pengim aise integrative case notes

47
GLOBAL BUSINESS Integrative Case Notes CASE NOTES INTEGRATIVE CASE 1 THE CHINESE MENU (FOR DEVELOPMENT) Analysis: China’s emergence as a significant economic power is an excellent basis for discussing what can happen in terms of economic development. You might have a discussion in class as to the extent that economic development can occur in the poorest nations on earth. Answers to Questions: 1. What role do institutions play in economic development? The student should have no problem identifying roles but help them to see that roles could be both positive and negative. Furthermore, the application of that role may vary based on time, culture, and circumstances. 2. What is behind the differences in economic development between North and South America? The student will likely find it easier to explain the differences in terms of institutions rather than resources. While some resources in South America have not been properly developed, the student should be able to explain how that lack of development is most often due to institutions. 3. Some argue that a democratic political system is conducive to economic growth. How does the experience of recent Chinese economic development support or refute this statement? Whether the focus is on all of mainland China (PRC) or Hong Kong that was integrated into the PRC, economic development has occurred in spite of a lack of democracy. On the other hand, Taiwan (ROC) has had a relatively democratic country and has enjoyed economic growth. The student should be challenged in whatever response is given and asked if perhaps other aspects such as culture affect whether democracy is best suited to providing the environment needed for economic growth. 4. If you were a policymaker in a poor country or a World Bank official, what would be your advice, based on 41

Upload: natasha-sharma

Post on 28-Nov-2014

2.025 views

Category:

Documents


2 download

TRANSCRIPT

Page 1: Pengim Aise Integrative Case Notes

GLOBAL BUSINESS Integrative Case Notes

CASE NOTES

INTEGRATIVE CASE 1THE CHINESE MENU (FOR DEVELOPMENT)

Analysis: China’s emergence as a significant economic power is an excellent basis for discussing what can happen in terms of economic development. You might have a discussion in class as to the extent that economic development can occur in the poorest nations on earth.Answers to Questions:

1. What role do institutions play in economic development? The student should have no problem identifying roles but help them to see that roles could be both positive and negative. Furthermore, the application of that role may vary based on time, culture, and circumstances.

2. What is behind the differences in economic development between North and South America?The student will likely find it easier to explain the differences in terms of institutions rather than resources. While some resources in South America have not been properly developed, the student should be able to explain how that lack of development is most often due to institutions.

3. Some argue that a democratic political system is conducive to economic growth. How does the experience of recent Chinese economic development support or refute this statement? Whether the focus is on all of mainland China (PRC) or Hong Kong that was integrated into the PRC, economic development has occurred in spite of a lack of democracy. On the other hand, Taiwan (ROC) has had a relatively democratic country and has enjoyed economic growth. The student should be challenged in whatever response is given and asked if perhaps other aspects such as culture affect whether democracy is best suited to providing the environment needed for economic growth.

4. If you were a policymaker in a poor country or a World Bank official, what would be your advice, based on North’s article and China’s experience, for the most effective economic development? This is a question in which the answer is not as important as the thought process and the ability to clearly articulate.

INTEGRATIVE CASE 2 TIPS ABOUT CORRUPTION AROUND THE PACIFIC

Analysis: The major objectives of the case are:

41

Page 2: Pengim Aise Integrative Case Notes

GLOBAL BUSINESS Integrative Case Notes

To develop an understanding of various types of corruption, as well as the concept of corruption in general

To promote discussion of corruption, independent and not independent of its value-laden connotations

To illustrate the difficulties of dealing with corruption for the uninformed, using the simple example of the practice of tipping

To understand the difficulties and costs that corruption presents to the conduct of business transactions in a country

In this case, we see a radical difference in perceptions and values. Ask your students as to whether those doing business in another nation should be bound the values of that nation or this nation. Try to develop a common ground understanding of the definition of corruption, before moving to its evaluation. Given the sensitivity and emotive content of corruption, students can be vocal and quick to voice conclusions and opinions. Although such enthusiasm can be useful, it is advisable to restrain this discussion until the appropriate groundwork is laid for the discussion.

Answers to Questions:1. What is the definition of corruption? Is tipping in the private sector corruption?

Why or why not?The case clearly brings out the reality that the definition of corruption varies in different cultures. Students who might feel that tipping in the private sector is not corruption might want to consider instances in which its purpose it to get an employee to do something for the tipper at the expense of the tipped person’s expense such as information concerning the employers’ plans and strategies.

2. Why do Mr. Lee, Mr. Biswas, and Mr. Lai have such difficulty understanding the practice of tipping? Should it not be second nature to know how to tip? Students should be able to recognize that growing up in one culture may make it difficult to understand the practices of a different culture and that such understanding is not “second nature.” The main problem with tipping and developing an understanding of tipping is the lack of transparency in a country’s rules and regulations surrounding tipping practices. This lack of transparency also accompanies corruption. There is uncertainty about whom to engage in corruption and the level of payment that is appropriate for a given level of services associated with a particular level of corruption; albeit, the scale is somewhat different with tips accounting for 15% or 20% of a meal, which is not the same as 2% or 3% of a $1 million deal.

3. Is what Mr. Biswas does in India corruption? Why or why not? Is what Mr. Lee does in Indonesia corruption? Why or why not? This is a question in which the answer is not as important as the thought process and the ability to clearly articulate. The discussion may center around the fact that their respective businesses could not become operational without good support from public sector officials.

42

Page 3: Pengim Aise Integrative Case Notes

GLOBAL BUSINESS Integrative Case Notes

INTEGRATIVE CASE 3 DP WORLD

Analysis: One of the concerns often raised to oppose trade or international investment, is the national security argument. It is the idea that some activity is so vital to our survival, especially in time of war, that it must be under U.S. control. This case is an example of that concern.Answers to Questions:

1. From a resource-based view, why was DP World interested in acquiring US ports? What advantages did it have or was interested in acquiring? If the students have difficulty answering that question, ask them to consider what was the main business of DP World and to what extend is the U.S. a player in international trade?

2. From an institution-based view, did this acquisition violate any formal laws, rules, and regulations? It is difficult to make a case for formal violation.

3. Also from an institution-based view, what informal rules and norms did this acquisition “violate” that triggered such a strong negative reaction in the United States? The informal “rules and norms” were ones that came about over the past decade and became more potent in the 21st century. Ask the student whether they think that there would have been the same level of objection in the 1980’s and why they feel that way.

4. Did DP World and its American lawyers and other advisors do enough homework?This is a question in which the answer is not as important as the thought process and the ability to clearly articulate.

5. Combining the institution- and resource-based views, what advantages did Eller have that DP did not have? Did Eller’s political strategy make sense?Students will probably point out that Eller had the advantage of not being Middle Eastern and that whether its strategy made sense, it was effecting in killing the DP deal.

6. If you were CEO of Hong Kong’s Hutchison Whampoa, Singapore’s PSA, Denmark’s Maersk, or Germany’s Eurogate, what lessons would you draw from this case when entertaining the idea of acquiring US port operations? This should not be a difficult question for students to answer – in the negative. However, challenge them to see that being a firm that is located overseas may not always be a problem. For example, an operation based in North Korea would

43

Page 4: Pengim Aise Integrative Case Notes

GLOBAL BUSINESS Integrative Case Notes

likely be rejected outright but one based in South Korea might at least be given some consideration.

INTEGRATIVE CASE 4 PRIVATE MILITARY COMPANIES: DOGS OF WAR OR PUSSYCATS OF PEACE?

Analysis: except for those who are history fans, most students like to discuss what is happening now. Even if the situation in the Middle East changed dramatically and suddenly, almost all in your class will at least see this as related to that which is recent if not current at the moment. On the other hand, one of the challenges will be to discuss the questions without whatever bias they may have on Iraq in particular or political economic policies in general.Answers to Questions:

1. From an institution-based view, explain what is behind the rise of this industry. Students may refer to the trend toward outsourcing is being applied to aspects of military operations and to the protection of clients in dangerous non-military environments. The outsourcing is driven by cost, effectiveness and political concerns.

2. From a resource-based standpoint, explain why certain PMCs outperform others. Why are industry associations such as the IPOA and BAPSC so interested in self-regulation?There are differences in the experience of firms and the capabilities of the employees. When discussing this in class, some of the students may or may not be aware that many of the employees are ex-military, including former Navy Seals. The firms recognize that there is a segment of the populace that would quickly seize upon any negative news about the firms in order to curtail their operations thus it is important for them to prevent any events that could damage their image.

3. As an investor, would you consider buying stock of a PMC such as DynCorp? Why or why not? Do you have any ethical reservations? The response to the financial question about buying stock may be more based on the final part of the question about ethics. The ethical issue in the students’ minds will likely be affected by their values, beliefs and stand regarding contemporary controversies such as conflicts in the Middle East.

4. As an oil company executive setting up operations in a political unstable and dangerous country, would you consider hiring security personnel from Blackwater?Students with a negative answer to question number three may sound a very loud “No” to this one since some of them are opposed not only to the Iraq war but also to Big Oil. Thus to get a thoughtful answer, students need to set aside their feelings about Iraq and the oil industry in order to answer the question – what would they do if they were in the situation described in the question.

