Welcome to

1. Welcome to GSBS6008 Global Business Management Course Introduction and Overview

2. Contact Details Course Coordinator/Lecturer Dr Narender Sharma Room and Building :11.13 Phone Number : 82626417 Email Narender.Sharma@newcastle.edu.au Consultation Hours Monday 4-6 pm (Other days by appointment only) Blackboard website and email are the best modes of communication

3. Who am I?

4. Academic Biography • International Business Environment • Comparative International Management • International Business Strategy • Cross-cultural management • Marketing principles • Introduction to Human Resource Management

5. Professional Biography • 21 years in business management – local & international • Experience gained in the Oil industry, Food industry, Tea industry and Consultancy • Own consulting company since 2001 • MBA University of Hull, UK, graduated in 2003 • Ph.D. in International Business

6. Who are you? Now it is time to get to know your fellow classmates. Which country/region/city you are from? Which program are you studying? What do you hope to achieve from this course? Where would you like to be in five years time?

7. Brief course description This course focuses on the management of international business organisations, comprising both equity (wholly-owned and JV) and non-equity business organisations (strategic alliances). The course is organised around theories and approaches to international management.

8. Brief course description Major topics include: the organization and management of multinational corporations (MNCs) as the leading type of international business organisation; MNC headquarter-subsidiary relationships; the organization and management of business networks; MNCs as learning organisations; critical perspectives on international businesses. Functional areas of management are examined in their international contexts, including international human resources management; international operations and supply chain management and international marketing.

9. Course aims & objectives Aim: To put you in the “shoes” of the a manager of a multinational corporation. A manager facing the changes and vagaries of the rapidly globalising international marketplace Objectives: On successful completion of this course you will able to: 1. Think critically about underlying theories, concepts, assumptions and arguments relating to the multinational form of organisation.   2. Critique that basic paradigm of maximising behaviour by international business organisations and think beyond a narrow managerial mindset.  

10. Course aims & objectives 3. Comprehend how the management of cross-border operations impact upon the management functions of human resource management, marketing, operations and supply chain management.   4. Work independently and collaboratively to analyse strategies to manage multiple cross-border operations.   5. Engage in inquiry processes to understand the management and organisational challenges of coordinating cross-border operations.   6. Develop the essential international perspectives which inform professional management standards and ethical practice in international management.

11. Learning approach Adult Learning - Personal Interest Interactive - Share, share, share Mentoring - Assist each other Self-directed learning - I am only the facilitator Leadership/Teamwork - Building skills Critical Thinking - Question, question, question “Show and tell” - Share, share, share Formal lecture - 1hr 15min – 1hr 30mins Group work - Case analysis 1hr 15 mins Assessment Items - Coming up

12. Continual assessment Individual Case Study Analysis This individual assignment is intended to give you an opportunity to apply some key concepts from this course to a real world context. Specifically, you are required to identify an MNC of your choice and apply Dunning’s Eclectic (OLI) Paradigm as a conceptual framework to explain to what extent (if any) the organisation derives, ownership, locational and internalisation advantages. Your analysis and critical discussion should be primarily developed using the criteria and information contained in Dunning (1979) and especially Table 2. Therefore your paper should be no more than 1500 words, excluding appendices, tables, and references.

13. Continual assessment Group Project - Written Report In groups you are required to develop a research report that critically discusses the management of an MNC of your choice. The report needs to identify, analyse, evaluate and communicate information on the following factors: Headquarter - subsidiary relationships and subsidiary roles. Organisation and management of networks of business organisations Knowledge management, learning and innovation Approach to international marketing

14. Continual assessment Group Project - Written Report Approach to international HRM Approach to international operations and supply chain management Recommendations on what (if anything) the MNC could do to improve its overall performance. As a research exercise, your report must provide empirical evidence from secondary data (where possible) so that you can make reasonably robust recommendations.

