Transnational Management IBUS 703 WS 2016/2017 Dr. Raghda El Ebrashi Assistant Professor of Strategic Management

Agenda Agenda for the Introductory Lecture: Introductions Course Outline Overview Chapter one: An Introduction to Transnational Management

Chapter One Chapter One: An Introduction to Transnational Management International Management is defined as a process of accomplishing the global objectives of a firm by: –Effectively coordinating the procurement, allocation, and utilization of the human, financial, intellectual, and physical resources of the firm and across national boundaries –Effectively charting the path towards the desired organizational goals by navigating the firm through a global environment that is not only dynamic but often very hostile to the firm’s very survival.

TNM is about understanding: Where do you locate what type of activity in which way, and what effect does this have on firm and environment? So, in other words it addresses the questions of: Why, when, and how does a business firm (as an organization) decide to “go international” including the expansion and reduction of such internalization? Why, when, and how is organizational behavior –covering mission, objectives, strategies, structures, staff, and processes [particularly, decision-making] internal, and external transactions and relations, performance, impact, etc. – altered by internationalization. Chapter One

International Strategy

Source: Chapter One

The Historically Indigenous Firm Cost-Reduction Motives Strategic Motives Market-Seeking Motives Chapter One Motives to Go International

Cost-Reduction Motives:  Reduce labor costs (earlier China, Taiwan, Singapore & Hong Kong took the lead; but were later replaced by Malaysia, Thailand & Indonesia).  Reduce transportation costs  Reduce overall costs via favorable host-country incentives or inducements  Relocate to less ecologically and environmentally friendly countries to reduce costs of adherence or compliance Chapter One

Strategic Motives:  Serve as a means for transferring & taking advantage of host country’s specialized assets, knowledge & capabilities  To diversify strategic risk  To meet demand more quickly, good PR with host country customers & government., improved product &/or service.  To follow Bandwagon Effect (when firms venture abroad to follow their major competitors)  Vertical Integration need (to secure suppliers & resources)  To make use of Cross-Subsidization Effect (using profits generated in one market to compete in another market)  To tap into the “Innovation Culture” or where knowledge resides

Economic: Trade Agreements Trading Blocs GNP/Wages Inflation Legal: International Law Host Country Laws Home Laws International Piracy Infrastructure: Communications Internet Transportation Technology Cultural: Customs Values Language Religion Political: Governments Ideology Stability Civil Strife The International Company Economic: Trade Agreements Trading Blocs GNP/Wages Inflation Legal: International Law Host Country Laws Home Laws International Piracy Infrastructure: Communications Internet Transportation Technology Cultural: Customs Values Language Religion Political: Governments Ideology Stability Civil Strife The International Environment Chapter One Addressing the “Where” question for Managers..

Exporting Contract manufacturing Licensing Franchising Non-equity strategic alliances Equity-based ventures such as wholly- owned subsidiaries and equity joint ventures Addressing the “How” question for Managers.. Modes of Operation for International Business Chapter One

National Culture Organization Culture How cultures affect corporate strategy The Focus of Transnational Management

Any Questions? Dr. Raghda El Ebrashi Assistant Professor of Strategic Management Office Location: B5.333