44

Page 5: Pengim Aise Integrative Case Notes

GLOBAL BUSINESS Integrative Case Notes

The chances are that at least some of those who may previously have said “no” might soften their opposition a bit if they really considered the possibility of being in a dangerous situation such as that and they needed a firm with a good track of protecting people in such situations.

INTEGRATIVE CASE 5 SOYBEANS IN CHINA

Analysis: over time a country’s advantage is some aspect of trade will change. Rather than adjusting to that change, some in the country may wish to preserve the industry that no longer has an advantage. Ask your students if this case exemplifies that tendency.Answers to Questions:

1. Does China have an absolute or comparative advantage in soybean production? The case makes it clear that China does not have an absolute advantage.

2. In China, what is the current crisis of the soybean industry? Do you think the government should or should not intervene? If intervention is called for, what measures should be taken? The price of Chinese soybeans is higher and the quality lower than imports. Student opinions may vary as to whether the government should intervene or whether the soybean farmers should shift into producing something different. Opinions may vary as to what could be done.

3. What difficulties do Chinese soybean farmers face? How can they compete with international producers?Students should easily be able to list difficulties. Other than suggesting government subsidies of farmers and providing incentives that would shorten the supply chain between farmers and production facilities, it may be a bit more difficult to come up with what can be done to compete successfully. You might question the students as to whether they can see any benefit of using government support to help the least efficient farmers to shift into something in which they could be more competitive.

One possibility that you might discuss with the class would be to attract foreign investment into actual operation of the farms. Perhaps the methods and technology that has worked elsewhere might have a “spill over” effect on local farmers and thus improve quality while reducing costs.

4. Will the new labeling standards for non-GM-based soybeans used for edible oil production have any impact on domestic soybeans? This is an opinion question in which students will likely be inclined to answer based on the culture in the U.S. Ask them to defend their answer.

45

Page 6: Pengim Aise Integrative Case Notes

GLOBAL BUSINESS Integrative Case Notes

5. Facing the imminent wave of consolidations led by FDI, what can the soybean oil processing companies do to promote locally grown soybeans? Is this their responsibility? This is a question in which the answer is not as important as the thought process and the ability to clearly articulate.

6. Table 1 Soybean Production, Consumption, and Imports in China.The table shows that over time there has been an increase in planting and output but not in proportion to the increase in consumption. It also shows that the imported price has gone but the domestic has also gone up and remains higher than the imported price.

INTEGRATIVE CASE 6 AGRANA: From a Local Supplier to a Global Player

Analysis: reduction of trade barriers and opening up a country to more international trade is viewed by many within the U.S. as a threat but the case is an example of how economic integration can provide opportunity for those who are able to leverage their expertise.Answers to Questions:

1. From an institution-based view, what opportunities and challenges have been brought by the integration of EU markets in both Western Europe and CEE? Integration of EU markets opened up the opportunity for sales beyond its existing markets and the opportunity to obtain through acquisitions the means of reaching those markets. One challenge was to integrate its expanded and operations.

2. From a resource-based view, what is behind AGRANA’s impressive growth? The organizations was especially successful in leveraging expertise in managing expansion of it existing lines of business but in applying that expertise in a new line of business involving fruit. In its expansion it was able to obtain economies of scale that provided it with the competitive capabilities needed for growth.

3. From an international perspective, what challenges do you foresee AGRANA facing as it continues its expansion into other regions such as East Asia? One challenge is the potential competition and successful operating in a different culture. Unlike the EU which has simplified requirements within its area and has a common currency for some of the EU, operations outside of the EU will be much more complex.

INTEGRATIVE CASE 7 DHL BANGLADESH

CASE SUMMARY AND ISSUES

46

Page 7: Pengim Aise Integrative Case Notes

GLOBAL BUSINESS Integrative Case Notes

This case revolves around Mr. Nurul Rahman, a DHL-Bangladesh (DHLB) manager who must recommend which of the two Human Resource Information Systems (HRIS) DHLB should adopt to alleviate the escalating workload on its Human Resources (HR) department. The choice between these systems is difficult: the HRIS favored by regional headquarters is significantly more expensive and likely unsuited to DHLB’s unique needs whereas the HRIS favored by DHLB—although likely effective—seems to be incapable of meeting headquarters’ strong preference for streamlining human resource systems across disparate Asian subsidiaries. Nurul must carefully balance conflicting stakeholder interests and do so against the backdrop of a politically powerful headquarters that can “make or break” managerial careers.

TEACHING OBJECTIVESThe main objective of this case is to better sensitize students to the (operational) tension between headquarters (here, regional headquarters) and a subsidiary—even a profitable one—and the implications of this tension for effective subsidiary operations. A second objective is to uncover some ways in which such tension can be diffused so as to create a win-win situation for all parties. A third objective is to allow students to come to terms with the political reality of working in multinational firms and to develop a personal “moral framework” for resolving dilemmas created by such realities. In this last sense, the case lends itself well to a role play involving various DHL stakeholders.

TEACHING APPROACHCase discussion formatThis case is relatively easy to teach because the agendas of different parties are reasonably well-known, at least to Nurul Rahman (the protagonist). This enables an instructor to concentrate on credible ways to reconcile the differing objectives under a common umbrella. Yet, this is not an easy task given the imperative to balance regional headquarters’ need for efficiency against the subsidiary’s need for effectiveness. A unilateral imposition of wills is likely infeasible to the extent that doing so will have repercussions either on employee morale in a (profitable and fast-growing) subsidiary or invoke the wrath of regional headquarters.

The key to solving this case is to develop persuasive arguments for headquarters and presenting them in a non-threatening, problem-solving manner to which the headquarters would be receptive. Hence, it is necessary to be sensitive to the context in which a give-and-take must occur. Indeed, achieving a sophisticated grasp of the context is a challenge that many students will confront in their careers as professional managers. Thus, an instructor would be advised to emphasize this point both during the case analysis and when presenting the case take-away.

Role play formatThis case is also well-suited for a role play session. The instructor can divide the class into four groups: i) Nurul Rahman (the protagonist; DHLB perspective), ii) Bruce Newton (DHL’s Asia region HR manager; Regional headquarters perspective), iii) DHL-Pakistan (DHL-Pakistan subsidiary perspective), and iv) DHLB’s HR personnel (Observers; HR department perspective). Given the case facts, the first group (i.e., Nurul

47

Page 8: Pengim Aise Integrative Case Notes

GLOBAL BUSINESS Integrative Case Notes

Rahman) will require the most horsepower. Thus, the groups need not all be of the same size.

Alternatively, the instructor can have multiple groups representing Nurul Rahman, and one group each representing the other three stakeholders. An optional fifth group can be made up of external observers, i.e., individuals who do not have a stake in the outcome of negotiations. This group should be asked to develop a detailed list of “what worked” and “what did not work” during the negotiations (plus other observations). After the role play, this last group can be called upon to debrief the first four groups about negotiation dynamics.

ASSIGNED READINGSCialdini, R.B. (2001). ‘Harnessing the Science of Persuasion,’ Harvard Business Review, Vol. 79 (9), pp. 72-79.ABSTRACT: If leadership, at its most basic, consists of getting things done through others, then persuasion is one of the leader’s essential tools. Many executives have assumed that this tool is beyond their grasp, available only to the charismatic and the eloquent. Over the past several decades, though, experimental psychologists have learned which methods reliably lead people to concede, comply, or change. Their research shows that persuasion is governed by several principles that can be taught and applied. The first principle is that people are more likely to follow someone who is similar to them than someone who is not. Wise managers, then, enlist peers to help make their cases. Second, people are more willing to cooperate with those who are not only like them but who like them, as well. So it’s worth the time to uncover real similarities and offer genuine praise. Third, experiments confirm the intuitive truth that people tend to treat you the way you treat them. It’s sound policy to do a favor before seeking one. Fourth, individuals are more likely to keep promises they make voluntarily and explicitly. The message for managers here is to get commitments in writing. Fifth, studies show that people really do defer to experts. So before they attempt to exert influence, executives should take pains to establish their own expertise and not assume that it’s self-evident. Finally, people want more of a commodity when it’s scarce; it follows, then, that exclusive information is more persuasive than widely available data. By mastering these principles--and, the author stresses, using them judiciously and ethically--executives can learn the elusive art of capturing an audience, swaying the undecided, and converting the opposition.

