Richard A. D'Aveni, Professor of Strategic Management

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Global Strategy & Implementation

Course Overview and Purpose

Multinational corporations account for about half the productive wealth in the industrialized world. Their importance in the U.S. economy is no less significant: close to three-quarters of the sales revenues of all U.S. corporations are accounted for by U.S. multinationals, and further, about a third of the sales revenues of these U.S. multinationals comes out of their production abroad. They account for 75% of all U.S. exports and 50% of all U.S. imports. Clearly, we are dealing with institutions that are remarkably significant in the world/U.S. economy.

Operation in an international environment gives the manager access to new markets, additional natural resources, and low-cost-factor endowments. More importantly, it opens up new sources of ideas and knowledge to stimulate future innovation. Above all, global markets provide a vast new source of the scarcest of all corporate resources: management talent. On the other hand, these new opportunities present the challenges of managing in more complex, diverse, and uncertain circumstances.

Purely domestic companies operate in a single national environment where consumer preferences, government policies and regulations, and labor union demands are relatively consistent and predictable and where competition is bounded within a single, familiar market. Overall performance is measured in one comparable unit: the local currency.

Unlike the purely domestic company, multinational corporations (MNCs) face diverse and often conflicting demands and pressures--including political risks from various host countries. Unlike domestic companies, MNCs must deal with barriers of distance and time, and differences in language and culture. They must compete on a complex, global playing field. Furthermore, MNCs are required to measure results with a flexible yardstick as the values of currencies fluctuate against each other.

In some instances, firms choose to confront these challenges when they make the decision to expand internationally. In many instances, however, firms have these challenges thrust upon them as their industries become increasingly global in scope. This is especially true for countries that are rapidly opening up their borders. For these firms, global competition is not an option but a necessary survival response to a changing world.

This course focuses on the challenges of developing and implementing strategies in global industries. The aim of the course is to provide participants with a conceptual and practical understanding of the strategic and organizational challenges of multinational corporate management. The types of questions that we address are: Why do firms go aboard? What differentiates a “global” from a “Multi-domestic” industry? How does a multinational company play the global chess game? Why and when do/should companies engage in cross-border strategic alliances? Cross-border mergers and acquisitions? What are the associated risks and how to guard against them? What potential roles can foreign subsidiaries play in the MNC’s global strategy? How do companies choose an optimal global structure? How do companies ensure coordination between the headquarters and its subsidiaries, and among subsidiaries? How do companies manage strategic change from one type of global strategy to another?

In sum, the course addresses the four critical strategic choices that MNCs must make:

  1. Where to compete with the world,
  2. Which products to offer around the globe,
  3. Where to locate the various activities of the firm, and
  4. How to organize to effectively coordinate worldwide activities.

The course takes the firm, which operates across borders as its unit of analysis, and the typical featured decision-maker is a senior manager within a multinational.

Who Should Take the Course and What You Will Get From It

As an outcome of this course, participants are expected to acquire knowledge, skills, and sensitivities that will help them manage effectively in an international business environment. Since virtually all corporations have to deal with global competition in one form or another, this course is intended for students interested in pursuing general management positions in any corporation. The course is well suited for students electing careers in management consulting, strategic planning, general management, and brand management in a global environment. Global Strategy and Implementation is designed for every student who will be involved in managing and advising companies that either compete internationally or which face international competitors.