Multinational Management Peter Zettinig Spring 2015

Multinational Management Session 6 Overall question in this course: Which factors determine successful management of MNCs? We were looking at the SUB-SUB relationships of the MNCs, how HQs and SUBs relate to each other and how knowledge is a potent explanatory to understand how the MNC became and how it continues to evolve based on its abilities to learn and to transfer this learning to new contexts. Focus on the question: What is the role of uncertainties in the MNC Building on this understanding to reflect how firms deal with uncertainties, how they may approach them in different ways, based on their cognitive mindsets and actions.

Multinational Management Session 6 CASE 4: BRL Hardy: Globalising an Australian Wine Company Global Strategy and Subsidiary Specific Advantages Task. Analyse Christopher Carson’s [1998] challenge as geographical subsidiary manager using the concepts we discussed in relation to different managerial roles in the MNC. How can we explain the conflict between his UK based team and HQ at BRL Hardy’s In Australia? What would you do in his shoes? Groups at work….

Multinational Management Session 6 CASE 4: BRL Hardy: Globalising an Australian Wine Company Global Strategy and Subsidiary Specific Advantages Try to think now, how from a subsidiary point of view advantages can Be created that lend themselves to strengthen the MNC as a whole. How can such a ’subsidiary advantage’ be at the core of the success of the firm? Think how firm-specific, location-specific and internalisation specific-advantages relate to a subsidiary advantage. Lets try to reverse these ideas and see whether they allow us to also understand how ’instant MNEs*’ might emerge… * International New Ventures, Born Globals, etc….

Multinational Management Session 6Managing the Networked MNC: Internal GROUP 9. Read Wiltbank et al. (2006) and present the different archetypes discussed in the prediction/control framework. How do they differentiate our views on strategy? What different behaviours are assumed by these different types? What are the consequences in strategy, organisational structure and processes between these types? Draw on understanding the framework and develop a consulting concept that would allow MNCs to utilise important insights of the framework in order to balance ‘exploitation of given’ with ‘exploration of new knowledge’ – in reference to March’s (1991) seminal article. Session 6 Managing the Networked MNC

Firm Stages: The entrepreneurial start up and the origins of innovation Opportunities are:(a). Discovered? (b). Created? How?

Firm Stages: The entrepreneurial start up and the origins of innovation ALERTNESS?? CREATION ENTREPRENEURSHIP

Firm Stages: The managerial firm and the origins of innovation STRATEGY APPROACH STRUCTURE APPROACH Management

Firm Stages: The entrepreneurial start up and the origins of innovation: If they are not found – they will be made. HOW does an entrepreneur (or entrepreneurial manager) create innovation?

Firm Stages: The entrepreneurial start up and the origins of innovation:

Literature related to different approaches

SYNTHESIS: Building a Global Company from Scratch & Quick Background: During a Saturday afternoon BBQ (and a few glasses of wine) we decide to start a new company and launch a new Vodka brand, which shall become a near instant international success on key markets. Other than a few thousand EUR (one digit) and our own DYNAMIC CAPABILITIES in Strategic Thinking and LEGO PLAY abilities we don’t have much else than the following OBJECTIVES: Objectives.Enter the local markets of HELSINKI, STOCKHOLM, OSLO, MOSCOW, LONDON, BERLIN, WARSAW, PRAG, BUDAPEST, BUKAREST, VIENNA, PARIS, MILANO, TOKYIO, SYDNEY, BEIJING, SHANGHAI, HONG KONG, RIO, L.A. and NEW YORK. Position it as the ultimate exclusive VODKA BRAND. Limit its production to initially units (year one; double that in year two; sell bottles in year 3). Limitations:We don’t know anything about production nor marketing of such products. We don’t have money, really. Picture:In 2018 you are invited as alumni of A! to give a guest lecture reviewing the enormous success of your business. What is the story you are going to tell the class of MUMA? The trick might be found outside the box. Follow the white rabbit.