Williams, G.A. & Miller, R.B. (2002). ‘Change the Way you Persuade’, Harvard Business Review, Vol. 80 (5), pp. 65-73.ABSTRACT: You call a meeting to try to convince your boss that your company needs to make an important move. Your argument is impassioned, your logic unassailable, your data bulletproof. Two weeks later, though, you learn that your brilliant proposal has been tabled. What went wrong? It’s likely the proposal wasn’t appropriately geared toward your boss’s decision-making style, say consultants Gary Williams and Robert Miller. Over the course of several years’ research, the authors have found that executives have a default style of decision making developed early in their careers. That style is reinforced

48

Page 9: Pengim Aise Integrative Case Notes

GLOBAL BUSINESS Integrative Case Notes

through repeated successes or changed after several failures. Typically, the authors say, executives fall into one of five categories of decision-making styles: Charismatics are intrigued by new ideas, but experience has taught them to make decisions based on balanced information, not just on emotions. Thinkers are risk-averse and need as much data as possible before coming to decisions. Skeptics are suspicious of data that don't fit their worldview and thus make decisions based on their gut feelings. Followers make decisions based on how other trusted executives, or they themselves, have made similar decisions in the past. And controllers focus on the facts and analytics of decisions because of their own fears and uncertainties. But most business presentations aren’t designed to acknowledge these different styles--to their detriment. In this article, the authors describe the various subtleties of the five decision-making styles and how best to persuade executives from each group. Knowing executives’ preferences for hearing or seeing certain types of information at specific stages in their decision-making process can substantially improve your ability to tip the outcome in your favor, the authors conclude.

Lax, D.A. & J.K. Sebenius (2003). ‘3-D Negotiation,’ Harvard Business Review, Vol. 81 (11), pp. 64-74.ABSTRACT: What stands between you and the yes you want? According to negotiation experts David Lax and James Sebenius, executives face obstacles in three common and complementary dimensions. The first dimension is tactics, or interactions at the bargaining table. The second is deal design, or the ability to draw up a deal at the table that creates lasting value. And the third is setup, which includes the structure of the negotiation itself. Each dimension is crucial in the bargaining process, but most executives fixate on only the first two: 1-D negotiators focus on improving their interpersonal skills at the negotiating table--courting their clients, using culturally sensitive language, and so on. 2-D negotiators focus on diagnosing underlying sources of value in a deal and then recrafting the terms to satisfy all parties. In this article, the authors explore the often-neglected third dimension. Instead of just playing the game at the bargaining table, 3-D negotiators reshape the scope and sequence of the game itself to achieve the desired outcome. They scan widely to identify elements outside of the deal on the table that might create a more favorable structure for it. They map backward from their ideal resolution to the current setup of the deal and carefully choose which players to approach and when. And they manage and frame the flow of information among the parties involved to improve their odds of getting to yes. Lax and Sebenius describe the tactics 3-D negotiators use--such as bringing new, previously unconsidered players into a negotiation--and cite examples from business and foreign affairs. Negotiators need to act in all three dimensions, the authors argue, to create and claim value for the long term.

DISCUSSION QUESTIONS1. List the merits/demerits of each viable alternative available to Nurul: i) proceed

with DHL-Pakistan’s HRIS system, ii) proceed with local Bangladeshi vendor, and iii) negotiate with headquarters.

2. What factors should Nurul Rahman consider in analyzing the HRIS dilemma facing DHLB? Be as comprehensive as possible.

3. Rank order above factors in terms of their: i) potential for solving DHLB’s problem, and ii) political importance from the viewpoint of: i) DHLB, and ii)

49

Page 10: Pengim Aise Integrative Case Notes

GLOBAL BUSINESS Integrative Case Notes

regional headquarters. (Hint: Specify two columns). Assign ratings to each cell (High/medium/low priority, or Not known). For a more detailed analysis include the following additional stakeholders: i) Nurul Rahman, ii) DHLB’s Human resource department, iii) Saha, and iv) DHL-Pakistan.

4. Identify patterns that emerge from the above exercise. What is the significance of patterns you have identified vis-à-vis managing headquarters-subsidiary relations at DHL (and, generally, at other multinational firms)?

5. Assuming you are Nurul Rahman, what would you recommend?

TIME ALLOCATIONThis case can be taught in an 80-minute session. One way to conduct this case would be as follows:

Introduction to the headquarters-subsidiary module 5 minutesMerits/demerits and discussion thereof (Question 1) 20-25 minutesFactors Nurul should consider (Question 2) 5-10 minutesRank order of above-mentioned factors (Question 3) 10-15 minutesPatterns and their significance (Question 4) 10-15 minutesFinalize Nurul’s recommendations (Question 5) 10 minutesLessons learned and Follow-up 5 minutes

For a role play, the following schedule would be reasonable:Introduction to the headquarters-subsidiary module 5 minutesAssigning role and responsibilities to the groups 5-10 minutesGroup breakout and preparation for negotiations 15-20 minutesActual negotiations 30-35 minutesDebriefing from group 5 (i.e., External observers) 5-10 minutesLessons learned and Follow-up 10 minutes

CASE ANALYSISI open this case by asking students what recommendation they—as Nurul Rahman—would make to Mr. Saha. This quickly allows students to get involved in the case; it also brings to surface the underlying tension students have been trying to diffuse. Typically, the responses refer to three actions: i) accept DHL-Pakistan proposal, ii) reject DHL-Pakistan proposal and go with local (i.e., Bangladeshi) vendor, iii) negotiate with regional headquarters and DHL-Pakistan for a more favorable adoption of the Pakistan system. Most students will recognize that maintaining status-quo is not really an option for Nurul.

Question 1: Pros and Cons of Each AlternativeThese recommendations allow me to generate three columns, one for each of the three options, which I use to list the pros and cons associated with each option. Generating this list is a simple task (see Exhibit 1).

50

Page 11: Pengim Aise Integrative Case Notes

GLOBAL BUSINESS Integrative Case Notes

After generating this list, I ask each recommending group to quickly summarize the key arguments supporting their choice. I deliberately begin with either of the two “extreme” recommendations (Accept DHL-Pakistan offer; Reject DHL-Pakistan offer). I purposely ignore the group recommending “Negotiate with headquarters” option, and ask it to identify the basis on which it believes it can negotiate with a powerful headquarters. I remind this group that regional headquarters has a clear rationale for requiring HRIS standardization across subsidiaries. (Disagreeing with this rationale is not a valid line of argument because case facts do not support such deviations.) Moreover, Bruce Newton (the regional VP) seems to have made up his mind about which HRIS DHLB should adopt.

Option 1: Accept DHL-Pakistan proposalThe biggest plus for the Pakistan HRIS option is that it has the backing of regional headquarters. If successfully implemented, this HRIS would standardize reported HR data throughout the Asia. Thus, it would fulfill headquarters’ goals and potentially benefit local subsidiaries indirectly. If Pakistan HRIS were successfully implemented/operated in DHLB, Nurul would likely benefit from a “correct” choice! Another pro of this option is that—despite anticipated problems—the Pakistan HRIS already exists. Thus, its adoption will facilitate a quicker reduction of the burden on DHLB’s Human resource department.

On the downside, the Pakistan system was complicated, expensive, and would probably take longer to implement within DHLB. Although DHLB had funds even for the expensive Pakistan HRIS, a judicial use of these monies would be appropriate. Was DHLB justified in spending 5x as much for a comparable (at best) HRIS? The financial outlay here would be DHLB’s biggest line item after salaries. If the HRIS did not serve its purpose, DHLB would have a hard time justifying any other major projects—headquarters’ support or not. It would also constrain HR department’s ability to propose other subsidiary-level initiatives.

Option 2: Reject DHL-Pakistan proposal and go with local Bangladeshi vendorThe local solution was desirable from financial and technical standpoints. One of the key merits of the Bangladesh-developed HRIS was that it could be customized to DHLB’s specific (current and future) needs. In that sense, it would likely be easier to operate. Moreover, the system would cost a fraction of Pakistan HRIS price. Although DHLB could afford the more expensive Pakistan system, a disadvantage of this option was that the system existed only on paper. Thus, the burden on DHLB’s HR was unlikely to be reduced until the local system became operational, in about six months.

Another disadvantage was that this option was at odds with headquarters’ preference. Given the political power headquarters wielded over its subsidiaries, recommending a local vendor would put DHLB in a contest with Bruce Newton, a powerful stakeholder and a useful ally. Moreover, could Nurul convince Saha to accept his recommendation—especially one that was at odds with headquarters’ proposal? Perhaps. But a bigger question was the extent to which this would prejudice future dealings between DHLB and

51

Page 12: Pengim Aise Integrative Case Notes

GLOBAL BUSINESS Integrative Case Notes

headquarters. Was a locally-developed HRIS worth fighting for? Even if DHLB won the argument for going with a local vendor, would the potential political costs be justified? Would DHLB be better off conserving its energy for future endeavors that would require support from headquarters? If the local vendor option fails to deliver the expected results, it could potentially end Nurul’s career at DHLB.

