singapore (-1) Singapore (-) Zurich (-) Hong Kong (-2) Singapore (-)

5 Tokyo (-) Seoul (-) Singapore (+1) Seoul (+23) Zurich (-)

6 Boston (-) Zurich (+2) Geneva (-1) Zurich (-1) Tokyo (+3)

7 Zurich (-) Tokyo (-1) Tokyo (-) Chicago (+4) Geneva (-1)

8 Toronto (-) Shanghai (+5) Seoul (+6) Boston (-2) Chicago (+6)

9 Geneva (+1) San Francisco (+1) Frankfurt (-1) Geneva (-1) Toronto (+1)

Washington DC
10 Chicago (+1) Geneva (-1) Toronto (-) Tokyo (+5)
(+20)

(The range from previous years is displayed in brackets.)

Source: Z/YEN LTD. 2014, p. 31.

30
Financial and Related Professional Services: Employment in London at End 2013 Table 8.3

Rank Sector Employment Change from previous year

Accounting & Management

1 215,500 1.4%
Consultancy

2 Banking 147,100 2.4%

3 Auxiliary & Other 126,400 2.1%

4 Legal Services 106,000 2.8%

5 Insurance 70,700 0.5%

6 Fund Management 23,100 3.6%

Source: TheCityUK 2014.

London Financial Cluster in Porter’s Diamond Model Figure 8.5

+ English has become the leading language of
international discourse
+ London as a global melting pot for international cultures + open to foreign companies and FDI
+ well-situated geographically to the USA and continental +/- financial services is a highly mobile and
Europe global industry
+ work day overlaps with US market’s and Asian market’s - increasing commodisation and low-cost
open hours competition made possible by technological
advancements and spread of advanced IT
infrastucture
Structure of
Chance Firms and + demanding and
Rivalry sophisticated global
customers
+ demanding and
sophisticated local
customers
- relatively small local
demand
Factor Demand + pushes domestic firms
Conditions Conditions to think internationally
and compete globally
+ relatively easy to serve
other geographies,
including accessing
+ development and attraction of an hundreds of million of
Related and
enormous pool of skilled labour potential new customers
Supporting Government
+ accomodating rules for migration and in emerging markets
Industries
temporary foreign workers
+ high quality of life for professionals + large number and variety of high-
(strong arts and culture, low crime rate) caliber local service providers, e.g. + highly competent regulator
+/- education: strong universities and telecommunications, IT, law, + fair and predictable legal environment
business schools; average public schools consulting, accounting, tax, audit, +/- low and decreasing barriers to the
- high cost of living (real estate, local services) mediation, business hospitality, flow of capital
- high costs of labour and commercial real commercial and residential real estate, + opportunity to continue to benefit
estate logistics, financial media from emerging markets
+/- transportation: Heathrow as an - further attraction of low-cost
international transportation hub; public competitors
transportation overcrowded

Source: Adapted from Porter 1990a, p. 127.

31
Levels of Culture Figure 9.1

Visible Structures and Language, Technology, Art,

Artefacts Processes Stratification and Status,
(Sometimes Hard to Decipher) Systems, Family

Espoused Strategies, Philosophies Ideals and Goals, Means

Values (Espoused Justifications) (How to Get There, e.g. Heroic
Paths, Sins, Virtues)

Unconscious, Taken-for-granted
“Man“ and Nature
Basic Beliefs, Perceptions, Thoughts,
Time, Space,
Assumptions and Feelings (Ultimate Source
Rules of Interaction
of Values and Action)

Source: Adapted from Schein 1992, pp. 15-20.

32
Layers of Culture Figure 9.2

Global Culture

National Culture

Organisational Culture

Group Culture

Individual
Cultural
Selfrepresentation

Source: Adapted from Erez/Gati 2004, p. 288.

Environmental Influences on International Management Functions Figure 9.3

Country-Specific Influences
Economic System International Management
Cultural Orientation and

Attitudes
Political System Functions
Toward
Technological Level
Value Patterns

Important Historical Events Work Organising and Controlling

Authority Managing Technological Change
Influences Money Influences Motivating
Change Communicating
Customs and Traditions Decision Making
of the Country Time
Risk Negotiating
Religion Ethical and Social Responsibility
Dialects and Languages Family
Education Equality

Source: Adapted from Phatak/Bhagat/Kashlak 2009, p. 115.

33
Examples of Cross-Cultural Business Contexts Figure 9.4

Meetings
• Language
Face • Knowledge/
to Communication Expertise
• Behaviour
Face • Rituals
Negotiation

• Organisation
Contracts • Hierarchy and
Company Decision
to Alliances Making
• Labor
Company JVs Relations
• Attitudes
M&As Toward Work

Marketing • Consumer
Company Preferences
to • Quality of
Customer (New) Product Demand
Development

Source: Rugman/Collinson 2012, p. 136.

34
Comparative Characteristics of High Context and Low Context Cultures Table 9.1

Low Context/Individualistic High Context/Collectivistic

Characteristic
(e.g. Western Europe, US) (e.g. Japan, China, Saudi Arabia)
Communication and
 explicit, direct  implicit, indirect
Language
Sense of Self and Space  informal handshakes  formal hugs, bows and handshakes
 dress for individual success, wide  indication of position in society,
Dress and Appearance
variety religious rule
Food and Eating Habits  eating is a necessity, fast food  eating is social event
 linear, exact, promptness is valued,  elastic, relative, time spent on
Time Consciousness
time = money enjoyment, time=relationships
 extended family, other oriented,
Family and Friends  nuclear family, self-oriented, value youth loyalty and responsibility, respect for
old age
Values and Norms  independence, confrontation of conflict  group conformity, harmony
 hierarchical, respect for authority,
 egalitarian, challenge authority,
Beliefs and Attitudes individuals accept destiny, gender
individuals control destiny, gender equity
roles
Mental Process and  linear, logical sequential, problem  lateral, holistic, simultaneous,
Learning solving accepting life's difficulties
 relationship oriented (“first you make
 deal oriented (“quickly getting down to
a friend, then you make a deal”),
Business/Work Habits business”), rewards based in
rewards based on seniority, work is a
achievement, work has value
necessity

Source: Hollensen 2014, p. 248.

Hofstede’s Culture Dimensions in Selected Countries Table 9.2

Power Uncertainty Long-Term

Country Individualism Masculinity
Distance Avoidance Orientation
France 68 71 43 86 -
Germany 35 67 66 65 31
Hong Kong 68 25 57 29 96
India 77 48 56 40 61
Japan 54 46 95 92 80
Malaysia 104 26 50 36 -
Netherlands 38 80 14 53 44
Singapore 74 20 48 8 48
South Korea 60 18 39 85 75
Sweden 31 71 5 29 33
Switzerland 34 68 70 58 -
United Kingdom 35 89 66 35 25
United States 40 91 62 46 29

Source: Hofstede 1991, pp. 312-313.

35
Latin Europe Cluster’s Societal Culture Scores Figure 9.4

Uncertainty Avoidance
7
6 Future Orientation
Assertiveness
5

4
3

Gender 2 Power
Egalitarianism 1 Distance

Family Orientation Institutional Collectivism

Performance Orientation Humane Orientation

as is should be

Source: Jesuino 2002, p. 85.

Organisation Types Reflecting Cultural Predispositions Table 9.3

Imperialist Interventionist Interactive Independent

Organisation ethnocentric ethnocentric geocentric polycentric

Structure steep hierarchy flat hierarchy network federation

Strategy dictated centrally decided jointly specified locally specified

Decision Making centralised distributed shared devolved

Source: Rugman/Collinson 2012, p. 151.

36
Development of GDP from 2005 to 2012 (in billion USD) Figure 9.5

1,800
1.800

1,600
1.600

1,400
1.400

1,200
1.200

1,000
1.000

800
800

600
600

400
400

200
200

00
2005 2006 2007 2008 2009 2010 2011 2012

Source: The World Bank 2014, p. 4.

Parameter-Values for the Culture-Dimensions of Russia Figure 9.6

Collectivism I
6
Humane
Collectivism II
Orientation
4

2
Uncertainty Gender
Avoidance Egalitarianism
0

Future Orientation Assertiveness

Performance
Power Distance
Orientation

as is should be

Source: House/Javidan 2004.

37
The Most Relevant Sets of Coordination Mechanisms Table 10.1

Formal Mechanisms Informal Mechanisms

organisational structure: departmentalisation lateral or cross-departmental relations: direct
or grouping of organisational units managerial contact, temporary or permanent
teams, task forces, committees, integrators, and
integrative departments
centralisation: centralisation or decentralisation informal communication: personal contacts
of decision making through the hierarchy of among managers, management trips, meetings,
formal authority conferences, transfer of managers, etc.

formalisation and standardisation: written normative integration: building an

policies, rules, job descriptions, and standard organisational culture of known and shares
procedures, through instruments such as strategic objectives and values by training,
manuals, charts, etc. transfer of managers, career path management,
reward systems, etc.
planning: strategic planning, budgeting,
functional plans, scheduling, etc.

Source: Adapted from Martinez/Jarillo 1989, p. 491.

