(VERBEKE, 2009) CAPÍTULO 12: ENTRY MODE DYNAMICS 2: ALLIANCE PARTNERS

Benefits: they allow firms to share risks and costs (R&D costs), they allow firms to benefit from their partner’s
complementary resources, and they allow the quicker development of capabilities to deliver products and
services valued by the output market.
Advice: keep developing FSAs independently and avoir a vicious cycle of dependency on the partner
Key principles:
- Collaboration is competition in a different form
- Harmony is not the most important measure of success
- Cooperation has limits. Companies must defend against competitive compromise
- Learning from partners is paramount
Why Asian MNEs tended to win the learning race:
- Intrinsically more receptive and more willing to put effort into learning
- They view alliances as an opportunity to develop new FSAs, not only as a tool
- They have clear learning objectives
- Complex, tacit process knowledge Asian MNEs’ contribution to alliances
The Asian partner firm can enter markets on itw own and compete outsite.
The challenge is to share enough skills to create advantage vis-à-vis companies outside the alliance while
preventing a wholesale transfer of core skills to the partners. Laggard and new comers
Variables: mobility, embeddedness
Dark side of alliance: dependence, exploitation and abuse. High levels of trust make a relationship more
vulnerable to bounded reliability, whether in the form of benevolent preference reversal or opportunism.
Safeguards:
1. Regular re-evaluation of the alliance relationship
2. Continued focus on profitability rather than volume
3. Continued attention to alternatives
4. Swapping hostages
5. Setting and reassessing common goals
6. Avoiding vicious cycles of suspicion and the resulting buildup of bounded reliability
Useful in international context because:
1. More differences in the goals of the alliance partners
2. Higher distance is a driver of suspicion
3. More effects in the realm of resource combination
Reasons the MNE is better equipped to win the learning race:
1. A systematically stronger MNE intent to learn from the partner
2. Better preparedness of the MNE to identify valuable learning opportunities
3. Learning routines underlying the MNE’s learning capability
International alliances are formed when an MNE is unable to replicate the same of equivalent FSAs as those
provided by a foreing alliance partner within an acceptable time frame or cost structure.
Alliances over Merger or acquisition (M&A) when two conditions are satisfied:
1. Each firm needs only a subset of the resources/FSAs held by the partner
2. It is difficult to dispose of the prospective partner’s unusable resources because those are firm
specific
Alliance can help link the MNE’s FSAs with location advantages abroad of other coveted resources in 2
ways:
1. Alliance facilitate access to the location-bound FSAs (difficult to transfer to other affiliates across
geographic space, but providing benefits of national responsiveness) of the local partner
2. Facilitate the combination of the MNE’s non location – bound resources and existing FSAs with the
equivalent resources of the partner to create new non-location-bound FSAs (easily transferable
and deployable across borders in foreign affiliates, and providing benefits of global exploitation,
typically through scope economies)
New concept  Alliance-specific advantages (ASAs), which cannot be classified using the old distinction
between endogenous FSAs (originating inside the firm) and exogenous location advantages (origination
outside the firm). It has international exploitation potential, is embedded in alliances and cannot be simply
transferred to the individual partner firms.
New concept  Susidiary-specific advantages (SSAs). It has international exploitation potential, is enbedded
in susdiriaries and cannot be simply transferred to the rest of the MNE network.
Transferable advantages: can be transferred to another economic actor in another location (treat these two
elements separately). E.g. FSAs (SSAs, ASAs are transferable to other locations but not to other economic
actors).
Limitations of to learn more from your partner than your partner learns from you:
1. Senior managers may overlook the important goal of creating ASAs.
2. Dysfunctionalities: may be instrumental to a vicious cycle of ever-increasing bounded reliability
problems
3. It insufficiently addresses the impact of culture on alliance dynamics.

(VERBEKE, 2009) CAPÍTULO 13: ENTRY MODE DYNAMICS 3: MERGERS AND ACQUISITIONS

The observed trend towards international mergers and acquisitions are so called global mega mergers. A
general belief persists in many industries that increasing internationalization in the sense of growing
interdependence of markets and increasing market share in the world economy will lead to economies of
scale. Empirical research reveals that several industries characterized by increasing internationalization
have actually also witnessed decreasing levels of market share concentration over the past half-century.
Creating value through M&A is difficult due to purchase price premiums and post integration barriers.

Comparative advantage argues that specific production activities will become concentrated in those
countries that possess advantages relative to other countries. However it does not account for economies of
scale.

Herfindahl index is a measure of market share concentration. The index is smaller than – or equal to – the
number 1.0. A high number reflects a high degree of market share consolidation. If one firm commands the
entire market the index is equal to 1. A lower number implies a low level of concentration. The index is
calculated by 1/(# of companies).