Option 3: Negotiate with headquarters and DHL-Pakistan for a more favorable adoption of the Pakistan systemThe negotiations option demonstrated DHLB’s willingness for a “give-and-take” with other stakeholders: it signaled DHLB’s flexibility to work towards a globally optimal solution. However, compromise could be a solution that no stakeholder—especially headquarters—really wants. Indeed, given Bruce’s apparent psychological commitment to Pakistan HRIS, it is likely that he will deem any deviations to be a suboptimal outcome. In fact, “negotiations” may be perceived as a softer form of challenging headquarters’ “advice” to DHLB. Another disadvantage is that headquarters might not be as involved in negotiating a acceptable solution between Bangladesh and Pakistan. It may have limited time/patience for hammering out the details during negotiations, especially given Bruce’s support for the Pakistan HRIS. If headquarters assumes an arms-length approach to the negotiations, then it will become difficult for DHLB to enforce any promises made by DHL-Pakistan. This ties in with DHLB’s dependence on a subsidiary over which it has no control. Acquiring this control—though headquarters’ involvement—assumes that DHLB can fully anticipate problems arising from the adoption of Pakistan HRIS. Thus, Nurul needs to be very clear about what he/DHLB wants headquarters to do.

Nurul also needs to consider the effect of prolonged negotiations on DHLB’s Human resource staff. The rationale underlying HRIS acquisition was to reduce the burden on HR as soon as possible. By negotiating with two stakeholders, the fulfillment of this objective is delayed . Yet, far from taking off the load, the HRIS issue seems to be creating additional burden for the HR staff. Any recommendation therefore must account for the time element: how long can the HRIS negotiations continue? If the goal is to reduce workload on DHLB’s HR staff, any recommendation must ensure that the intended benefits reach the recipients sooner than later. Indeed, the intent to reduce burden on HR is headquarters’ goal as well, albeit now for the headquarters HR staff. As such, this is a common ground for both DHLB and headquarters, and likely to be a strategic persuasion during negotiations!

Question 2: Factors Nurul Rahman Should ConsiderAt the end of each summary, I push the two groups (Accept DHL-Pakistan offer; Reject DHL-Pakistan offer) in an attempt to uncover the drivers underlying their recommended course(s) of action. Why is a particular driver a plus or minus? What is the appeal, or lack thereof, of a particular driver? And so on. This approach permits me to explicitly identify various factors that Nurul must consider in arriving at a recommendation. The significance of generating a comprehensive list of factors cannot be understated. This is because the list would: i) clarify key stakeholder motivations, ii) highlight stakeholders’ initial positions, and iii) establish stakeholder roles.

52

Page 13: Pengim Aise Integrative Case Notes

GLOBAL BUSINESS Integrative Case Notes

As the decision maker, Nurul’s role is clear. However, the roles of other stakeholders may not be clear, at least initially. The instructor can expose these roles by asking questions that illuminate the power/ influence of each stakeholder. For example, what is Bruce Newton’s role? How important is it for Nurul to have him on board? Why is DHL-Pakistan pushing its HRIS on other subsidiaries? How far can DHLB go its own way if it decides to ignore headquarters’ proposal? How much authority and influence does/might Saha really have? And so on.

The factors that Nurul ought to consider are listed below:Financial outlays

o Initial purchase price and operating costo Potential customization costs

Technical considerationso HRIS’ suitability for DHLB’s particular needso Potential for a speedy solution re: HR bottleneck problemso Ability to automate multiple HR functions at DHLBo Ability to link various HR databases at DHLBo Adaptability to DHLB’s current and anticipated needso Compatibility with HRIS at other Asian DHL subsidiarieso Availability of user- or technical-training manualso HRIS’ ease with respect to future customizationo Country-specific differences between Bangladesh and Pakistano Hard-wired routines in the DHL-Pakistan HRISo Future growth at DHLBo Nurul’s initial doubt about the utility of DHL-Pakistan’s HRIS

Intra-company relationshipso Psychological commitment to DHL-Pakistan’s HRIS o Headquarters’ assurance (to DHLB) and its “…serious backing” for DHL-

Pakistan’s HRISo Relations between DHLB and other DHL subsidiarieso Regional headquarters’ perception of DHLBo Future curtailment of DHLB’s operational and strategic freedomo Potential reprisals from regional headquarterso Technical support required by Asian subsidiaries if Pakistan HRIS was adoptedo DHLB’s dependence on DHL-Pakistan for technical support and future

customizationo Balancing various stakeholder interestso Operational HRIS at DHL-Pakistano Assurances offered by DHL-Pakistan managers regarding their own HRISo Political standing and influence of DHL-Pakistan within the DHL network

Effect on DHLB

53

Page 14: Pengim Aise Integrative Case Notes

GLOBAL BUSINESS Integrative Case Notes

o Effect of “…another corporate struggle” on DHLB’s HR staffo Ability to reduce the strain on DHLB’s HR staffo Ease of implementation for DHLB’s HR staffo User-friendliness to current and future DHLB HR employeeso Operational ease-of-use for DHLB’s HR departmento Role of HR department (“…vital role”) in DHLB’s overall operationso Psychological commitment to HRIS designed by local Bangladeshi vendor

Career implicationso Political fallout of Nurul making a “wrong” choiceo Career-related implications for DHLB staff, Nurul himself, and Saha

Cost reduction initiative at regional headquarterso Ability to fulfill headquarters’ need for regional harmonizationo Ability to reduce the strain on regional headquarters’ HR staff

Question 3: Rank Ordering ConsiderationsTo be useful, the above list of factors should be evaluated as required in the discussion question. To meet that objective, the instructor should offer a mechanism to organize the list. Exhibit 2 (attached) of this note illustrates one such mechanism. The exhibit highlights the divergence between DHLB and regional headquarters. Importantly, the exhibit permits the “Negotiate with headquarters” group to enter the class discussion.

While each group of students will rank order specific criteria differently, two themes are likely to emerge. One, DHLB and Nurul are in general agreement about the decision criteria. (Nonetheless, there is some divergence between them further down the exhibit. This is an interesting point that an instructor may wish to point out: Nurul—while a DHLB employee—has his own compass to follow!) Two, there is considerable disagreement between Nurul and regional headquarters: criteria that are important to Nurul are not as important to regional headquarters, and vice versa.

To illustrate, the cost reduction initiative is the most important decision criteria for headquarters, it is not one of Nurul’s considerations: Nurul is thinking mostly from a subsidiary perspective. The local vendor option seems to be the best value—both in financial terms as well as for its ability to quickly reduce the burden on DHLB’s Human resource staff. Conversely, Nurul’s desire to alleviate the workload of HR staff does not seem to be a factor Bruce appears to have considered. Bruce is probably thinking of how fast the Pakistan HRIS can facilitate his goal of harmonizing HRIS across DHL’s Asian subsidiaries!

Instructors can highlight other discrepancies between the criteria applied by various stakeholders. One implication of this exercise is that a middle ground needs to be found to satisfactorily resolve the apparent impasse between headquarters and DHLB. Identifying a common platform is Nurul’s responsibility—not that of the headquarters, which is unlikely to even see a need for discussion.

54

Page 15: Pengim Aise Integrative Case Notes

GLOBAL BUSINESS Integrative Case Notes

Question 4: Patterns and Their SignificanceThe intent of this question is to explicitly highlight the tension across key stakeholders: DHLB, regional headquarters, and Nurul himself. It is obvious that Nurul is caught between two equally “convincing” but seemingly “divergent” sets of arguments. Clearly, a midrange approach is called for.

This is where the “Negotiate with headquarters” group must be called upon for their substantive take on the case. The challenge for this group—and for Nurul—lies in figuring out where the two sets of preceding arguments begin to converge. Indeed, this convergence will form a basis for persuading headquarters to reconsider its psychological commitment to DHL-Pakistan’s HRIS. Thus, it would be important for Nurul to take stock of any/all available resources and figure out how to leverage them to influence Bruce Newton. After all, it is likely that Saha will ask Nurul for an implementation strategy—especially if Nurul recommends going with a Bangladeshi vendor.

Thus, the instructor must call upon the “Negotiate with headquarters” group for specific negotiations strategies. What should Nurul’s game plan be? How should he persuade Bruce Newton? What position can/should Nurul negotiate from? What are Nurul’s “needs” and what are his “wants”? How might Nurul handle potential resistance from DHL-Pakistan? How should he counter Bruce’s stated support for Pakistan HRIS? Should Nurul have a backup plan for possible future reprisals from headquarters? And so on.

Question 5: Nurul’s RecommendationFrom Nurul’s viewpoint, technical aspects of the HRIS decision support a local vendor solution. Yet, this recommendation is a difficult one for three reasons: i) Pakistan HRIS is currently operational, ii) the amount of time DHL (as a whole) now has invested in the Pakistan HRIS, and iii) headquarters’ clear support for the Pakistan HRIS. The problem is compounded if one considers career repercussions for Nurul if the locally-developed HRIS does not produce the required results immediately. On the other hand, regional headquarters has promised DHLB full assistance, if necessary, vis-à-vis adoption of the Pakistan HRIS. Even though it is hard to see how headquarters can keep its promise, the fact that it has given DHLB this guarantee has a serious implication for Nurul: if Nurul takes this promise lightly (or is not sensitive to it or ignores it), his conduct would likely be seen as a breach of trust in headquarters. Thus given the assurance Nurul has, he should recommend that DHLB adopt the Pakistan HRIS.