15. Continual assessment Group Project - Written Report You are strongly encouraged to select a large MNC on which there is ample publically available information. Where secondary data is lacking, you may make assumptions and inferences but you should note your assumptions and inferences in the report. Your report should produce a rational evaluation of the organisation on the above criteria (rather than simply describing the organisation) as this will assist you in determining any recommendations. The length of the report is 2500 words, excluding the Executive Summary, Appendices, Charts, Tables and References.

16. Continual assessment Group Project – Presentations Every group will be required to present the findings of their final written report in week 12. Details of the marking criteria and advice on conducting effective presentations are available in the Assessment area in the course Blackboard. Final Examination The final examination will cover all course material. Details regarding the format of the final examination will be announced later in the course.

17. Reading materials Text: Kelly, P. (2009), International Business and Management, South-Western Cengage Learning ISBN 9781844807840 Please refer to the reading guide in the Course Outline for additional prescribed readings. * For your convenience, these articles are available electronically and may be accessed through the Short loans Online portal in Blackboard.

18. Blackboard & Turnitin BLACKBOARD This course is complemented with a feature packed Blackboard website to assist you in developing your knowledge and understanding of this course and to assist in the development of your academic skills. TURNITIN It is a university policy requirements that all assignments must be submitted in electronic form to Turnitin. You will be provided with a Turnitin submission box in Blackboard through which you can submit your two written assignments.

19. Group work and formation Purpose and Function of Group Work During class and during assessments Group interaction during class - During our in class discussions each group must operate with a rotating spokesperson so that every student is required to deliver the groups answers at some point. This approach should emphasise to you the reciprocal nature of your contributions during in class discussion. Group marks will be moderated by peer review using SPARK. See Blackboard for SPARK information. Procedures for Selecting Groups, Roles and Responsibilities

20. Introduction to Global Business Management After today’s mini-lecture, you should be able to: Discuss the terms international business and International management Explain the term value chain and identify different value chain configurations Discuss the concept of value chain configuration in IB Explain the terms supply chain and value system Identify the key features of Dunning’s eclectic paradigm

21. Differences between IB and IM International trade and IB focus on the purchase, sale or exchange of goods across national borders and the revenues such activities provides for the firm As we explored in Globalisation, the why and how of international trade has been explained through a number of national level theories over the past five centuries including classical theories such as: Mercantilism Absolute Advantage Comparative Advantage Factor Proportions Theory International Product Life Cycle Theory New Trade Theory

22. Differences between IB and IM And contemporary theories such as: Competitive Advantage of Nations Michael Porter’s Diamond Model National Industrial Policy

23. Differences between IB and IM We also explored a number of theories in relation to why and how firms internationalise including: Internationalisation process of the firm Born Globals and International Entrepreneurship Monopolistic Advantage Theory Internalisation theory Dunning’s Eclectic Paradigm (OLI Framework) International Collaborative Ventures Networks and Relational Assets

24. Differences between IB and IM From what you remember about these theories, you should be able to deduce that they are fundamentally about economic activity and are therefore strongly underpinned by economic theories. International trade and international business are more focused on inputs and outputs, markets and industries and advantage from strategic positioning In many respects, the focus is on factors that are external to the organisation Remember PESTLE, CAGE, Diamond Model, 5 - Forces

25. Differences between IB and IM International management focuses more on the productive activities of the international organisation While there is an overlap between IB and IM, the focus of IM is on achieving operational effectiveness and efficiency This is done through analysing the way resources are used, human resources are motivated, organised, made knowledgeable, technologically enabled and coordinated through business processes and best practice.

26. Differences between IB and IM In short, IM considers the transformational activities taking place in the international firm and how value is actually added Collectively IB and IM seek to ensure the firm generates revenue, attains goals and performs in an efficient, sustainable and superior manner

27. The value chain and value chain configurations In a business sense, value is essentially what customers are willing to pay for a service or product (offering). Added-value is the difference between the amount customers are willing to pay, minus the costs of the inputs and transformational activities used to create the offering. There are three main factors that influence the value equation: input costs (supply side) transformation costs the amount the customer is prepared to pay for the offering (demand side), based on perceived benefits, relative to competing offerings, substitutes, etc.