Effectiveness of Different Coordination Mechanisms Figure 10.1

Strategic and Organisational Strategic and Organisational

Clarity Ambiguity
high high
Effectiveness

low low
Structure Systems Culture People Structure Systems Culture People

Source: Hamel/Prahalad 1983, p. 349.

38
Shared Values at McKinsey & Co. Table 10.2

Put the client’s interest ahead of our own

This means we deliver more value than expected. It doesn’t mean doing
whatever the client asks.
Behave as professionals
Uphold absolute integrity. Show respect to local custom and culture, as long
as we don’t compromise our integrity.
Keep our client information confidential
We don’t reveal sensitive information. We don’t promote our own good work.
We focus on making our clients successful.
Tell the truth as we see it
We stay independent and able to disagree, regardless of the popularity of our
views or their effect on our fees. We have the courage to invent and champion
unconventional solutions to problems. We do this to help build internal
support, get to real issues, and reach practical recommendations.
Deliver the best of our firm to every client as cost effectively as we can
We expect our people to spend clients’ and our firm’s resources as if their own
resources were at stake

Source: McKinsey 2014.

Table 10.3
Guiding Principles at McKinsey & Company

We operate as one firm. We maintain consistently high standards for service

and people so that we can always bring the best team of minds from around
the world—with the broadest range of industry and functional experience—to
bear on every engagement.
We come to better answers in teams than as individuals. So we do not
compete against each other. Instead, we share a structured problem-solving
approach, where all opinions and options are considered, researched, and
analysed carefully before recommendations are made.
We give each other tireless support. We are fiercely dedicated to developing
and coaching one another and our clients. Ours is a firm of leaders who want
the freedom to do what they think is right.

Source: McKinsey 2014.

39
Global Functional Structure at STIHL AG Figure 11.1

Chairman
of the Board

Finance,
Production Human
Controlling, Marketing
& Materials Resources Development
Information & Sales
Handling & Legal
Systems & Services

Source: STIHL 2014.

Strengths and Weaknesses of a Global Functional Structure Table 11.1

Strengths Weaknesses
 intensive knowledge transfer concerning the function  knowledge transfer concerning other fields rather low
 focus on key functions (specific requirements of certain product groups,
 functional expertise regions, customer groups often neglected)
 centralisation/standardisation  potentially low motivation due to centralisation
 helps to “unify” the corporation  slow reaction to changes in certain countries due to
standardisation and formalisation
 one line of responsibility
 high requirements for information processing by top
 avoidance of double work management
 potentially lack of market orientation
 difficult for subsidiaries with whole value-added
chains

Source: Adapted from Zentes/Swoboda/Morschett 2004, p. 765.

Global Product Structure at Liebherr Figure 11.2

Chairman
of the Board

Aerospace
Tower Machine
and
Mobile cranes and Maritime Domestic tools and Compo-
Earthmoving Mining transpor-
cranes concrete cranes appliances automotion nents
tation
technology systems
systems

Source: Liebherr 2014.

40
Strengths and Weaknesses of a Global Product Structure Table 11.2

Strengths Weaknesses
 intensive knowledge transfer concerning the  duplication of functions
product/product groups  knowledge transfer concerning other fields (e.g.
 focus on differences between products functions, regions) rather low
 expertise for specific products  coordination and cooperation between different
 usually high market orientation of product divisions product divisions more complicated
 coordination in companies with heterogeneous  risk of divisional egoism
products facilitated  difficult for foreign subsidiaries with more than one
 holistic view of the value chain product line
 promotion of entrepreneurial behaviour  lack of economies of scope
 economies of scale easily exploited
 flexible response to changes in product requirements

Source: Adapted from Zentes/Swoboda/Morschett 2004, p. 767.

Global Area Structure at Mondelez International Figure 11.3

Chairman and
Chief Executive
Officer

Executive
Executive Executive Executive
Vice President
Vice President Vice President Vice President
Asia Pacific and
Latin America North America Europe
EEMEA*

*Eastern Europe, Middle East, Africa

Source: Mondelez International 2014.

41
Strengths and Weaknesses of a Global Area Structure Table 11.3

Strengths Weaknesses
 intensive knowledge transfer concerning the region  duplication of functions
 focus on differences between regions  duplication of resources
 regional expertise  coordination and knowledge transfer across regions
 communication and coordination advantages: might be difficult and slow
personal communication as coordination instrument  risk of regional egoism
easy to use, due to geographic proximity  risk of overemphasis on regional differences
 holistic view on business in the region  risk of low cost efficiency and low economies of scale
 uniform company image in the region due to local adaptation
 flexible response to changes in local environment  diffusion of technology might be slowed down
(local responsiveness easy)  “not invented here” syndrome
 problems in technologically dynamic environments

Source: Adapted from Zentes/Swoboda/Morschett 2004, p. 770.

Global Matrix Structure at Procter & Gamble Figure 11.4

Central/
North Western Middle Latin
Eastern Asia
America Europe East/Africa America
Europe

Global Baby,
Feminine and Family
Care

Global Beauty

Gobal Fabric and

Home Care

Global Health and

Grooming

Corporate Function (CF)

Global Business Service (GBS)

Source: Procter & Gamble 2014.

42
Strengths and Weaknesses of a Global Matrix Structure Table 11.4

Strengths Weaknesses
 provides access to advantages of the other  complex and costly
organisational structures  high requirements for information and communication
 combination of two or more areas of expertise  high requirements for cooperative behaviour
 good knowledge transfer throughout the organisation  potential ambiguity of orders
 simultaneous consideration of product, region and/or  decisions may take longer, often extensive meeting
function culture
 better allocation of resources due to forced  risk of power struggles
consideration of multiple aspects simultaneously  appropriate for firms with many products and
 good opportunity to decentralise the decision process unstable environments

Source: Adapted from Zentes/Swoboda/Morschett 2004, p. 783; Griffin/

Pustay 2013, pp. 401-402.

Hybrid Global Structure at Coca-Cola Figure 11.5

CEO

Bottling
Coca-Cola Coca-Cola
Investments
Americas International
Group

North Latin Eurasia/

Europe Pacific
America America Africa
Group Group
Group Group Group

Source: Coca-Cola 2014.

43
The Stages Model of Stopford and Wells Figure 11.6

Global Product Global

Structure Matrix

Alternative
Product Development
Diversification Paths
Abroad

Interna- Global Area

tional Structure
Division

Foreign Sales
as Percentage
of Total Sales

Source: Adapted from Stopford/Wells 1972, p. 65.

Development of Total Number of Employees (in thousands) Figure 11.7

101
91 93 94
89 90
79
71
61

2005 2006 2007 2008 2009 2010 2011 2012 2013

Source: Microsoft 2013a.

44
Development of Revenue (in billion USD) Figure 11.8

77.9
73.7
69.9
60.4 62.5
58.4
51.1
44.3
39.8

2005 2006 2007 2008 2009 2010 2011 2012 2013

Source: Microsoft 2013a.

Microsoft’s Organisational Structure as of 2006 Figure 11.9

CEO

Entertainment and Platforms and Microsoft Business

Devices Division Services Division Division

 R&D  R&D  R&D

 Sales  Sales  Sales
 Customer Service  Customer Service  Customer Service

Corporate Affairs Groups

Human Resources, Finance, Operations, IT, Legal Affairs, Accounting

Source: Adapted from Microsoft 2006.

45
List of Major Microsoft Corporation Acquisitions Table 11.5

Year Company
1987 Forethought (computer software)
1997 Hotmail (web-based email service)
2000 Visio (drawing software)
2002 Navision (software programming)
2007 aQuantitave (digital marketing)
2008 Fast Search & Transfer (data search technologies)
2011 Skype (telecommunications)
2012 Yammer (social networking)
2013 Nokia mobile phones unit
2014 Parature (customer service software)

Source: Microsoft 2014.

Microsoft’s Organisational Structure as of 2013 Figure 11.10

CEO

Operating
COO
Systems

Devices and
Engineering Groups

Finance
Studios

Applications
Centralised Groups

HR
and Services

Cloud and
Marketing
Enterprises

Business
Microsoft
Development
Dynamics
& Evangelism

Legal and
Corporate
Affairs
Advanced
Strategy and
Research

Source: Adapted from Microsoft 2013b.

46
Generic Corporate Cultures Figure 12.1
With the Company‘s Activities
Degree of Risk Associated

high
Bet-Your-Company Tough-Guy,
Culture Macho Culture

Process Work Hard/Play Hard

low
Culture Culture

slow fast
Speed of Feedback from the Market

Source: Adapted from Deal/Kennedy 1982, pp. 107-108.

Apple’s Brand Values

Table 12.1

Brand Values Characteristics

Innovative frequent hardware and software updates
highly trained and skilled retail staff; on-site ability for the
Customer Support
customer to get their hands on the product
high build quality; low error count in both hardware and
High Quality Products
software, therefore a low amount of customer complaints
high attention to detail; an overall consistent brand
Great Design
image, reflected by design, form and function
Easy to Use no previous background knowledge required

Source: Adapted from Apple 2014.

47
Apple´s Departments Figure 12.2

Executive Profiles

Angela Ahrendts
Tim Cook Eddy Cue Craig Federighi Jonathan Ive
Retail and Online
CEO Internet Software Software Engineering Design
Stores

Dan Riccio
Peter Oppenheimer Philip W. Schiller Bruce Sewell Jeff Williams
Hardware
Financial Officer Marketing General Counsel Operations
Engineering

Source: Adapted from Apple 2014.