As will have been clear from the class discussion, Nurul’s recommendation depends on a combination of elements, and how he ultimately balances conflicting demands imposed by them. Thus, at least to me, Nurul’s recommendation per se is less significant than the process at which it has been arrived. The take-away is to realize that subsidiary managers operate at the interface of diverse stakeholders—who may not be substantively connected with one another (e.g., DHL-Pakistan is unlikely to be thinking about DHLB HR department). Yet, it is these managers’ responsibility to think carefully through various potential ramifications of their supposedly “internal-to-subsidiary” decisions. I

55

Page 16: Pengim Aise Integrative Case Notes

GLOBAL BUSINESS Integrative Case Notes

believe subsidiary managers who can do this and successfully implement their recommendation(s) are candidates for more senior positions (e.g., Country manager).

LESSONS LEARNED AND FOLLOW-UPA wrap-up of this case should involve a brief discussion of factors that are within Nurul’s (or even DHLB’s) control. While neither Nurul nor DHLB can exert full control, any decision Nurul makes will have ramifications throughout the DHL system in Asia. For example, although Nurul cannot control the relations between DHLB and headquarters, his recommendation will have implications for the nature of future relationships between DHLB and headquarters and also between DHLB and DHL’s other Asian (and perhaps non-Asian) subsidiaries. Such system-wide dynamics, which underscore a two-way exchange and a state of constant flux, should be emphasized at the conclusion of the case discussion.

Lessons learnedIn general, there are important lessons here for managing the relationship between regional headquarters and subsidiaries. Although both are part of the same organization, their interests, at least in the short term, often diverge—sometimes significantly. Regional headquarters usually sees things from a quasi-strategic perspective (as it should) and is often more concerned with standardization of (what it believes are) key parameters across its spheres of influence. In contrast, at the subsidiary level, precedence is usually given to more immediate (i.e., operational) concerns. This creates a tension between the two units. Of course, it is not “necessary” that these two units operate as a dichotomy. However, because of the power differential between headquarters and subsidiaries, local decisions are often made after considering regional-level concerns and their repercussions at the local level. Decisions motivated by such political consideration can sometimes become problematic because the headquarters’ authority in many local matters often is implied (i.e., not overt) and may not even appear on any organizational chart.

What happened?Nurul recommended DHLB adopt the Pakistan HRIS, but only after it received headquarters’ reassurance that it would help smooth over potential implementation-related difficulties related to the Pakistan HRIS. Although regional headquarters assured DHLB of its backing, it did not specify the nature of assistance it would provide for the project.

In December 2001, Saha recommended Pakistan HRIS to DHLB’s board. Saha’s recommendation was approved without much discussion, and DHLB committed itself to the project. At about the same time, DHL-Sri Lanka and DHL-Nepal also agreed to adopt the Pakistan HRIS; the HRIS initiative now had a region-wide following.

In late-January 2002, DHLB received the HRIS software as well as newly-developed user and technical manuals from DHL-Pakistan. Despite Pakistan’s assistance, installation of the software ran into trouble from the very start. The manuals were not very descriptive, and DHLB’s Information Technology (IT) department frequently had to contact its counterpart at DHL-Pakistan even for relatively simple installation problems. Even after

56

Page 17: Pengim Aise Integrative Case Notes

GLOBAL BUSINESS Integrative Case Notes

the software was installed, about 3-4 weeks later, troubles with it continued. The lack of manuals meant that DHLB had to refer most problems to DHL-Pakistan.

At a more substantive level, DHL-Pakistan did not incorporate some of the changes requested by DHLB’s HR department. Pakistan claimed that DHLB’s IT department could make the required changes on its own. The IT department countered that it could not. The impasse between the two subsidiaries could not be resolved. For example, it took DHLB numerous hours to figure out some of the bugs in the system that Pakistan had delivered. Fixing these bugs led to a virtual standstill in DHLB’s HR department. However, even these fixes did not satisfy Human resource department’s needs. Less than a month after the Pakistan HRIS was first installed (in end-February 2002), DHLB stopped using it.

By April 2002, the process of ensuring that the modified Pakistan HRIS served its intended purpose was at a deadlock. No one—including the regional headquarters—was satisfied with the outcomes. Repeated communications with headquarters could not help resolve the situation because headquarters was busy with other, more pressing issues. To add to the aggravation, DHLB and DHL-Pakistan differed in their own assessments about the cause of HRIS problems.

By June 2002, the HR and IT managers of DHLB, DHL-Pakistan, and Bruce Newton agreed that an IT expert from Pakistan would fly to Bangladesh and help set up the HRIS in accordance with DHLB’s requirements. The IT expert’s visit took place in later that month. It was expected the updated HRIS system would be running at DHLB within two days. In reality, the visit had to be extended twice because the changes were much more difficult to make than Pakistan had predicted. It took the expert a full week to make the required changes.

Entering DHLB’s company-specific data into the new system took another month. The modified Pakistan HRIS finally became operational in August 2002—almost 24 to 28 weeks after Nurul first recommended its adoption. However, the system’s user-flexibility was still limited: all changes still had to be configured from the technical side. Within four months after the system became operational (in August, 2002), DHLB’s Human resource department started maintaining records of new HR initiatives outside the HRIS because of the cumbersome process of updating the system.

In July 2003, DHLB started searching again for a local software solution to replace the modified HRIS it currently had in place. By this time both of DHLB’s Human resource executives had left the company. One relocated to another country, whereas the other moved to another company with a more structured HR setup. Less than a year later, Saha also left DHLB to pursue better opportunities at another company.

EXHIBIT 1

MERITS AND DEMERITS OF EACH OPTION

57

Page 18: Pengim Aise Integrative Case Notes

GLOBAL BUSINESS Integrative Case Notes

PAKISTAN HRIS LOCAL HRIS NEGOTIATE

MERITS: MERITS: MERITS:

Has headquarters’ support Can be customized to DHLB’s current and future needs

Signals DHLB’s willingness for a give-and-take

Helps headquarters’ goal of standardizing HRIS

Likely, easier to operate vis-à-vis Pakistan HRIS

Ability to do some customizations

May benefit Nurul politically

Considerably cheaper than the Pakistan HRIS

A “working” system (at least in DHL Pakistan)

Quickest way to reduce burden on HR

DEMERITS: DEMERITS: DEMERITS:

Not user-friendly from DHLB view (e.g., hard-wired routines; no manuals)

System does not exist at this time; it is only a plan

Suboptimal, at least from headquarters’ view?

5x more expensive than locally available HRIS

Unlikely to reduce HR department’s burden in the near future

May be perceived as challenging HQ’s “advice”

Designed for DHL Pakistan, not other subsidiaries

Goes against headquarters’ preference. Political costs of this disagreement?

Headquarters might not be as “involved”

Customization might delay implementation at DHLB

Can Saha be persuaded? Will he support this option?

Delays the goal of reducing burden on HR

Is it suitable/flexible for DHLB’s use? Will it work?

Could end Nurul’s career, if the system fails to “deliver”

EXHIBIT 2

STAKEHOLDER ANALYSIS

58

Page 19: Pengim Aise Integrative Case Notes

GLOBAL BUSINESS Integrative Case Notes

HEADQUARTERS DHLB NURUL

Most important

1. Cost reduction Standardize HRIS in the Asia region

Reduce strain on DHLB’s HR staff

Reduce strain on DHLB’s HR staff

2. Reduce strain on HR staff at headquarters

Relations between DHLB and regional headquarters

Relations between DHLB and regional headquarters

3. Psychological commitment to DHL-Pakistan’s HRIS

Financial and non-financial cost of the proposed HRIS

Career implications

Least important /Irrelevant1. Relations between

DHLB and regional headquarters

Harmonization of HRIS across the region

Cost reduction initiative at headquarters

2. Financial outlays for HRIS

Reduce strain on HR staff at headquarters

3. Reduce strain on DHLB’s HR staff

Harmonization of HRIS across the region

INTEGRATIVE CASE 8 THE LG-NORTEL JOINT VENTURE

Analysis: success in joint ventures involves more than being in the right place at the right time with the right technical skills. It also requires people skills in dealing with different cultures. However, sometimes a manager who has a few such skills may be unaware that he or she lacks other skills that may ultimately produce failure for the joint venture. This case covers one such instance.Answers to Questions:

1. Did Nortel make the right decision by reentering South Korea through a JV? What other market entry alternatives did Nortel have?

This is a question in which the answer is not as important as the thought process and the ability to clearly articulate.

2. Discuss the advantages and disadvantages of having a strategic alliance such as the LG-Nortel JV. What are the unique advantages of controlling 50% equity plus one share?

59

Page 20: Pengim Aise Integrative Case Notes

GLOBAL BUSINESS Integrative Case Notes

The students might discuss alliances and how joint ventures deviate from typical alliances. An alliance may involve relationships, sharing of facilities, and specialization on joint projects but a JV involves the ownership of an operation that is shared by two or more organizations. Have slightly more than 50% can give it the same effect of control as if it had 100%.