28. The value chain and value chain configurations Porter (1985) identified the value chain as a means of analysing an organisation’s strategically relevant activities. Value chain analysis helps the firm to identify its key value adding and support functions, its strengths, weaknesses, capabilities, core competencies and distinguish those activities that may drive competitive advantage Therefore, the value chain is a model for the analysis of how supply chain activities can add value to products and services delivered to the customers and thereby add a margin of value to the firm.

29. The value chain and value chain configurations However, it is a generic model and it is important to realise that value chains may be quite different from one type of industry to another as the following slide illustrates.

30. The value chain and value chain configurations Value-net v. value chain? A picture or model “paints a thousand words” Inbound logistics Outbound logistics Sales & Marketing Production Porter’s traditional chain Each ingredient supported by HR, Finance & Info systems Integrated v networked Revised e-Market oriented model Market research New product develop-ment Market products Procure materials Procure products Manage selling & fulfillment Aim is to reduce cost and add value to the process

31. Supply chain and value system The value chain concept has been extended beyond individual organisations. An organisation’s value chain is part of a larger system including the value chains of upstream suppliers and downstream customers. Porter calls this series of value chains the value system and others refer to it as a value network or supply chain. Linkages exist not only in a firm’s value chain but also between value chains as the next diagram illustrates.

32. Supply chain and value system

33. Supply chain and value system One way a firm can manage its value system to attain its profit goal is through differentiation - creating offerings that are of perceived higher value to the customer so that they will pay a higher price. In this case, the manager can both identify ways of raising willingness to pay and reducing input costs Another, way a firm can manage its value system to attain its profit goal is through a cost-leadership approach. This approach requires the firm to configure its value adding activities in such a way that it is the lowest cost provider for its offering in relation to its competitors. Both are examples of value creation or performing activities that increase the value of goods or services to customers

34. Value chain fragmentation As discussed in Globalisation, Multinational organizations can benefit from the comparative advantage of different countries, particularly through fragmentation(slicing up the value chain) in which different parts (activities) of the production process are located in different countries

35. Dunning’s eclectic paradigm John Dunning is one of the most respected and cited IB scholars. In 1979 he published a seminal article entitled ‘Explaining changing patterns of international production: In defence of the eclectic theory’. This article, lay the foundations for providing a firm based conceptual framework (Eclectic Paradigm or OLI Framework) for explaining why and how firms might internationalise. You are required to use this framework as the analytical tool in your individual assignment. You need to read the article (located in Short Loans Online) and use the criteria set out in Table 2 (page 276) in order to do the analysis.

36. Dunning’s eclectic paradigm OLI Framework O – Ownership-specific advantages Tangible assets, such natural endowments, manpower, and capital. Intangible assets, such as technology and information, managerial, marketing and entrepreneurial skills. L – Location-specific variables Market structure, government policies, and political, legal, and cultural environment. I – Internalization (incentive) advantages Firm’s inherent flexibility and capacity to produce and market through its internal subsidiaries. Dunning suggests that all three factors are important in determining the extent and pattern of FDI.

37. Learning Activity – Nestle case study • Take 15 minutes to read the Nestle case study on pages 5 – 6 of the text. • Then join up with 3 – 4 other class members and discuss how Nestle is configuring its value chain in order to change from a ‘super-tanker’ (classic multinational) to an agile fleet of businesses’ for about 10 minutes. • The be prepared to share your group’s thoughts with the rest of the class

38. For next week • Please read the allocated chapter, reading and case study before coming to class next week. • You are required to have a copy of the textbook/cases in class when we conduct our case discussions every week. • The case studies assigned to each week are listed in your course outline. • Please print out your lecture notes prior to each class.