Events in the Evolution and Development of CSR

Figure 13.1
1790s: 1840s: 1929: 1984: 1990s: 2007:
First Consumer Victorian Wall Street Bhopal Nike Housing
Boycott of Slave- Philanthropy Crash Disaster Sweatshops Crisis
harvested Sugar (Quakers, 1930s: 1989: 2008:
Cadbury, Great Exxon 1995: Lehman
Barclays) in the Depression Valez Brent Spar Bankruptcy
UK Ken Sara-wiwa
1900 1982: 2011:
1800 2000
Tylenol Occupy
Recall Wall St.

Timeline of Key CSR Events

1991: 2010: BP‘s

Kyoto Protocol Oil Spill in
1759: Gulf of
Publication of Adam 1919: Mexico
Smith‘s Theory of 1886: Santa Dodge v. Ford 1990:
1960s-1980s: 2001: Enron
Moral Sentiments Clara County Motor Company Launch of
Environmentalism Bankruptcy
v. Southern Internet
1962: 2002:
Pacific by Tim
1911: Publication of SOX
1750-1850: Railroad Berners-
Standard Oil Rachel Carson‘s
Industrial Silent Spring Lee
Revolution

Source: Adapted from Chandler/Werther 2014, p. 15.

48
Measures to Capture the Triple Bottom Line Table 13.1

Economic Environmental Social

sales, profits, ROI pollutants emitted health and safety record
taxes paid carbon footprint community impacts
monetary flows recycling and reuse human rights, privacy
jobs created water and energy use product responsibility
supplier relations product impacts employee relations

Source: Adapted from Savitz/Weber 2014, p. 5.

49
Corporate Social Responsibility Pyramid Figure 13.2

Philan-
Be a Good trophic
(“Being a Good
Desired
Corporate Citizen
Citizen“)

Ethical
Be Ethical (“Being Ethical“)
Expected

Legal
Obey the Law (“Bbeying the Law“)
Required

Economic
Be Profitable (“Being Profitable“)
Required

Source: Carroll 1991.

MNC Stakeholders Figure 13.3

Home Country Host Country

Owners Economy
Customers MNC Employees
Employees Community
Unions Host Government
Suppliers Consumers
Distributors Strategic Allies
Strategic Allies Society in General Suppliers
Community Global Environment and Ecology Distributors
Economy Sustainable Resources
Government Population´s Standard of Living

Source: Adapted from Deresky 2014, p. 62.

50
The CSR Management Model Figure 13.4

Business Context
Organising
Identity

Organising
Organising Organising
the Business
Transactivity Systems
Proposition

Organising
Accountability
Societal Context

Source: Jonker/De Witte 2006, p. 5.

Development of DJSI World and MSCI World Figure 13.5

50%

40%

30%

20%

10%

0%

-10%

-20%

-30%

-40%

-50%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
DJSI World MSCI All Countries

Source: Robecosam 2014.

51
Newsweek Green Ranking: World’s Greenest Companies Table 13.2

Newsweek
Energy Carbon Water Waste
Rank Company Name Industry Group Reputation Green
Productivity Productivity productivity Productivity
Score
Telecommunication
1 Vivendi 73.3% 67.8% 97.6% 82.9% 87.7% 85.3%
Services
Pharmaceuticals,
2 Allergan 72.2% 85.2% 61.1% 82.0% 100.0% 85.1%
Biotechnilogy
3 Adobe Systems Software & Services 82.7% 87.1% 99.2% 91.9% 51.4% 84.4%
Consumer Durables
4 Kering 67.7% 70.2% 81.5% 82.2% 90.1% 83.6%
& Apparel
Telecommunication
5 NTT DOCOMO 81.7% 57.7% 90.5% 90.6% 100.0% 83.1%
Services
6 Ecolab Materials 73.2% 80.1% 84.3% 59.6% 90.1% 82.6%
7 Atlas Copco Capital Goods 78.0% 89.4% 81.9% 87.4% 58.7% 77.2%
Pharmaceuticals,
8 Biogen Idee 69.2% 82.7% 84.5% 97.0% 53.4% 75.7%
Biotechnilogy
9 Compass Group Consumer Service 74.3% 69.3% 91.3% 83.9% 87.4% 75.3%
Schneider
10 Capital Goods 73.0% 71.9% 79.5% 68.0% 57.0% 75.3%
Electric
11 Centrica Utilities 57.4% 82.2% 58.5% 82.6% 65.6% 75.2%
12 Kone Capital Goods 73.6% 63.9% 69.5% 59.4% 72.2% 74.4%
Automobiles &
13 Hyundai Mobis 85.7% 94.9% 72.2% 53.6% 81.7% 72.3%
Components
Skandinaviska
14 Banks 66.6% 92.3% 66.6% 53.3% 51.7% 72.1%
Enskilda Banken
Consumer Durables
15 Christian Dior 58.5% 67.6% 36.3% 50.5% 100.0% 71.9%
& Apparel
Bayerische Automobiles &
16 75.0% 87.5% 83.6% 82.2% 11.0% 71.4%
Motoren Werke Components
Consumer Durables
17 Adidas 81.8% 90.0% 84.3% 81.7% 3.6% 71.4%
& Apparel
Health Care
18 Cardinal Health Equipment & 75.5% 70.1% 81.9% 64.6% 61.0% 71.0%
Services
Itau Unibanco
19 Banks 59.6% 90.6% 49.4% 56.9% 62.1% 70.9%
Holding
20 Baker Hughes Energy 75.4% 74.9% 60.8% 14.1% 85.3% 70.8%

Source: Newsweek 2014.

52
Selected Coop Store Brands Figure 13.6

Coop Naturaplan
Organically produced food bearing the Bio Suisse bud label, including regional
organic specialties. Uncompromisingly organic, uncompromisingly tasty.

Coop Naturafarm
Swiss meat and eggs from animals and poultry reared subject to very rigorous
animal husbandry standards, with stalls designed to meet animals’ needs and
feed that is free of genetically modified plants.

Coop Oecoplan
Environmentally friendly products for home and garden, flowers and plants with
Bio Suisse bud logo, timber products with the FSC label, products made from
recycled materials, energy-efficient appliances and ecological services.

Coop Naturaline
Textiles made from organically grown cotton and produced according to socially
and environmently responsible methods, and plant-based cosmetic products.

Pro Montagna
Products produced and processed in the Swiss mountain areas – with a donation
tot he Coop Aid for Mountain Regions scheme.

Slow Food
Traditional, sustainably manufactured specialities for rediscovering the pleasure
of real food.

Source: Coop 2013a.

53
Milestones in the Cooperation between Coop and Remei Figure 13.7

1993 1995 1997 2005 2006 2008 2012 2013 2014

Introduction Naturaline Launch of Opening of Mobile First Complete Implementa New design
of made from the bioRe the first hospital carbonate assortment tion of the and first
Naturaline 100% Foundation BioRe and dioxide carbonate Traceability collection
ecologically organic by Coop training opening of neutral T- dioxide -Tool by Melanie
and socially cotton and Remei centre in the first shirt neutral Wagner
responsible India village collection
textiles school in
India

Figure 13.8
Net Sales of Naturaline Textiles (in billion CHF)

60
54 55 54 53 53
51 51
50
44

40 37

31
30
25 25 26 25
24
22
20
15
10
10
4

0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Source: Coop 2013b.

54
Classification of Selected Foreign Operation Modes Figure 14.1

Foreign Operation Modes

Value-Added Dominantly Value-Added Dominantly Value-Added Dominantly

in Home Country in Host Country in Third Country

Cooperation Hierarchy

Without FDI With FDI

in Host Country in Host Country
(Contractual) (Equity)

(Direct or e.g. Licensing,

Indirect)
Joint Wholly-owned
Franchising, Contract
Export Ventures Subsidiaries
Manufacturing

Acquisition
Greenfield
(Brownfield
Investment
Investment)

Source: Adapted and expanded from Zentes 1993, p. 67.

Characteristics of Selected Foreign Operation Modes Table 14.1

Contractual Equity Wholly-owned

Export
Cooperation Cooperation Subsidiary
Control low/medium/high low medium high
Resource Commitment low low medium high
Flexibility high medium medium-low low
Knowledge Dissemination Risk low high medium low

Source: Adapted from Driscoll/Paliwoda 1997, p. 60.

55
The Creation of AB InBev Figure 14.2

1987

2004 2008

2000

Source: AB InBev 2014.

AB InBev’s Global Presence Figure 14.3

Country with Presence of AB InBev

Source: AB InBev 2014.

56
Characteristics of AB InBev’s Focus Markets Figure 14.4

47.6%
United States 20.8%
12.6%

Market Share of AB InBev

68.5% in Country
Brazil .13.7%
6.8%
Country Share of Global
13.4% Beer Industry EBIT
China 3.4%
25.6%
Country Share of Global
Beer Industry Volume
58.0%
Mexico 5.3%
3.5%

0% 20% 40% 60% 80%

Source: AB InBev 2014.