3. What are the skills and attributes that successful JV managers would ideally possess? Does MacKinnon possess these skills and attributes?

Students may cover several useful skills and attribute of successful JV managers but some of them were clearly present and some were clearly absent in the case of MacKinnon. On the positive side, he was evidently a good listener and he did try to comply with some aspects of Korean culture but he totally ignored others. For example, Asians typically like to reach decisions by consensus but once MacKinnon reached a decision, he did not work to persuade others – he simply used the company’s majority ownership to push things through.

There is one thing that your students might enjoy discussing: he overlooked the socializing aspect of Korean business: however controversial the practice of drinking might be – especially if one is a total abstainer – it is a common way in Korea to build working relationships. You might ask them how they think he should have handled that. He evidently wanted to phase down his involvement in the JV: should he have expedited that by seeking a different position within Nortel?

4. What can MacKinnon do to reduce cross-cultural conflicts within the JV? He is evidently the basis for the conflict. Remind students of the discussion in paragraph three and encourage them to find some alternative in addition to MacKinnon leaving.

5. What can Nortel and LG do to improve the odds for the success of this JV? This is a question in which the answer is not as important as the thought process and the ability to clearly articulate.

INTEGRATIVE CASE 9 OCEAN PARK CONFRONTS HONG KONG DISNEYLAND

Analysis: As MNE’s expand around the globe there will be many instances of the type of situation described in this case. In essence, this involves the larger, better-known, and better-financed MNE moving into a line of business currently occupied by a much smaller local company. In such a case, should the smaller company simply throw in the towel or are there strategies that it may use to survive and perhaps even grow?

Teaching NoteThe “trick” to this case is that students are lead to believe that Ocean Park is doomed. The case is set up such that students are lead to believe that Ocean Park cannot possibly

60

Page 21: Pengim Aise Integrative Case Notes

GLOBAL BUSINESS Integrative Case Notes

compete with the deep pockets of Disney. Yet, according to the chairman, Disney is the best thing that has ever happened to Ocean Park. The opening of Hong Kong Disney has completely changed the dynamics of the tourism industry in Hong Kong. Previously, many of the guests to Ocean Part were local Hong Kong people. Now, the mix has changed dramatically, to a much larger portion of Mainland Chinese. When families, usually with children, come to Hong Kong to attend Disney they want to engage in other activities. As most of them are Chinese nationals, they are not attracted to Chinese cultural events as are the western tourists. They want to experience the modern, western side of Hong Kong and they want their children to have a good time.

In reality, there are examples illustrating that different theme parks flourish when located within close proximity to one another. In Orlando, there are three major theme parks─ Walt Disney World, Universal Studios Orlando, and Seaworld of Orlando. Of course, the Magic Kingdom in Walt Disney World topped the list of attendance among all the theme parks worldwide in 2004. Another interesting fact is that the Universal Studios Orlando (top 6th) and the Seaworld of Orlando (top 9th) also emerged as the North American top10 in terms of attendance in the same year .This connotes that the success of a theme park does not mean the failure of the other theme parks in the same area. The case in Orlando is similar to that in Hong Kong in a sense that all the three theme parks in Orlando have different core competencies. Evidently, Magic Kingdom focuses on Disney’s cartoon characters, while Universal Studio Orlando boasts its thrilling rides and Seaworld of Orlando is regarded as a water park. Similarly, Hong Kong Disneyland will surely allure millions of people from around the world to Hong Kong, who would at the same time be the potential customers of Ocean Park. Chareles Ng Kwong-wai, chairman of the Inbound Tours Operators Association, said Ocean Park would be continued include in its schedule. “We offer one day to Disneyland and one day to Ocean Park in our four-day package, and market response has been good. I don’t see Disneyland replacing Ocean Park… because Ocean Park has long been established as the landmark of Hong Kong.”

The brighter students will pick up on this idea. They will note that Ocean Park may want to cooperate with travel agents to offer a “theme park” tour package to Mainland Chinese tourists.

It is important to note that Ocean Park should not try to “out-Disney Disney” as the chairman put it. That is, Ocean Park should differentiate itself from Disney by focusing on nature, acquariums, Chinese culture, etc. and not try to create characters or fantasy.

“We really want Disneyland to succeed in Hong Kong. They will bring more people to Hong Kong and, also, to Ocean Park. This will be a win-win situation,” said Mr. Thomas Mehrmann with 27 years of international experience in the theme park business and currently chief Executive of Ocean Park. He emphasized that Ocean Park is not intended to go head-to-head with Disney but instead hopes to complement it. Mr. Mehrmann also attempted to distinguish Ocean Park from Disneyland by arousing a sense of indigenous belonging. “We are Hong Kong”, he said. “They are an American import.” “The Park is built on years of Hong Kong tradition that sets it apart from Disneyland6.

61

Page 22: Pengim Aise Integrative Case Notes

GLOBAL BUSINESS Integrative Case Notes

Mr. Zeman stressed that Ocean Park did not want to duplicate “We want to differentiate ourselves markedly from Disneyland, especially on mainland. If we are just the same, why do people have to visit Ocean Park?”

Copyright 2006 South China Morning Post Ltd.All Rights Reserved

South China Morning Post

May 29, 2006 Monday

SECTION: NEWS; Pg. 1HEADLINE: Ocean Park record dispels fears of Disney challengeBYLINE: Anita Lam

BODY: Ocean Park passed a new milestone yesterday, surpassing the record annual attendance set on June 30 last year in less than 11 months, and declared that Disneyland, which it had feared would eat into its patronage, had actually increased attendance at the homegrown theme park.

Ocean Park chairman Allan Zeman said yesterday the new record dispelled any fears about competition posed by the newcomer.

Mr Zeman, who had thought Ocean Park business could drop by as much as 25 per cent when Mickey and Minnie marched into the city last September, said he was thrilled to see the 29-year-old park was gaining in popularity instead.

"A year ago, I would have been happy if we went down only 20 per cent," he said. "We were budgeting for 25 per cent, because everywhere you go, all the other cities, I don't know any other parks that beat Disney, so that's very surprising."

A spokeswoman from Disneyland declined to comment on Ocean Park's performance, saying the two parks had their own identities and could complement each other to boost tourism in Hong Kong.

Ocean Park recorded its 4,030,001st visitor yesterday, less than 11 months after it set a record of 4,030,000 visitors in the year to June 30 last year.

Most of the growth had come from local visitors, who have made up half the park's patronage since last July - 20 per cent more than in the previous year. Overseas guests account for the rest of the park's visitors, 85 per cent of them from the mainland.

The family of four who broke the record yesterday earned a lifetime pass good for 4,030,001 free visits, plus 4 million candy pieces.

The father, who only gave his name as Mr Chan, said it was his family's sixth visit to the park in the past year. "Ocean Park is closer to the city, and many of their programmes are

62

Page 23: Pengim Aise Integrative Case Notes

GLOBAL BUSINESS Integrative Case Notes

more educational, which poses greater attraction to me than Disneyland," he said. "Its annual pass system also gives more edge over Disney as visitors do not have to finish their tour on one single day, but can go whenever they are free throughout the year."

Only tickets valid for a specific day or for any day within a six-month period are available for Disneyland. But a source close to the park's finance division disclosed recently that the park was planning to introduce annual passes and promotions to bolster attendance, as the number of visitors had fallen short of expectations.

The source said the park, with a capacity of about 30,000, needed to be full every day from now until the end of September to come close to meeting its first-year target of 5.6 million visitors. Estimates from the local travel industry that a daily turnout of at least 25,000 is needed to meet the goal indicate only 1.64 million people have visited the park since last September, a daily average of 7,000, compared to a daily average of more than 12,000 for Ocean Park in the past 11 months.

LOAD-DATE: May 29, 2006

USA TODAY

June 15, 2007 Friday FINAL EDITION

Ocean Park takes on Hong Kong Disneyland; Entrepreneur creates buzz, posts profits

BYLINE: Paul WisemanSECTION: NEWS; Pg. 9A

HONG KONG

Sometimes, beating Mickey Mouse means schmoozing bankers or lobbying the government for a subway line. Sometimes it means pleading with Chinese officials to part with a pair of pandas. And sometimes it means parading in front of the cameras in a jellyfish costume.

Dings to his dignity aside, Hong Kong entrepreneur Allan Zeman is determined to do what it takes to fend off the threat from Hong Kong Disneyland and keep families coming to Ocean Park, Hong Kong's oldest amusement park.

So far it's working. Ocean Park, David to Disney's Goliath, has defied the doomsayers to post record profits. In May, it broke its annual attendance record -- 4.4 million visitors -- with almost two months to go in the fiscal year. "People started believing," says Zeman, brought in as chairman four years ago to salvage the place. "Suddenly, there was this buzz."