Multinational Management Session 6Managing the Networked MNC: External GROUP 10. Review literature on ‘Change Management’. What are the most common themes, challenges and solutions found in different approaches to managing change? How does this ‘practice oriented literature’ compare with the ideas by Farjoun (2010) who sees stability and change as a duality, making them interdependent and reciprocally necessary. Drawing on your evaluation build a synthesis of approaches that a CEO could introduce in order to facilitate major strategic change being accepted and implemented in their firms. Use an existing example or develop your own to illustrate how your model would function in a given setting. Session 6 Managing the Networked MNC

Multinational Management Session 7The evolving MNC The firm needs to be efficient in what it does today, so that ‘R > C’; And: The firm needs to have future ‘R’. What is the problem with future Rs? Session 7 Uncertainty and Evolution of MNC

Multinational Management Session 7The evolving MNC Risks Uncertainties Ambiguities Session 7 Uncertainty and Evolution of MNC What are the differences conceptually?

Multinational Management Session 7The evolving MNC FACTORSPROBABILITIESKNOWN Risks yes yes Uncertainties yes no Ambiguities no no Session 7 Uncertainty and Evolution of MNC How do firms/actors deal with uncertainties?

Multinational Management Session 7The evolving MNC Session 7 Uncertainty and Evolution of MNC Uncertainties and the MNC: Nordic MNC, business unit in consumer branded food products, different subs in many countries, many different entry modes used…from M&A to joint ventures, to WOS to licensing. Challenge: New Product Development (packaged branded food products) in Scandinavia: Which new product ideas to develop into projects, which ones to launch? Background: The development of new products is rather easy and technologically not too difficult and the costs are rather low; however, the launch phase is very expensive…and the closer you get to the launch the more the costs rise…

Multinational Management Session 7The evolving MNC Session 7 Uncertainty and Evolution of MNC Which new product ideas to develop into projects, which ones to launch? Background: The development of new products is rather easy and technologically not too difficult and the costs are rather low; however, the launch phase is very expensive…and the closer you get to the launch the more the costs rise…the opportunities to change things get lower… Costs Opportunities TIME Costs Opportunities for changes in project Idea Stage NPD Stage Pre- launch Launch

Multinational Management Session 7The evolving MNC Session 7 Uncertainty and Evolution of MNC Which new product ideas to develop into projects, which ones to launch? Costs Opportunities TIME Costs Opportunities for changing Idea Stage NPD Stage Pre- launch Launch Discuss:What to do about ’new product development’? How to select NPD projects? Kill – NoKill decisions, when, implications… What do you think the responsible manager for NPD in Scandinavia would do to create a ’system that allows to manage risks and uncertainties?’

Multinational Management Session 7The evolving MNC Session 7 Uncertainty and Evolution of MNC Which new product ideas to develop into projects, which ones to launch? What do you think the responsible manager for NPD in Scandinavia would do to create a ’system that allows to manage risks and uncertainties?’

Multinational Management Session 7The evolving MNC Session 7 Uncertainty and Evolution of MNC Which new product ideas to develop into projects, which ones to launch? What do you think the responsible manager for NPD in Scandinavia would do to create a ’system that allows to manage risks and uncertainties?’

Multinational Management Session 7The evolving MNC Session 7 Uncertainty and Evolution of MNC Which new product ideas to develop into projects, which ones to launch? What do you think the responsible manager for NPD in Scandinavia would do to create a ’system that allows to manage risks and uncertainties?’

Multinational Management Session 7The evolving MNC Session 7 Uncertainty and Evolution of MNC Which new product ideas to develop into projects, which ones to launch? What do you think the responsible manager for NPD in Scandinavia would do to create a ’system that allows to manage risks and uncertainties?’

Multinational Management Session 7The evolving MNC Session 7 Uncertainty and Evolution of MNC Which new product ideas to develop into projects, which ones to launch? What do you think the responsible manager for NPD in Scandinavia would do to create a ’system that allows to manage risks and uncertainties?’

Illustration: A typical stage/gate model. (This one by course participant!)

Multinational Management Session 7The evolving MNC Session 7 Uncertainty and Evolution of MNC Which new product ideas to develop into projects, which ones to launch? What do you think the responsible manager for NPD in Scandinavia would do to create a ’system that allows to manage risks and uncertainties?’ Discuss:What do we get with this approach? Why are these approaches so popular? Think of the decision maker – the person responsible!