Global Merchandise Exports from 1980 to 2013 (in billion USD) Figure 15.1

20
18,401
18 18,319 18,784

16 16,160
Export Volume (in billion USD)

15,283
14 14,023
12,554
12 12,130
10 10,508

6 6,459

4
3,449
3,449
2 2,034

0
1980 1990 1995 2000 2005 2006 2007 2008 2009 2010 2011 2012 2013

Source: WTO World Trade Report 2014.

57
Leading Export Countries (Merchandise Trade): Share of World Trade 2013 (in %) Figure 15.2

China 11.7

USA 8.4

Germany 7.7

Japan 3.8

Netherlands 3.6

France 3.1

South Korea 3.0

United Kingdom 2.9

Hongkong 2.9

Russia 2.8

0% 2% 4% 6% 8% 10% 12%
Export Share

Source: WTO World Trade Report 2014.

Figure 15.3
Growth of World Trade and World Production (in %)

16
14 World Trade
12
10 World Production
8
6
4
2
0
-2
-4
-6
-8
-10
-12

Source: WTO World Trade Report 2013.

58
Advantages and Disadvantages of Export Modes Table 15.1

Export Mode Advantages Disadvantages

Indirect Exporting
♦ limited commitment and investment ♦ no control over marketing mix
required elements other than the product
♦ minimal risk (market, political) ♦ an additional domestic member in the
♦ little or no involvement or export distribution chain may add costs
experience needed ♦ lack of contact with the market
♦ suitable for firms with limited ♦ lower profit margin due to commissions
resources and other payment to intermediaries
♦ good way to test-market products, ♦ limited contact/feedback from end
develop goodwill, and allow clients to users
become familiar with firm‘s tradename ♦ limited/no opportunity to learn
international business know-how and
develop marketing contacts
♦ difficulties in taking over the business
after the relationship has ended.

Direct exporting
- Domestic-Based Sales ♦ better control of sales activities ♦ high travel expenses
Representatives compared to independent
intermediaries

- Agents/Distributors ♦ access to market experience ♦ little control over market price and lack
♦ shorter distribution chain (compared to of distribution control (especially with
indirect exporting) distributors)

♦ acquisation of market knowledge ♦ some investment in sales organisation

required (contact with distributors or
♦ more control over marketing mix agents)
(especially with agents)
♦ cultural differences, providing
♦ local service support available communication problems

- Resident Sales ♦ full control of operation ♦ initial capital investment required

Representatives/Foreign (subsidiary)
♦ direct acquisation of market
Sales Branches/Foreign ♦ less flexibility (subsidiary)
knowledge
Sales Subsidiaries
♦ high risk (market, political)
♦ taxation problems

Source: Adapted from Hollensen 2014, p. 362, p. 398; Seyoum 2014, p. 94.

59
Forms of Countertrade Figure 15.4

Does the transaction involve reciprocal commitments?

(other than cash payments)

Yes No

Countertrade Straight Sales

(cash or credit)

Does the transaction involve the use of money?

Yes No

Counterpurchase,
Barter-type
buyback, or offset

Is the transaction a Does the transaction

reciprocal commitment extend over long time
limited to purchase of periods and involve a
goods? basket of goods?

Yes No Yes No

Buyback and Does the Clearing

counterpurchase transaction arrangements
involve debt?

Are the goods taken Are third parties

Yes No
back by the exporter involved?
and the resultant output
of the equipment sold?
Swaps
Yes No
Yes No

Offset Switch Clearing Simple

Buyback Counterpurchase Trading Arrangements Barter

Source: Seyoum 2014, p. 263.

60
Incoterms 2010: Division of Costs, Licences, Formalities and Risks Table 15.2

Transport Export Import

Term Transport Clearance Taxes Transfer of risk
Insurance license license
EXW buyer buyer (although not buyer buyer buyer buyer when goods are placed
(Ex-Works) obligated to insure) at the disposal of the
buyer
FCA buyer buyer (although not buyer buyer seller buyer upon seller’s delivery to
(Free Carrier) obligated to insure the carrier at the named
place
FAS buyer buyer (although not buyer buyer seller buyer when goods are placed
(Free Alongside Ship) obligated to insure alongside the ship
FOB buyer buyer buyer buyer seller buyer when goods are placed
(Free on Board) on board the vessel at
the port of departure
CFR seller buyer (although not buyer buyer seller buyer when goods are placed
(Cost and Freight) obligated to insure on board the vessel at
the port of departure
CIF seller seller buyer buyer seller buyer when goods are placed
(Cost, Insurance and on board the vessel at
Freight) the port of departure
CPT seller buyer buyer buyer seller buyer upon seller’s delivery to
(Carriage Paid To) the main carrier at the
place of departure
CIP seller seller buyer buyer seller buyer upon seller’s delivery to
(Carriage and the main carrier at the
Insurance Paid To) place of departure
DAT seller seller buyer buyer seller buyer when the goods are
(Delivered At Terminal) unloaded from the
arriving vehicle (not
cleared) and are at the
buyer’s disposal at the
agreed place of
destination
DAP seller seller (although not buyer buyer seller buyer when the goods are
(Delivered At Place) obligated to insure) placed at the buyer’s
disposal at the agreed
destination (not
unloaded and not
cleared)
DDP seller seller (although not seller seller seller seller when goods cleared and
(Delivered Duty Paid) obligated to insure) duty paid (not unloaded)
are placed at the buyer’s
disposal at the agreed
destination

Source: ICC Germany 2013.

Selected Data of Herrenknecht (2008 to 2013) Table 15.3

2008 2009 2010 2011 2012 2013

Sales (in million EUR) 926 866 935 1,017 1,147 1,051

Order inflow (in million EUR) 939 908 916 1,143 1,051 1,082

Number of staff* 3,831 3,960 4,154 5,635 5,079 4,777

*including trainees and temporary workers

Source: Herrenknecht 2014.

61
Milestones in Herrenknecht’s History (1975 to 2013) Figure 15.5

1975 1977 1980 1984 1991 1998 2002 2010 2011 2012 2013

Engineer Office and Acquiring Market leader in Sales pass the A second time, first
office, assembly plant, Maschinen- und mechanised 1 billion EUR mark place in brand
Lahr Schwanau Stahlbau GmbH, tunneling ranking among
Dresden technology First place in brand German mid-sized
ranking among companies
German mid-sized
companies

Foundation of First subsidiary Conversion World´s largest 35 years of

Herrenknecht abroad, of GmbH tunnel drilling Herrenknecht
GmbH Sunderland in AG machine

Source: Herrenknecht 2014.

Figure 15.6
Core Markets and Brands

Herrenknecht (AG)

Core
Markets
Tunnelling Mining Exploration

Core Herrenknecht Herrenknecht Herrenknecht

Brands Tunneling Systems Tunneling Systems Vertical

Additional Equipment Additional Equipment Additional Equipment

♦ H+E Logistik ♦ VMT ♦ H+E Logistik ♦ VMT

Group ♦ Maschinen- ♦ Herren- ♦ Maschinen- ♦ Schäfer ♦ Schäfer ♦ Bohrtech

Brands und Stahlbau knecht und Stahlbau Urbach Urbach Vertical
Dresden Formwork Dresden

♦ Techni Métal ♦ Euroform ♦ Techni Métal ♦ Euroform

Systèms Systèms

Additional Services
Global Tunneling Experts

Source: Herrenknecht 2014.

62
Worldwide Operations (2014) Table 15.4

Number of Number of Number of Number of Number of Number of

Region Country distribution service production Region Country distribution service production
locations locations locations locations locations locations

Egypt 1 Italy 3 2 1

Qatar 1 1 Netherlands 2 2
Africa &
Middle Saudi Arabia 1 1 Portugal 1
East
South Africa 1 Romania 1
United Arab
2 2 1 Russia 2 2
Emirates
China 2 7 4 Europe Spain 1 1

India 1 1 1 Sweden 1

Indonesia 2 Switzerland 3 2 1

Asia Malaysia 1 Turkey 1

Singapore 1 1 Ukraine 1 1
United
South Korea 1 1 1
Kingdom
Thailand 1 1 Canada 1
Northern
Australia & America United
Australia 2 1 1 1 1
Oceania States

Mexico 2 1 Argentina 2 1
Central
America
Panama 1 1 Brazil 1 1

Azerbaijan 1 Chile 1 1
South
America
Bulgaria 1 Colombia 1 1
Europe
France 2 1 1 Peru 1

Germany 9 8 8 Venezuela 1 1

Source: Herrenknecht 2014.

Selective Production Expansion Figure 15.7

Germany
(8 plants) USA
(1 plant) China
(4 plants)
Switzerland
(1 plant) India
(1 plant) UAE
(1 plant)
France
(1 plant)
Brazil

1977 1997 2005 2007 2010 2012 in process

of planning

Source: Adapted from Herrenknecht 2014.

63
Transaction Modes Figure 16.1

Hierarchy/
Market Cooperation
Integration

Internalisation

Externalisation

Most Important Reasons for Outsourcing Figure 16.2

Improvement in Cost Level or Reduction 42%

Efficiency Improvements 33%

Improved Focus on Core Objectives 26%

Reduction in Headcount Objectives 24%

Access to Specific Knowledge, Expertise

23%
and Tools

0 10 20 30 40 50

Source: Ernst & Young 2013, p.15.