63

Page 24: Pengim Aise Integrative Case Notes

GLOBAL BUSINESS Integrative Case Notes

Meanwhile, the Mouse is struggling in a new market. Burbank, Calif.-based Disney won't release figures for attendance or profitability in Hong Kong, and the company did not return phone calls for comment. In a Securities and Exchange Commission filing this spring, Disney reported that business is so weak that Hong Kong Disneyland might have to persuade lenders to refinance its debt.

Formidable competition

It wasn't supposed to be this way. When Hong Kong officials in 1999 cut a deal to bring Disney here, it sounded like a death sentence for Ocean Park.

Since it opened in 1977, Ocean Park had been pretty much the only game in town for parents who wanted a day out with their kids. But the park, owned by the Hong Kong government, had grown shabby, complacent and unsure what it was supposed to be -- an Asian Sea World? A second-rate Six Flags? A Chinese theme park with imitation pagodas?

The 1997 Asian financial crisis and the 2003 SARS outbreak tipped the park into a financial tailspin -- and the Disney threat was looming. Ocean Park CEO Randolph Guthrie warned in 2001 that the park might have to close. The government considered moving it from a hillside on Hong Kong island's south side to the flatlands below or to Lantau Island, where Hong Kong Disneyland opened in September 2005.

Former Hong Kong chief executive Tung Chee-hwa set about persuading a reluctant Zeman to take the unpaid position of Ocean Park chairman. "I didn't know what a dolphin looked like," Zeman says.

Zeman, who grew up in New York and Montreal, is a legend in Hong Kong, where he has lived for more than three decades. He started in the clothing business. When he couldn't find fashionable restaurants and bars to entertain clients, he decided to develop his own. In the 1980s, he started turning the run-down neighborhood of Lan Kwai Fong into the place Hong Kong yuppies went to party.

Zeman had never visited Ocean Park. When he finally did, he was stunned. "I looked at the billion-dollar view," he recalls. "It was unbelievable. I said, 'If they move this park, they're out of their minds.' At Ocean Park, Mother Nature created this beautiful park for free." When he learned that Tung would give the job to a career bureaucrat if he didn't take it, Zeman relented.

'Can-do guy' does

Ocean Park "needed some TLC," Zeman says. "The staff was tired. The CEO was near retirement. Everything was a problem -- can't do this, can't do that. I'm a can-do guy." He nudged Guthrie out and launched a worldwide search for his successor, eventually landing experienced U.S. amusement park executive Thomas Mehrmann.

64

Page 25: Pengim Aise Integrative Case Notes

GLOBAL BUSINESS Integrative Case Notes

The new team didn't have money for lots of new attractions, so they staged big events instead, making Ocean Park a must-see for families at Halloween, Christmas and Chinese New Year. Zeman gave the place a paint job, upgraded the food and focused on "edutainment" -- nature exhibits with dolphins, pandas and sea lions. "Disneyland is about fantasy. ... It's make-believe," he says. "Ocean Park is educational. It's real. It's about the environment, sea mammals, conservation."

Ocean Park had another edge: It knew the local market better than Disney did. During its 30-year anniversary celebrations, for instance, Ocean Park featured its animated sea lion mascot Whiskers with a bamboo basket filled with traditional buns symbolizing longevity. "No Westerner would ever think of that," says John Ap, associate professor of tourism management at Hong Kong Polytechnic University.

Disney alienated the community with a series of highly publicized blunders. It closed the gates on tourists from the Chinese mainland when the park filled and refused to allow food inspectors on the premises. That imperious display earned Disney a rebuke from its own partner, the Hong Kong government, which owns 57% of the park.

Hong Kong residents, many of whom have visited Disneylands in Tokyo or Anaheim, Calif., were unimpressed with the pint-sized version Disney built here. At 310 acres, Hong Kong Disneyland is the smallest Disney park in the world. (Ocean Park covers 215 acres.) Disneyland's weekend entrance fee is $45 for adults and $32 for children, vs. $24 for adults and $12 for children at Ocean Park every day.

Despite the setbacks, Disney's executives continued to make all the decisions. "They are straitjacketing the product," Ap says. "They want to make sure Disney has a consistent image, but they don't allow enough latitude. They lack flexibility. Ocean Park is at the other extreme. They'll try anything."

Dressing for success

Zeman doesn't hesitate to go with his instincts. When he noticed visitors lingering in front of the jellyfish in the Ocean Park aquarium, he collected 1,000 of the creatures and gave them their own popular exhibit. At the debut of the "Sea Jelly Spectacular," Zeman slipped into a jellyfish costume and hammed it up for delighted newspaper photographers.

Ocean Park has pulled off other coups: The Chinese government agreed to donate two pandas to the park, bringing the park's total to four; the public can see new arrivals Le Le and Ying Ying on July 1, the 10th anniversary of the hand-over of Hong Kong from British to Chinese rule.

Zeman says the Hong Kong government has approved a subway line to Ocean Park, like the one it built for Disney. Zeman has lined up financing and government loan guarantees for a $700 million expansion that will double the park's attractions to 70 by 2012.

65

Page 26: Pengim Aise Integrative Case Notes

GLOBAL BUSINESS Integrative Case Notes

He hopes to win more loyal customers like Hong Kong college student Chu Wai-yan, 20. She figures she has visited Ocean Park 20 times since age 12. "I just bought a season pass," Chu says. "Of course I'll be back." And Hong Kong Disneyland? "I liked it," she says. "But once is enough.

Answers to Questions:1. When confronting multinationals (such as Disney), are local companies (such as

Ocean Park) doomed? This is a question in which the answer is not as important as the thought process and the ability to clearly articulate.

2. In which cell in Chapter 11’s Figure 11.4 would you put Ocean Park?Most students will state that it is pursuing a defender strategy but challenge them to indicate whether that is the most desirable strategy and if not, what strategy should Ocean Park pursue and how.

3. How does the influx of mainland Chinese tourists resulting from Disneyland affect the tourism industry in Hong Kong? Can Ocean Park capitalize on this new phenomenon? (Hint: Check out how other parks surrounding Disney, such as Sea World and Universal Studios, survive in Anaheim and Orlando.) Students should recognize that sometimes what seems to be a problem is really an opportunity. They should be able to make suggestions based on Ocean Park’s identity with sea life – something that is not the major focus of Disney. Also, Ocean Park has more of a Chinese identity and Disney is more U.S.

4. Should Ocean Park intensify or reduce head-on competition with Hong Kong Disneyland?

Encourage all points of view but a student will have an uphill battle explaining why it would be good for the weaker Ocean Park to take on the giant Disney organization.

5. For whatever action Ocean Park chooses, how should Hong Kong Disneyland react?

This is a question in which the answer is not as important as the thought process and the ability to clearly articulate. However, one thing which should be discussed is “why should it be necessary for Hong Kong Disneyland to react” in the sense of doing something different.

INTEGRATIVE CASE 10 GLOBAL KNOWLEDGE MANAGEMENT AT ACCENTURE

Analysis: increasingly, while the value of knowledge cannot be adequately quantified in dollar terms, it is becoming more important than any asset that can be listed on a balance sheet. In fact, the one thing that gives a consulting organization any value at all is

66

Page 27: Pengim Aise Integrative Case Notes

GLOBAL BUSINESS Integrative Case Notes

knowledge and the ability to use it to help clients. One thing that your students will find interesting about this case is that the consulting organization dealt with international business so it would be expected that would especially successful in applying its knowledge of cultural issues within its own organization but that was its weakness.

Answers to Questions:1. Why does Accenture consider knowledge and knowledge management to be its

primary source of competitive advantage? It has made an impressive use of technology to develop a database and capabilities regarding the use of that database.

2. What problems in knowledge management has KX exhibited? Lack of appreciation for regional knowledge, inadequate support for challenges at the local offices, and insufficient allowance for local control.

3. From an institution-based standpoint, what norms and values have inhibited the more effective flow of knowledge through KX?The student should have no problem answering this question. You might ask how such a situation could exist in an organization that specializes in international business consulting. Is this a case of “physician heal thyself”?

4. How would you address the knowledge management problems at Accenture? This is a question in which the answer is not as important as the thought process and the ability to clearly articulate.

INTEGRATIVE CASE 11 Competing in the Chinese Automobile Industry

Analysis: relate this case dealing with FDI to the theme of the chapter - global and regional integration. That should not be difficult to do. The geographic area as well as the population makes it more than comparable to other areas of the world that have benefited from integration. Like China, one thing contributing to the growth of the United States is that all 50 states are integrated into one market and entity. (Note that originally each “state” was regarded in the same way that we today use the word “state” to refer to a sovereign nation – as in the Head of State) The Chinese automobile industry benefits from that type of economic integration.Answers to Questions:

1. Why do all multinational automakers choose to use FDI to enter this industry? What are the drawbacks of using other entry modes such as exporting and licensing? The FDI may involve joint ventures (as in China) or total ownership but FDI provides advantages in terms of quality control and greater control over its markets. However, it should be noted that Honda used it successful exports to China as a means of building up its market there prior to beginning production in China.