Multinational Management Session 7The evolving MNC With other words: The firm needs to be efficient in what it does today, so that ‘R > C’; And: The firm needs to have future ‘Rs’. Session 7 Uncertainty and Evolution of MNC This is what ’good managers’ are rewarded for: Exploitation behaviour: systematic reasoning, efficiency seeking, Performance measuring, incremental improvements, Rationalising, cost reduction, standardisation… …avoiding uncertainties, minimising risks. This is what ’entrepreneurs’ often are associated with: Exploration behaviour: Experimenting with ideas, new Technologies, new business models, strategies, systems,…taking risks. See: March, 1991

Multinational Management Session 7The evolving MNC Session 7 Uncertainty and Evolution of MNC This is what ’good managers’ are rewarded for: Exploitation behaviour: systematic resoning, efficiency seeking, Performance measuring, incremental improvements, Rationalising, cost reduction, standardisation… …avoiding uncertainties, minimising risks. This is what ’entrepreneurs’ often are associated with: Exploration behaviour: Experimenting with ideas, new Technologies, new business models, strategies, systems,… See: March, 1991 Not to forget ballance! Organisational systems which pursue exploitation without Exploration are likely to find Themselves trapped in sub- Optimal stable equilibria. Exclude exploitation and suffer The costs of experimentation Without gaining many of the Benefits of future returns But how to find it in an organizational context?

Multinational Management Session 7The evolving MNC Session 7 Uncertainty and Evolution of MNC Which new product ideas to develop into projects, which ones to launch? What do you think the responsible manager for NPD in Scandinavia would do to create a ’system that allows to manage risks and uncertainties?’ WHAT IS THE PROBLEM AT HEART? (Compare: Ansoff Matrix)

Multinational Management Session 7 Uncertainty and Evolution of MNC What should the firm do in order to secure that not only incremental innovations are developed but also radical and disruptive can emerge?

Multinational Management Session 7 Uncertainty and Evolution of MNC In order to implement such ’balanced innovation systems’ within firms there is a need for managing change.

Multinational Management Session 7The evolving MNC Requirements? What is important to: Be viable today (= make revenues, pay bills, etc)? - efficiency…. where from? …. Organisational routines. What is important to: Be viable tomorrow (= deal with changes in the environment, future)? - differentiate, … adapt to new environments, innovate….dynamic capabilities. Session Uncertainty and Evolution of MNC Sasaki, Zettinig & Sandberg (2013) WIP.

WRAP UP

ASSESSMENT? Multinational Management Session 8 What do we try to accomplish in this course? 40 The basic principle is simple: Pass the course: You give enough evidence of your knowledge of key concepts through all relevant assignments/assessments. Satisfactory - ok: You show that you can use these concepts in a meaningful manner by applying them to managerial situations. You provide evidence that you can analyse theoretical arguments. Good to excellent: On top of previous you are able to evaluate situations with given knowledge and suggest alternative courses of action. You develop a synthesis of conceptual views.

Multinational Management Session 6 What do we try to accomplish in this course? 50 Which factors determine successful management of MNCs? How to deal with complexity of factors, idiosyncrasy and contextual change? With other words: What makes a good theoretical contribution – which is practical? Three main questions*: WHATor which factors (variables, constructs, concepts) to include and which ones not? - Comprehensiveness (i.e. all relevant factors considered) - Parsimony (i.e. Which ones to eliminate because they add little additional understanding/explanation) HOWare identified factors related? (e.g. Boxes and arrows) WHYare they chosen? Which psychological, economic, dynamic or social reasons justify their inclusion? *Whetten, 1989; Corley & Gioia, 2011

Multinational Management Session 6 What do we try to accomplish in this course? 55 Which factors determine successful management of MNCs? How to eat an elephant? Session 1.Understand why the MNC exists. Session 2.The role of strategy and structure in MNCs. Session 3.Entering new markets. Session 4.MNCs knowledge base. Session 5.Headquarters and subsidiaries. The MNC as a network. Session 6.Uncertainties. Managing change. GROUP WORK:Define research questions which should allow us to capture the learning for each of these topics. (UNDERSTAND/USE/CREATE)

GLOBAL MANAGEMENT 75 Developing Exam Questions (GROUP WORK). 1.Make a list of most important ’topics or concepts’ – Choose top 3 2.Develop exam questions: - Understanding - Application and Analysis - Evaluation and Synthesis CLASS DISCUSSION ON FINAL QUESTIONS.

GLOBAL MANAGEMENT 75 Exam Questions # 1.

GLOBAL MANAGEMENT 75 Course Evaluations

75 Overall question in this course: Which factors determine successful management of MNCs? QUESTIONS & COMMENTS OVERALL THANK YOU! It has been a pleasure to share intellectually stimulating time with you!