64
Most Important Risks for Outsourcing Figure 16.3

Dependency on External Service Provider 51%

Loss of Control 43%

Impact on Quality 35%

Loss of Knowledge 29%

Loss of Confidentiality 29%

0% 10% 20% 30% 40% 50% 60%

Source: Ernst & Young 2013, p. 15.

Strategic Relevance/Competence-Matrix Figure 16.4

high Develop Use

Strategic
Relevance

low Outsource Transfer

low high

Strength of Competence

Source: Adapted from Krüger/Homp 1997, p. 105.

65
A.T. Kearney’s Strategic Outsourcing Framework Figure 16.5

high Contest Co-Source

Market
Maturity

low Insource Outsource

low high

Commonality

Source: Martin 2010, p. 165.

Supplier Pyramid Figure 16.6

Assembly
Plant

First Tier
System Suppliers

Second Tier
Component Suppliers

Third Tier
Subcomponent Suppliers

66
Transactional Modes and Configuration Figure 16.7
Corporate Boundary Decision

Insourcing
(Transactional Mode)

Domestic Foreign
Units Affiliates
Outsourcing

Domestic Foreign
Suppliers Suppliers

Home Country Foreign Countries

(Onshore) (Offshore/Nearshore)

Location Decision
(Configuration)

Source: Adapted from Abramovsky/Griffith 2006, p. 595.

Location of Outsourced Business Processes and Services by Country Figure 16.8

Denmark 59% 26% 16%

Finland 74% 18% 8%

Germany 65% 21% 14%

Netherlands 76% 11% 13%

Norway 80% 10% 10%

Sweden 87% 9% 5%

Spain 86% 11% 3%

United Kingdom 77% 10% 14%

0% 20% 40% 60% 80% 100%

Onshore Nearshore Offshore

Source: Ernst & Young 2013, p. 13.

67
Outsourcing of IT Services per Industry Figure 16.9

Automotive 42% 58%

Consumer Products 31% 69%

IT 10% 90%

Oil and Gas 13% 87%

Telecommunication 35% 65%

0% 20% 40% 60% 80% 100%

Outsourced Inhouse

Source: Ernst & Young 2013, p. 12.

Figure 16.10
Milestones in Company History (from 1974 to 2012)

1974 1991 1999 2001 2002 2003 2006/2007 2011 2012

Foundation Ranked Best Ranked Once Again Ranked 30th

by Terry Management Largest Ranked Best among
Gou Company in Exporter Investor Fortune
Taiwan in China Relation Global 500
Company in
Taiwan

Listed on the Ranked First Ranked Best Ranked 60th

Taiwan Stock Largest Private Investor among
Exchange Manufacturing Relation Fortune
Corporation Enterprise in Company in Global 500
Taiwan Taiwan

The Company´s Manufacturing Services Figure 16.11

Manufacturing
Services

CEM EMS ODM CMMS

(Contract Electronic (Electronic Manu- (Original Design (Components, Module,
Manufacturing) facturing Services) Manufacturing) Move and Service)

68
Major Customers and Devices Produced by Foxconn Table 16.1

Customer Manufacturing Product

Amazon Kindle

Apple iPad, iPod, iPhone, Mac mini, Macbook pro

Cisco Video and Telecommunication Equipment

Dell Laptops

Hewlett-Packard Personal Computer, Laptops, Printer

Intel Mainboards

Microsoft X-Box, X-Box 360

Nintendo DS, Wii

Nokia Components of Mobile Phones

Blackberry Smartphones

Sony Playstation

Huawei Smartphones

Acer Smartphones

Revenue by Geographic Area Based on the Location of Customers (in 2012) Figure 16.12

USA
0.3% 17.4% Ireland
30.0% China
Singapore
8.8% Japan
Taiwan
9.0%
28.8% Others

Source: Foxconn 2014.

69
Markets for IT Goods and Services 2014 (in billion USD) Figure 16.13

877.2

211.4
124.5 100.2 95.6

USA Japan China Great Britain Germany

Source: SCMP 2014.

Operating Units (in 2013) Figure 16.14

Europe:
Lahti/Komarom/
Copenhagen/ Asia:
Helsinki/Ulm/ Shenzhen/Shanghai/Beijing/
Renfrew/ Taiyuan/Kunshan/Hangzhou/
Pardubice/Czech Chungshan/Tucheng/Hsinchu/
Peneng/Korea/Yokohama/
Singapore/Chennai/Sydney

Pan America:
Toronto/Fullerton/Santa
Clara/Houston/Forth
Worth/Austin/Indy/Seattle/
Vicksburg/San
Diego/Florida/Raleigh/
Harrisburg/Manaus/
Sao Paulo/Chihuahua/
Juarez/Guadalajara

Pan America Upcoming Mega-Sites:

Europe China: Langfang/Huaian/Shenyang/Yingkou/Qinhuangda
Asia Vietnam: Hanoi
Upcoming Mega-Sites Mexico: Reynosa
Brazil: Itu
USA: Pennsylvania

Source: Foxconn 2014.

70
Strategic Advantages of Alliances Figure 17.1

Partner A Partner B

Strengths/Weaknesses Strengths/Weaknesses

Joint Competitive Advantage

International Y-Alliances and X-Alliance: Examples Figure 17.2

Border

A: Upstream specialist

R&D Production
A+B (e.g. a joint venture)
Sales and X-
R&D Production Marketing
services
C Alliance
B: Downstream specialist
Sales and
Marketing
services

A
Sales and
R&D Production Marketing A+B (e.g. a joint ventutre)
services
Sales and Y-
R&D Production Marketing C
B services Alliance

Sales and
R&D Production Marketing
services

Note. A is the manufacturer, B is the partner and C is the customer

Source: Adapted from Hollensen 2014, p. 370.

Types of Licence Agreements Figure 17.3

Licences

Process Product Distribution Brand

Licences Licences Licences Licences

Advantages and Disadvantages of Licensing Table 17.1

Advantages Disadvantages
 Increases income on products already developed as  The licensee may prove less competent than
a result of expensive research. expected at marketing or other management
 Permits entry into markets that are otherwise closed activities. Costs may even grow faster than income.
on account of high rates of duty, import quotas and  The licensee, even if it reaches an agreed minimum
so on. turnover, may not fully exploit the market, leaving it
 A viable option where manufacture is near the open to the entry of competitors, so that the licensor
customer‘s base. loses control of the marketing operation.

 Requires little capital investment and should provide  Danger of the licensee running short of funds,
a higher rate of return on capital employed. especially if considerable plant expansion is involved
or an injection of capital is required to sustain the
 There may be valuable spin-offs if the licensor can project. This danger can be turned to advantage if the
sell other products or components to the licensee. If licensor has funds available by a general expansion
these parts are for products being manufactured of the business through a partnership.
locally or machinery, there may also be some tariff
concessions on their import.  Licence fees are normally a small percentage of
turnover, about 5 per cent, and will often compare
 The licensor is not exposed to the danger of unfavourably with what might be obtained from a
nationalization or expropriation of assets. company’s own manufacturing operation.
 Because of the limited capital requirements, new  Lack of control over licensee operations.
products can be exploited rapidly, on a worldwide
basis, before competition develops.  Quality control of the product is difficult - and the
product will often be sold under the licensor’s brand
 The licensor can take immediate advantage of the name.
licensee‘s local marketing and distribution
organization and of existing customer contacts.  Negotiations with the licensee, and sometimes with
local government, are costly.
 Protects patents, especially in countries that give
weak protection for products not produced locally.  Governments often impose conditions on transferral
of royalties or on component supply.
 Local manufacture may also be an advantage in
securing government contracts.

Source: Hollensen 2014, p. 390.

72
Types of International Franchise Agreements Figure 17.4

Direct
Franchisee Foreign
Franchise Franchising
Franchisor Contract

Franchisee
Franchise Contract

Franchisee Franchisee Franchisee Franchisee

Master-
Franchising
Master
Franchise Master
Franchisor
Contract Franchisee

Franchise Contract Franchise Contract

Franchisee Franchisee Franchisee Franchisee Franchisee Franchisee

Indirect
Foreign
Franchising
by Equity Joint
Ventures/Wholly Owned
Subsidiaries

Articles of Equity Joint Venture/

Franchisor Association Wholly Owned Subsi-
diary

Franchise Contract Franchise Contract

Franchisee Franchisee Franchisee Franchisee Franchisee Franchisee

Home Market Foreign Market

Source: Adapted from Zentes/Swoboda/Schramm-Klein 2013, p. 250.

73
Structure of a Management Contract System in the Airport Industry Figure 17.5

Civil Aviation Ministry

Fraport AG
Egyptian Holding Company for
Germany
Airports and Air Navigation

Management
Ownership
100%

Ownership
Cairo Airport Company Cairo International Airport
100%

Source: Fraport AG 2014.