67

Page 28: Pengim Aise Integrative Case Notes

GLOBAL BUSINESS Integrative Case Notes

2. Some early entrants (such as Volkswagen) succeeded, but other early entrants (such as Peugeot) failed. Similarly, some late entrants (such as Honda) did well, but other late entrants (such as Ford) are struggling. From a resource-based standpoint, what role does entry timing play in determining performance?When discussing this with your students, consider the possibility that timing is only one of several factors and that the human resource involved will determine when an otherwise brilliant timing will pay off.

3. From an institution-based view, explain the initial reluctance of most multinational automakers to enter China in the 1980s. Why happened that made them to change their mind more recently?As the potential market expanded and as the experience of a few firms proved successful, others were encouraged to enter.

4. If you were a board member at one of the major multinational companies, you have just heard two presentations at a board meeting outlining the two contrasting scenarios for the outlook of the Chinese automobile industry in the last paragraph of the case. Would you vote yes or no for a $2 billion proposal to fund a major FDI project in China?The last paragraph presents a risk (over capacity during an industry shakeout) and an ultimate expansion of the market. Whether one would vote yes or no would depend on the willingness to take risk and that willingness might be affected by the development of a strategy to weather any such shakeout.

INTEGRATIVE CASE 12 KALASHNIKOV: SWORDS INTO VODKA

Analysis: this could be viewed as a happy or sad case, depending on one’s focus. Most people probably would not view the end of the Soviet Union as a tragedy but impact of that end on some people might be so viewed. The case involves a person who served the Soviet Union in its military and created a product known around the world – however, his service may have paid off for the government but not for him. His name now is a means of him surviving as it is used on various products.Answers to Questions:

1. This case deals with two of the arguably strongest “brand images” (if not strict brands per se) out of Russia: Kalashnikov and vodka. Essentially, in the new Russia, General Kalashnikov is becoming an entrepreneur by leveraging his brand to enter the vodka (and other) business. From a resource-based view, predict whether his new vodka venture is likely to succeed.Given that he has lent his name to so many products, it would seem that it will take more than just his name to sell his new vodka. However, this is a question in which the answer is not as important as the thought process and the ability to clearly articulate.

68

Page 29: Pengim Aise Integrative Case Notes

GLOBAL BUSINESS Integrative Case Notes

2. What are the ideal marketing and supply chain capabilities for the small-arms business? What are the ideal marketing and supply chain capabilities for the vodka business?This is a question in which the answer is not as important as the thought process and the ability to clearly articulate.

3. From an institution-based view, explain why Kalashnikov, now 85, is still interested in making money. Although he achieved a high rank in the Soviet military and his government made money from licensing the product of his AK47, Russia did not reciprocate financially and he has a need to continue to earn income.

4. What does the future hold for the small-arms industry? The case study suggests that a decline in crime harms the industry but it is possible that any acceleration of terrorism could expand demand for both offensive and defensive purposes. In any event, this is a question in which the answer is not as important as the thought process and the ability to clearly articulate.

INTEGRATIVE CASE 13 SHAKIRA: THE DILEMMA OF GOING GLOBAL

Analysis: the case has many interesting potential applications and your use of the case may be affected by the interests of your class. It is interesting to note how the case brings an often-observed reality: art and music can transcend differences in language and ethnicity. Songs in a different language do not simply appeal to only those of that language. As people around the world come interact more through technology, it may be that many of the stereotypical characteristics of various ethnic and cultural groups may become more and more blurred and will call for more frequent revisions in marketing strategy.Answers to Questions:

1. A leading concern in international marketing is localization versus standardization, which, in this case, is singing in Spanish versus in English. Discuss the pros and cons of each approach. This is a question in which the answer is not as important as the thought process and the ability to clearly articulate. However, singing in Spanish does not exclude those who only speak English since words for music function in a different role than words used in how to assemble one a product: in one case the words perform artistic affects such as creating an appealing sound (not necessarily an understandable message) but words for utilitarian purposes such assembling a product having nothing to do with artistic beauty and would need to be understood.

2. From a resource-based view, explain what is behind Shakira’s phenomenal success.

69

Page 30: Pengim Aise Integrative Case Notes

GLOBAL BUSINESS Integrative Case Notes

Among points that might be mentioned by students would be her knowledge, contacts with Spanish speaking entertainers, and an ability to project the image that she want others to have of her.

3. From an institution-based view, discuss the informal norms constraining Shakira’s choices. For example, even if she so chooses, can she sing 100% in English? Can she afford to be perceived as having “abandoned” her Colombian middle-class origins for the Latin elite based around Miami and the Bahamas? This is a question in which the answer is not as important as the thought process and the ability to clearly articulate.

4. Does her manifestation in social responsibility play a role in facilitating her commercial success? This is a question in which the answer is not as important as the thought process and the ability to clearly articulate.

5. In what language should Shakira release her next album?This is a question in which the answer is not as important as the thought process and the ability to clearly articulate.

INTEGRATIVE CASE 14 SHAKTI: UNILEVER COLLABORATES WITH WOMEN ENTREPRENEURS IN RURAL INDIA

Analysis: “Doing well by doing good” is an ideal and the Shakti approach may indeed by a win/win situation. HLL is not doing this out of the goodness of their hearts but the case does show that firms can sometimes find creative ways of simultaneously advances their own interests by advancing the interests of others.Answers to Questions:

1. From a resource-based view, what were HLL’s competitive advantages prior to launching Shakti? HLL invested in an extensive distribution system in India that eventually became a source of its competitive advantage. By focusing on efficiencies, reach, and visibility, it was able to stitch together a vast network of retail outlets that were connected seamlessly by the country’s most sophisticated distribution chain. These retailers were loyal because a large portion of revenues typically was comprised of Unilever products. Using this distribution chain, HLL could efficiently provide its products to consumers in a convenient fashion, offering the company an advantage that was the envy of its competitors.

2. From an institution-based view, what are the barriers against ventures such as Shakti?Barriers include the size, number and diversity of the Shakti units in competition with other private or government organization that may adopt a similar approach.

70

Page 31: Pengim Aise Integrative Case Notes

GLOBAL BUSINESS Integrative Case Notes

3. Why is HLL pursuing Shakti? Is Shakti successful? Shakti helps provide HLL with a distribution system that reaches untapped markets and it appears to have been fairly successful.

4. From the perspective of those at the base of the pyramid, what is the impact of Shakti’s activities on poverty alleviation? It should be noted that those directly involved are not among the poorest since the entrepreneurs must make a small initial investment. However, by increasing the economic activity in some of the rural areas, it may ultimately help reduce poverty somewhat.

5. What metrics can Shakti use to measure its impact?Economic metrics would include income and employment levels, before and after Shakti. However, the impact on abstract things such as feelings of self-worth, financial security, etc. may be somewhat measured by survey but they may fail to adequately quantify such non-economic impacts.

6. What should Shakti do to enhance its poverty alleviation impact?This is a question in which the answer is not as important as the thought process and the ability to clearly articulate.

INTEGRATIVE CASE 15 COMPUTIME

1. Analysis: the case brings out the problem of managing change – in particular, reorganization. Reorganization can be a threat and some may try to avoid it by searching for persuasive reasons why it should not be done. Focus your discussion on the part of question six which asks: “If you were the HR manager, what would you do?” Answers to Questions:

2. What is the general environmental situation faced by Computime? The organization is confronted with significant growth opportunities but its current organizational structure makes it difficult to take advantage of those opportunities.

3. What is the rationale behind Bernard’s reorganization idea? How can Bernard expand the business?He needs a flatter organizational structure that is less centralized and better able to respond to customer needs so that the business can expand.

4. If you were an employee of Computime, would you welcome the restructuring plan? Why or why not? What steps can Bernard take to get organizational mThis is a question in which the answer is not as important as the thought process and the ability to clearly articulate.

71

Page 32: Pengim Aise Integrative Case Notes

GLOBAL BUSINESS Integrative Case Notes

5. What are the major challenges facing Bernard in the course of the restructuring? How should he address those challenges? This is a question in which the answer is not as important as the thought process and the ability to clearly articulate.

6. Why does the board of directors have reservations regarding the reorganization plan? Are the reservations valid? What can Bernard do to win them over to his plan? Board members were concerned that the functional expertise would diminish as the best functional heads were removed to lead the new divisions. Board members were also afraid that they could not obtain enough competent leaders and supporting staff to facilitate the consolidation. Furthermore, they were afraid that dividing the company would reduce economies of scale and could create three distinct cultures. On the whole, as the board members said, they felt comfortable about the financial side and the balance sheet and knew that they needed to reinvest in the company. What they wanted to know was whether the reorganization was the right way to reinvest rather than whether they could afford it.

In regards to the validity of the reservations and what Bernard can do, these are questions in which the answer is not as important as the thought process and the ability to clearly articulate.

7. To carry out restructuring successfully, what are some of the HRM issues that Bernard should address? If you were the HR manager, what would you do? This is a question in which the answer is not as important as the thought process and the ability to clearly articulate.

72