International Business and the Multinational Enterprise (IBME) - Lecture Notes

IBME Course Overview

  • This module expands on the content covered in the IBGT course from term 1, focusing on the micro aspects of international business.
  • Aims to understand why enterprises expand operations across national borders and the strategies they use to exploit overseas markets.
  • Covers operational aspects of multinational enterprises (MNEs), including:
    • Sourcing and logistics
    • Technology management
    • Protection of intellectual property rights
    • Financial management
  • Tutorials are an essential part of the course.
  • Course runs from weeks 1-5 and 7-11 (no teaching in week 6).

Course Structure

The course is divided into four parts:

  • Part 1: General Framework and FDI
    • Introduction to International Business and general framework (L1-2)
    • Foreign Direct Investment (FDI) (L3-4)
  • Part 2: Strategy and Innovation
    • Strategy and organization of the internationalized firm (L5-6)
    • International Production/Innovation Strategy (L7-8)
    • External sources of knowledge and intellectual property (L9-10)
  • Part 3: GMOs and Entry Modes
    • Internationalization process and global market opportunity assessment (L11-12)
    • Exports and sourcing (L13-14)
    • Licensing, franchising, and alliances (L15-16)
  • Part 4: Business Functional Areas
    • International Marketing (L17)
    • Financial Management (L18)
    • Corporate Governance (L19)
    • International Human Resource Management (L20)

Required Readings

  • L1 is introduction and L11 based on journal articles
  • Collinson Textbook: Collinson, S., Narula, R., Rugman, A.M. International Business. Pearson
    • L2 (Ch 2)
    • L6 (Ch 9)
  • Compiled Textbook: Brown, A.. International Business and the multinational enterprise. Pearson
    • L3-L5
    • L7-L10
    • L12-L16
  • Cavusgil Textbook: Cavusgil, S.T., Knight, G., Riesenberger, J.R. International Business: Strategy, Management and New Realities. Pearson
    • L17 (Ch 16)
    • L18 (Ch 10)
    • L19 (Ch 4)
    • L20 (Ch 17)

Seminar Schedule

The seminar schedule is as follows:

  • Week 1 (starting 27th January): The growth and scope of multinationals
    • Two short case studies: Starbucks and Sony
  • Week 2 (3rd February): International innovation and production strategy
    • Case study: Lenovo
  • Week 3 (10th February): Competing with a multinational through open innovation
    • Long case study: Mercadona
  • Week 4 (24th February): Cameron auto parts early internationalization
    • Long case study: Cameron 1st part
  • Week 5 (3rd March): Cameron auto parts: joint ventures, licensing or exporting
    • Long case study: Cameron 2nd part
  • Week 6 (10th March): Foreign Location choices
    • Case study: Disney locating theme park in France
  • Week 7 (17th March): Cross-border acquisitions
    • Case study: Renault acquired Nissan
  • Week 8 (24th March): Exam review
    • Organization of time in the exam and key topics & How to answer specific exam type question

Multinational vs. Local Firms

  • Foreign investment is increasing, leading to more job opportunities in multinational companies.
  • It is often assumed that working for a multinational provides higher salaries, better career prospects, and international travel.
  • However, there's no definitive answer to whether local or multinational firms are better.
  • Due to shortages of skilled professionals, companies (both local and multinational) are competing to attract and retain talent.

Salaries

  • In traditional industries, local firms tend to pay lower salaries than multinationals.
  • However, in high-technology and services industries, this is different.
  • Local companies in high-tech industries understand that competitive salaries are necessary to attract and retain good employees, resulting in similar pay levels between local and multinational firms.

Career Advancement

  • Multinational companies are known for developing strong business leaders through prestigious management training programs.
  • However, many locally owned companies have improved their internal talent development programs to compete with multinationals.
  • Job seekers must often choose between:
    • A predictable career path in a multinational firm with an established brand.
    • A role in a local company with a steep learning curve, faster career advancement, and no need to relocate abroad.

Work-Life Balance

  • Some companies may require long working hours (60-70 hours per week).
  • This varies depending on home and host market conditions.
  • Employees in such companies may be rewarded with good salaries and quick promotions for achieving results.
  • Excessive overtime can lead to serious health problems.
  • It’s important to research a company’s attitude towards work-life balance before applying for a position and to consider how much personal time you are willing to sacrifice for professional gain.

Questions to Consider

  1. Do you want opportunities to work abroad?
    • Yes – Multinational
  2. Are you attracted to work in high-tech industries?
    • No – Multinational; Yes – Indifferent
  3. How do you value work-life balance?
    • It depends
  4. How quickly do you want to reach top management levels?
    • Quick – Local firm
  5. What is your professional goal?
    • Super-star manager – Multinational