Advantages and Disadvantages of Equity Joint Ventures Table 17.2

Advantages Disadvantages

 access to expertise and contacts in local markets  objectives of respective partners may be
 typically, international partner contributes financial imcompatible, resulting in conflicts
resources, technological know-how or products, the  contribution to joint venture can become
local partner provides local skills and knowledge disproportionate
 reduced market and political risk  loss of control over foreign operations
 shared knowledge and resources, shared risk of  partners may become locked into long-term
failures incvetments from which it is difficult to withdraw
 overcomes host government restrictions  transfer pricing problems as goods pass between
 may avoid local tariffs or non-tariff barriers partners

 possibly better relations with local governments  importance of venture to each partner may change
through having a local partner (meets host country over time
pressure for local participation)  loss of flexibility and confidentiality
 problems of management structures and dual parent
staffing of equity joint ventures

Source: Adapted from Hollensen 2014, p. 391.

74
Organisational Modes of Alliances Figure 17.6

Strategic
Alliances

Decentralised Integrated Network

Centralised Hub
Federation Model

Source: Adapted from Bartlett/Ghoshal/Beamish 2008, pp. 338, 342.

Fits in Cooperative Agreements Figure 17.7

Partner A Fits Partner B

Strategic Fit Cultural Fit Process-Related Fit

Aims/Strategies Values/Standards IT Systems

Management Accounting/
Capacities/Capabilities
Style Controlling

Organisational
Negotiating Positions
Structures

75
Group Sales by Geographic Region (in billion EUR) Figure 17.8

4.7 Europe
8.3
ALMA Zone
(Asia-Pacific, Latin-America, Africa,
Middle East)
8.3 North America
(including CIS Zone)

Source: Adapted from Danone 2014.

Global FDI Inflows (in billion USD) Figure 18.1

4.000.000
4,000,000

3.500.000
3,500,000

3.000.000
3,000,000

2.500.000
2,500,000

2.000.000
2,000,000

1.500.000
1,500,000

1.000.000
1,000,000

500.000
500,000

Developing economies Transition economies Developed economies World

Source: UNCTAD 2014.

76
Advantages and Disadvantages of Wholly-owned Subsidiaries Table 18.1

Advantages Disadvantages
 direct and independent presence  investment requirements and barriers
 independent marketing activities  high risks especially in insecure countries
 pushing of own strategies, easy alignment of  build up of considerably resources
own structures  cost intensive acquisitions and time
 uniformity of market appearance consuming start up
 influence- and supervision options  decision for investment much less reversible
 bundling and deployment of company know- than other transaction forms
how (supervision of inflow and outflow)  disadvantages in terms of flexibility
because of capital commitment but
 increasing market power towards buyers, advantages through decision superiority
suppliers and competitors
 frequent settlement sponsorships by host
countries

Source: Adapted from Kutschker/Schmid 2011, pp. 908-909.

Table 18.2
Types of M&A Strategies

Strategy Method
Merger of Equals Companies of equal size come together. Often, one of the merging
companies is considered the “primus inter pares” once the merger has
taken place.
Friendly Takeover The management of the takeover target has a positive attitude towards the
takeover.
Tender Offer Public, open offer by an acquirer to all shareholders. The bidder contacts
the shareholders directly, inviting them to sell their shares to the offer price.
Unfriendly/Hostile The takeover target is unwilling to be acquired or the target’s management
Takeover has no prior knowledge of the offer.
Proxy Contest Specific type of a hostile takeover in which the acquiring company attempts
to convince the existing shareholders to use their proxy votes to install a
new management that is open for the takeover.
Builder Acquisition The objective of the acquisition is to integrate the takeover target into the
network of the MNC, e.g. to realise synergies, economies of scale, etc.
Raider Acquisition Acquisitions that are conducted with the purpose of post-acquisition asset
stripping.
Leveraged Buyout Acquisition of a company with cash that is raised with a preponderance of
(LBO) debt raised by the acquirer. Several different types of LBO exist, depending
on the acquiring party, for example investor buyout, management buyout, or
employee buyout can be distinguished.

77
Cross-border M&As by Region of Purchaser and Seller in 2012 Table 18.3

Value of cross-border M&As by region/economy of Value of cross-border M&As by region/economy of

seller, 2012 purchaser, 2012
(in million of USD) (in million of USD)
United States 66,113 United States 79,885
United Kingdom 35,852 Canada 39,474
Canada 29,325 China 37,111
Australia 23,087 Japan 35,666
Netherlands 17,051 Switzerland 16,254
Brazil 16,359 Germany 15,453
Ireland 12,096 Chile 9,764
France 11,985 Malaysia 9,292
China 9,995 Hong Kong/China 8,016
Switzerland 8,635 Russian Federation 7,807

Source: UNCTAD 2013.

Barriers to Cross-border M&As Table 18.4

Structural Barriers
Statutory  strong powers for supervisory boards to block mergers; unions and workers’
councils have say on takeovers and strong redundancy rights
 issue of bearer shares, double voting or non-voting shares; absence of one share,
one vote (OSOV) principle
 discriminatory tax laws against foreign acquirers, e.g. withholding taxes on
dividends
Regulatory  antitrust regulation, foreign investment review, rules of stock exchange and
professional self-regulatory bodies
 absence of statutory or voluntary bodies to regulate takeovers
Infrastructure  absence of M&A services, e.g. legal, accounting, investment banking services
Technical Barriers
Management  two-tier boards which cannot be removed or changed quickly
 families dominate shareholding
 powers to issue shares with differential voting rights or to friendly persons
 powers to limit maximum voting rights; powers to override shareholders in
company’s interest
Information Barriers
Accounting  accounting statements not available, quality of information poor
 low compliance with international generally accepted accounting principles;
accounting practice biased to avoid tax liability, or conservative, hence accounting
statements opaque
Shareholders  due to issue of bearer shares, shareholding structure not known
Regulation  regulatory procedures not known or unpredictable
Culture and Tradition
Attitude  “to sell is to admit failure” syndrome; dislike of hostile bids; dislike of institutional
constraints on dividends or short-term profits
 unwillingness to disclose information
Value system  high premium on trust and confidence in negotiations rather than formal contracts

Source: Adapted from Sudarsanam 2010, p. 231.

78
Advantages and Disadvantages of Cross-border M&As Table 18.5

Advantages Disadvantages
 access to customers, distribution channels,  massive risk
materials, HR  huge capital availability as requirement
 rapid market development
 time savings/synergy effects  best case scenario: financial markets as
 if applicable fast market entry in balancing instrument
numerous geographic regions  in reality: limited range of alternatives for
 positive cash-flow SME
 scale effects  high information and search costs
 adequate target company as basic
 gain of know-how requirement
 complementary effects  negotiation problem (Information
 gain of market position/image asymmetries)
 fastest mode of diversification  necessity of coordination and integration of
 no increasing competition intensity in host heterogeneous structures, systems, cultures
 country  adaptation of market appearance required
 little danger of overcapacity  provisos/resistances of local management
 possibly brain drain
 provisos/resistances of host country
government (foreign infiltration)
 growing management complexity

Source: Adapted from Zentes/Swoboda/Morschett 2004, p. 658.

Table 18.6
Causes of Failure and Success in Cross-border M&As

Cause of Failure Cause of Success

 target management attitudes  detailed post-acquisition integration plans
 cultural differences  speed of implementation
 no post-acquisition integration planning  clarity of acquisition purpose
 lack of knowledge of industry or target  good cultural fit
 poor management of target  high degree of target management cooperation
 no prior acquisition experience  knowledge of target and its industry

Source: Adapted from Sudarsanam 2010, p. 726.

79
ThyssenKrupp Group Structure Figure 18.2

ThyssenKrupp

Plant Mechanical
Division Division

Elevator
Steel Europe
Technoylogy

Steel America Plant Technology

Components
Stainless Global
Technology

Materials
Marine Systems
Services

ThyssenKrupp ThyssenKrupp
Business Services IT Services

Source: ThyssenKrupp AG 2010.

Business Opportunities for ThyssenKrupp Figure 18.3

Driver Demand („More“) Business Opportunities Demand („Better“) Constraints

Reductin in CO2
More Consumer and Leading
Demographic Change Emissions, Climate Change
Capital Goods Engineering Renewable Energies
Expertise
Efficient
Urbanisation More Infrastructure in Infrastructure, Finite Resources
and Buildings Method, Processes
Material Efficient Resource
Mechanical and Energy
More Resource and Plant Political Framework
Globalisation Utilization, Alternative
Energy Consumption Conditions
Energies

Source: ThyssenKrupp AG 2013, p. 31.

80
Example of a Scoring Model for the Selection of a Production Location Table 19.1

Importance of Evaluation of Country (ei)

Combined Score
Location Characteristic Criterion (from 1 - very bad
(wi x ei)
in Percent (wi) to 10 - excellent)
Attractiveness of Local Market 20% 8 1.6

Logistics Costs 5% 4 0.2

Wage Level 15% 2 0.3

Availability of Skilled Labour 15% 9 1.35

Innovativeness of Country 10% 8 0.8

Availability of Suppliers 20% 8 1.6

Stability of Local Currency 5% 9 0.45

Political Risk 10% 4 0.4

SUM (Overall Score) 100% - 6.7

Basic Types of Production Configurations Figure 19.1

Parallel Production Cross-Border Production II

Host Country A
De-
Host Country B
centralization
Host Country C
Number of Home Country
Production
Locations Host Country A
Host Country B
Concentration Host Country C
Home Country

World Market Factory Cross-Border Production I

no yes
International Splitting
Production Steps
of Production Process
Sales

Source: Grünig/Morschett 2012, p. 301.

81
 Figure 19.2
Types of Foreign Production Plants
Extent of Technical
Activities at the

high Source Lead Contributor

Site

low Offshore Outpost Server

access to low use of local proximity to

cost production technological market
input factors resources

Strategic Reason for Establishing the Plant

Source: Ferdows 1989, p. 8; 1997, p. 77.

82
Alternative Modes for Producing and Sourcing from Abroad Figure 19.3

Sourcing from a Trading Company

Independent
Company Import Firm
Manufacturer

Manufacturer‘s Independent
Company
Sales Subs. Manufacturer

Independent
Company Export Firm
Manufacturer

Sourcing from an Independent Foreign Manufacturer

Buying Agent
Independent
Company
Manufacturer

Procurement Office
Independent
Company
Manufacturer

Independent
Company
Manufacturer

Sourcing from a Foreign Contract Manufacturer

Contract
Company
Manufacturer

Taking Up Own Production Abroad

Production
Company
Joint Venture

Wholly-Owned
Company Production
Subsidiary

Company
Alliance/Partnership
Border
Independent Suppliers

Source: Grünig/Morschett 2012, p. 188.

83
Deliveries (Sales) of Audi – Development and Geographical Distribution Figure 19.4

Development of Delivered Cars Geographic Distribution 2013

(in thousands) (in thousands)

1,575
1,455 Other
253 Germany
1,303
250
1,092
USA
964 1,003 950
905 158
829
770 779
Rest of
Europe
423
China
492

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Source: Audi 2014a and several annual reports.

Audi Production Sites around the World Figure 19.5

Brussels, Neckarsulm, Ingolstadt,

Belgium Germany Germany

Kaluga, Russia
Changchun,
Bratislava, Slovakia
China
Györ, Hungary
Martorell,
Spain

Foshan,
Aurangabad,
San José Chiapa, China
India
Mexico (from 2016)

Jakarta,
Indonesia
Curibata,
Brazil (from 2015)

Source: Adapted from Audi 2014b, p. 145.

84
Grouping of Industrial Sectors According to R&D Intensity Table 20.1

Industry R&D
Examples of Industries
Category Intensity
High >5% pharmaceuticals and biotechnology; health care equipment and services; technology
R&D Intensity hardware and equipment; software and computer services; aerospace and defence
Medium-high 2-5% electronics and electrical equipment; automobiles and parts; industrial engineering
R&D Intensity and machinery; chemicals; personal goods; household goods; general industrials;
support services
Medium-low 1-2% food products; beverages; travel and leisure; media; oil equipment; electricity; fixed
R&D Intensity line telecommunications
Low <1% oil and gas; industrial metals; construction and materials; food and drug retailers;
R&D Intensity transportation; mining; tobacco; multi-utilities

Source: European Commission 2013a, p. 27.

Ethnocentric Centralised R&D Figure 20.1

Behavioural Orientation
 ethnocentric inward orientation
 think tank as national treasure in home country
 protection of core technology against competitors
 homogeneous R&D culture
Central
R&D Configuration
 central R&D in home country
 central and tight coordination and control of R&D programme

Strengths Weaknesses
 high efficiency  lack of sensitivity for local markets
 low R&D costs (scale effects)  danger or missing external technology
 short cycle times  not-invented-here syndrome
 protected core technologies  tendency towards rigid organisation

Source: Boutellier/Gassmann/Zedtwitz 2008, p. 80.

85
Geocentric Centralised R&D Figure 20.2

International Manufacturing Behavioural Orientation

Technology Parks  geocentric external orientation
 close cooperation with other sites
Central  unrestricted information flow
Local Logistics
 change agents enable internationalisation
R&D
Global Sourcing
Configuration
Strategic Alliances  central R&D in home country
 close contact with international sites
Cooperation/Lead Users  international secondments and recruiting

Strengths Weaknesses
 efficiency due to centralisation  danger to neglect systematic internationalisation
 high sensitivity for local markets  local content restrictions and local market
and technology trends specifications insufficiently considered
 cost-efficient R&D internationalisation

Source: Boutellier/Gassmann/Zedtwitz 2008, p. 82.

Figure 20.3
Polycentric Decentralised R&D

R&D1 Behavioural Orientation

 polycentric orientation
 customisation before standardisation
R&D2  local effectiveness before global efficiency
 arm‘s length principle
Central
R&D R&D3 Configuration
 decentralised R&D
 dominance of product-related R&D
R&D4  little coordination between R&D units

Strengths Weaknesses
 strong sensitivity for local markets  inefficiency and parallel development
 adaptation to local environment  no technological focus
 usage of local resources  problems with critical mass

Source: Boutellier/Gassmann/Zedtwitz 2008, p. 84

86
R&D Hub Model Figure 20.4

R&D1 Behavioural Orientation

 decentralised R&D tightly controlled by centre
 R&D centre has technology lead
R&D2  global coordination of R&D direction and budget

Central Configuration
R&D R&D3  ethno- or geocentric orientation
 node structure with clear dominance of centre
 cooperation of units centrally controlled
R&D4

Strengths Weaknesses
 high efficiency due to central coordination of R&D  high costs of coordination and time
 avoidance of redundant R&D  danger of oppressing creativity and
 exploitation of all available strengths flexibility through central directives
 realisation of synergies

Source: Boutellier/Gassmann/Zedtwitz 2008, p. 86.

Integrated R&D Network Figure 20.5

R&D2 Behavioural Orientation

 geocentric orientation, lead-country concept
 partnership among all competence centres
 unrestricted flow of information
R&D1 R&D3
Configuration
 highly internationalised R&D
 global responsibility of competence centres
for technologies or products
R&D4  multi-dimensional coordination and information

Strengths Weaknesses
 coupling of specialisation and synergy effects  high coordination costs
 global before local efficiency  complexity of institutional rules
 organisational learning across many locations and decision processes
 exploitation and refining of local strengths

Source: Boutellier/Gassmann/Zedtwitz 2008, p. 88.

87
Growth Platforms and Economic Importance Table 20.2

Sales in billion EUR

Growth Platform Function
(in 2013)
Offers a broad product portfolio adapted to local needs of emerging
Emerging Markets 10.96
markets.
Offers patients integrated and personalised solutions (treatments,
Diabetes 6.57
services and technologies) to simplify the management of diabetes.
Deals with the task of human immunization and prevention of
Vaccines 3.7
epidemics around the world.
Consumer Includes for example pain killers and treatments for coughs and
3.0
Healthcare colds.
Therapeutic solutions for rare diseases provided and developed by
New Genzyme 2.1
Genzyme, a subsidiary of Sanofi.
Launches innovative products for pets and production animals and
Animal Health 2.0
is executed by Merial, the animal health subsidiary of Sanofi.
Includes products launched since 2009, and do not belong to other
Innovative Products growth platforms with a focus on the development of biologic 0.7
medicines.

Source: Sanofi 2014.

Figure 20.6
Sanofi’s Geographically Focused Research Hubs

French German
Hub Hub
United States Hub Asian Hub

Source: Sanofi 2014.

88
Types and Characteristics of Sanofi’s Collaborations Figure 20.7

Collaborative
Focus

Scientific Commercial
Focus Focus

Research
Hospitals Biotechs Others
Institutes

Source: Adapted from Sanofi 2014.

Classification of Marketing Strategies Figure 21.1

International Marketing Strategy Multinational Marketing Strategy

HQ HQ

Border Border
All Countries Country 1 Country 2 Country n
Undifferentiated use of the Product 1 Product 2 Product n
same marketing mix in all Price 1 Price 2 Price n
countries (1,2,…,n). Place 1 Place 2 Place n
Product 1,2,…,n Promotion 1 Promotion 2 Promotion n
Price 1,2,…,n
Place 1,2,…,n Each country/market has its own marketing mix.
Promotion 1,2,…,n

Global Marketing Strategy Transnational Marketing Strategy

HQ HQ

Development of Guidelines for

Development of Global
Marketing Strategy („Pattern
Marketing Strategy
Standardisation“)
Border
All countries Border

Undifferentiated use of Country 1 Country 2 Country n

global marketing mix in all Product 1 Product 2 Product n
countries (1,2,…,n). Price 1 Price 2 Price n
Product 1,2,…,n Place 1 Place 2 Place n
Price 1,2,…,n Promotion 1 Promotion 2 Promotion n
Place 1,2,…,n
Promotion 1,2,…,n Patterns are transferred to each country/market
with only as much adaption as necessary.

Source: Adapted from Hollensen 2014, p. 474.

89
Selected Factors Favouring Standardisation vs. Differentiation Table 21.1

Factors Favouring Standardisation Factors Favouring Differentiation

 economies of scale, e.g. in R&D, production  local environment-induced adaptation, e.g.
and marketing (experience curve effects) government and regulatory influences, legal
 global competition issues, differences in technical standards
(no experience curve effects)
 convergence of tastes and consumer needs
 local competition
(consumer preferences are homogeneous)
 centralised management of international  variation in consumer needs (consumer
operations (possible to transfer experience needs are heterogeneous, e.g. because of
cultural differences)
across borders)
 fragmented and decentralised management
 a standardised concept is used by competitors
with independent country subsidiaries
 high degree of transferability of competitive
advantages from market to market  an adapted concept is used by competitors

 easier communication, planning and control  low degree of transferability of competitive

(e.g. through Internet and mobile technology) advantages from market to market

 stock cost reduction

Source: Adapted from Hollensen 2014, p. 477.

90
Factors Influencing International Pricing Strategy Table 21.2

Company and
Market Factors Environmental Factors
Product-specific Factors
 corporate and marketing  consumers’ perceptions,  government influences and
objectives expectations and ability to constraints
 firm and product positioning pay  tax, tariffs
 degree of international  need for product and  currency fluctuations
promotional adaptation,
product standardisation or  business cycle stage, level of
adaptation market servicing, extra
packaging requirements inflation
 product range, cross  use of non-money payment
 market structure, distribution
subsidisation, life cycle, and leasing
substitutes, product channels, discounting
differentiation and unique pressures
selling proposition  market growth, demand
 cost structures, elasticities
manufacturing, experience  need for credit
effects, economies of scale  competition objectives,
 marketing, product strategies and strength
development
 available resources
 inventory
 shipping cost

Source: Adapted from Doole/Lowe 2012, pp. 358-359.

91
Taxonomy of International Pricing Practices Figure 21.2

Source: Adapted from Solberg/Stöttinger/Yaprak 2006, p. 31.

92
Communication Tools in International Marketing Table 21.3

Advertising Public Relations Sales Promotion Direct Marketing Personal Selling

 newspapers  annual reports  rebates and  direct mail  sales
price discounts presentations
 magazines  house  database
 journals magazines  catalogues and marketing  sales force
 press relations brochures  Internet management
 directories
 events  samples, marketing  trade fairs
 television coupons, gifts  mobile  exhibitions
 radio  lobbying
 competitions marketing
 cinema  sponsorships (SMS, MMS)
 outdoor  social media
marketing
 Internet
 viral marketing
 location-based
marketing
 advertising
games

Source: Adapted from Zentes/Swoboda/Schramm-Klein 2013, p. 389.

93
General Standardisation Level for Different Elements of the Marketing Mix Figure 21.3

Differentiation Standardisation

Pricing Distribution Promotion Advertising Advertising Product Service Brand

Media Content Name

Source: Adapted from Zentes/Swoboda/Schramm-Klein 2013, p. 449.

The Vision of Nestlé Figure 21.4

Operational Nutrition, Growth

Health and Emerging
Pillars Innovation Markets and Drivers
Wellness
and Populary
Renovation Positioned
Products

Whenever, Out-of-Home
Wherever, Consumption
However
Compliance Creating Shared
Sustainability Value
Nestlé
Operational „Our objective is to be the
Efficiency leader in Nutrition Health and Premiumisation
Wellness, and the industry
reference for financial
performance, trusted by
all stakeholders.“
Unmatched
Consumer Product and
Engagement Brand
Nestlé Culture, Values
and Principles Portfolio

People, Unmatched
Culture, Values Research and
and Unmatched Development
Competitive
Attitude Geographic Capability
Advantages
Presence

94
The Nestlé Brand Tree Figure 21.5

Examples:

 Savory  Haoji  Levissima

Around 8,300 Local Brands  Sahne-Nuss  Totole  Minéré
Responsibility of local  McKay  La Vie  Theodora
markets  Buxton  Erikli

140 Regional Strategic  Herta  Stouffer‘s  Ice Mountain

Brands  Findus  Arrowhead  Ozarka
Responsibility of strategic  Alpo  Calistoga  Zephyrhills
business unit and regional management  Vittel  Deer Park

Around 55 Worldwide  Kit Kat  Mighty Dog

Strategic Brands  Polo  Smarties
Responsibility of general management  Cerelac  After Eight
at strategic business unit level  Baci  Coffee-Mate

10 Worldwide Corporate  Nestle  L‘Oreal

Brands  Maggi  Buitoni
 Perrier  Carnatio

Source: Adapted from Zentes/Swoboda/Schramm-Klein 2013, p. 450.

Examples of Various KitKat Flavours Figure 21.6

Source: Alimenta 2014.

95
Nespresso Magazine Figure 21.7

Source: Nespresso 2014.

Figure 22.1
Dimensions of International Human Resource Management
me oup e

Third-Country Nationals
Gr loye

ion
p

Host-Country Nationals
ns
Em

Home-Country Nationals
Di

Leadership

Labour Relations
Dimension
Activity

Performance Appraisal
& Compensation

Training &
Development

Recruitment &
Selection
Home Host Other
Country Country Countries

Regional Dimension

Source: Adapted from Morgan 1986, p. 44.

96
Phases in Cultural Adjustment Figure 22.2

Repatriation
positive

time
Emotions

negative
1 2 3 4
Euphoria/ Culture Shock/ Acculturation Stability/
Honey- Disillusionment Biculturalism
moon

Source: Adapted from Hofstede 2001, p. 259; Griffin/Pustay 2013, p. 547.

Selected Products and Services of Google Table 22.1

Google Search YouTube Google Maps

Gmail Google News Google Places
Google Chrome Google Scholar Google AdWords
Google Calendar Google Translate Google Code
Google+ Google Wallet Google Insights for Search
Google Groups Google Glass Google Docs
Google Play (Store) Google Nexus Google Chromecast

Source: Google 2014.

97
Europe’s Most Attractive Employers in 2014 Table 22.2

Rank Business Ranking Engineering Ranking

1 Google Siemens
2 L'Oréal Group IBM
3 PwC (PriceWaterhouseCoopers) BMW Group
4 EY (Ernst & Young) Google
5 Microsoft Microsoft
6 McKinsey & Company Nestlé
7 Unilever General Electric
8 KPMG Bosch
9 Procter & Gamble Daimler Mercedes-Benz
10 The Boston Consulting Group EADS (Airbus)

Source: Universum 2014.

Decision and Information Requirements at Different Levels in an MNC Table 23.1

Decision Decisions Information Infor-

Type Requirements mation
Strategic Corporate Management External
 basic long-term strategic decisions for  opportunities/threats and strengths/
company weaknesses info on coporate level
 resource allocation to divisions  info across divisions (and performance)
 coordination of divisions (incl. selecting and  long-term developments (highly aggregated)
appraising division management)
Division Management
 basic targets for subsidiaries  targets from HQ
 mid-term planning  long-term, mid-term, rather speculative data
 resource allocation to subsidiaries  specific product and/or region related
 coordination of subsidiaries (incl. selecting coordination and evaluation data
and appraising subsidiary management)  quantitative monetary info on division results
Subsidiary Management
 development of country-specific strategies  targets from division management
 coordination of operational issues in  operative data from internal accounting
subsidiary  only immediate info on external environment
Ope-  supportive data from division or HQ
rational Internal

Source: Adapted from Zentes/Swoboda/Morschett 2004, p. 806.

98
The Balanced Scorecard Figure 23.1

Financial
Perspective
 objectives
 measures
Customer Internal Processes
Perspective Perspective
Vision and Strategy
 objectives  objectives
 measures  measures
Learning & Growth
Perspective
 objectives
 measures

Source: Kaplan/Norton 1996, p. 9; Gowthorpe 2011, p. 425.

Implementing the Balanced Scorecard in Multi-Level Organisations Figure 23.2

Corporation
F
Corporate Level
C I

L&G

Asia/Pacific Americas Europe

F F F
Division Level
C I C I C I

L&G L&G L&G

France Slovakia
F F
Subsidiary Level C I C I

L&G L&G

Subsequent Levels
e.g. functions, teams, …

Source: Adapted from Rieg/Gleich 2002, p. 697; Zentes/Swoboda/Morschett

2004, p. 830.

99
Business Units and Selected Brands Figure 23.3

Laundry and Home Care

Somat Pril Persil Vernel Spee Perwoll

Beauty Care

Fa Aok Theramed syoss got2b Schwarzkopf

Adhesive Technologies

Loctite Pattex Technomelt Pritt Metylan Sista

Source: Henkel 2014.

Selected Performance and Financial Key Figures for the Henkel Business Units Table 23.2
(2013)

Laundry & Home Adhesive

Beauty Care
Care Technologies
Sales
4,580 3,510 8,117
(in million EUR)
EBIT
682 474 1,271
(in million EUR)
Adjusted Return on Sales
15.6% 15.0% 16.9%
(EBIT)
Capital Employed
2,321 2,007 6,752
(in million EUR)
Weighted Average Cost of
7.5% 7.5% 10.5%
Capital (WACC)
Return on Capital Employed
29.4% 23.6% 18.8%
(ROCE)
Economic Value Added
507 323 562
(EVA; in million EUR)

Source: Henkel 2014.

100
Economic Value Added of the Business Unit Adhesive Technologies in 2013 (in Figure 23.4
million EUR)

Economic Value
EBIT Capital Employed WACC
Added = - x
1,271 6,752 10.5%
562

Source: Adapted from Henkel 2014, p. 109.

Calculation of Return on Capital Employed of the Laundry and Home Care Business Figure 23.5
Unit

EBIT
682 million EUR
Return on Capital
Employed =
29.4%
Capital Employed
2,321 million EUR

Source: Adapted from Henkel 2014, p. 109.

101
[Link]