List of Management biases:

1. Top Line obsession

a. Senior management focuses too much on growing revenues rather than profits.
Performance incentives are often tied to revenue.
i. Principal-Agent problems
2. Stock Price Exploitation
a. Firms often engage in M&A transactions if the stock is overvalued
b. In order to maintain an elevated stock price management promises large synergies
3. Grooved Thinking
a. Senior Management will often follow the traditional mind set within an industry even if it has
become obsolete
4. Herd Behavior
a. Senior manager tend to follow and imitate the actions of their main competitors, especially in
oligopolistic industries
5. Personal Commitments
a. Individual senior managers may hold fast to their own personal views even though they are
underperforming
6. Trust in Interested Parties
a. Outside parties such as investment bankers and consultants can be motivated by their own
self-interest of earning fees and commissions.
List of Alternatives to M&A:

1. Pick up and Scraps

a. Spin-offs and divestments, which arise from the mega-M&As of other companies, can offer
profitable growth opportunities
2. Stay Home
a. Man companies have ample opportunity to improve their competitive position locally, rather
than pursuing large-scale interregional M&As
3. Keep your eye on the ball
a. Companies can improve their competitive position by remaining focused on developing and
exploiting their key FSAs
4. Make Friends
a. Strategic Alliances offer an alternative expansion trajectory, often with less resistance
internally and from external parties such as regulators
5. Appeal to the referee
a. Assuming a company cannot / will not pursue a mega M&A it may be able to slow those of
its competitors by calling on regulators to review antitrust implications
6. Stalk your target
a. In industries where first-mover advantages associated with international market expansion, it
may be best to wait and observe others testing the water rather than quickly entering new
markets through M&A.
7. Sell out
a. If consolidation is economically justified it may prove more profitable to be the seller rather
than the buyer given price premiums and integration difficulties

Dual post-integration approach

1. Most competent individuals in charge of divisions

2. Cross border integration of operations through international product-type divisions with clear
leadership

Severe post M&A integration problems can therefore be expected when the distance between locations is
large. There can be problems even around completely transferable FSAs.

(VERBEKE, 2009) CAPÍTULO 15A: INTERNATIONAL STRATEGIES OF CORPORATE SOCIAL RESPONSIBILITY Y

Dunn and Yamashita´s idea

Corporate social responsibility (CSR) refers to good citizenship by the firm, while citizenship can be viewed
as the equivalent of a cost increase, it can also be an opportunity to develop FSAs and improve
performance. (DOING GOOD, DOING WELL)

THE AUTORS FOCUS ON HP CSR EFFORTS (LA EMPRESA DE COMPUTADORAS), PARTICULARLY

ITS I-COMMUNITY INICIATIVE IN THE KUPPAN REGION OF INDIA.

3 Areas of CSR

1. Privacy: advocating personal information of consumers

2. Environment: minimize their ecological impact
 3. E-inclusion: use technology to improve people´s access to both social and economic opportunities

The first business practice applied is uncovering a need and quickly developing a prototype solution

2 business practice: fielding a diversely talented team (management knowledge, expertise in government
affairs)

3 business practice: adopting a system approach, involve extant FSAs, technology and resources (human
and others)

4: creation of a leading platform, refers to a standardized product

5: building an ecosystem, stakeholders with interest in long-term solutions

6: set a deadline for the project, keeps all participants in the partnership focused

7: ¨solving, stitching and scaling¨

Four key phases of project development:

1. Establish credibility
2. Gathering resources, evaluating solutions and training stakeholders
3. Help local partner decide which solutions to deploy
4. Community leaders are identified, and power and knowledge are transferred to local participants

Teaching leaders new ways to lead may be one of the largest competitive benefits of the initiative.

MNE activity cannot replace the role of the government in terms of providing public goods such as basic
education, general infrastructure and enforcement of the rule of law, which are really preconditions to be
fulfilled for any HP-type initiative to come to fruition.

Good citizenship efforts in the least-developed countries may therefore still need to take the form of
PHILANTROPHY until a minimum baseline of institutional infrastructure is developed.

Richard Locke and Monica Romis

MNE CSR efforts to improve labour standards, MNEs need to go beyond monitoring suppliers for compliance
with labour codes of conduct: dangerous working conditions, poor wages and child labour.

Nike developed the management and working conditions audit (M-audit): hiring practices, worker treatment,
worker-management communications and compensation.

This strategy acknowledges that mere monitoring of suppliers should be supplemented with collaborative
initiatives to transfer work-place and human resources management best practices among suppliers.

Sushil Vachani and N. Craig Smith´s

Drug pricing in developing countries

The concept of fair trade means that vulnerable producers are given prices for their production that will allow
them a minimum level of economic security and sustained self-sufficiency, and will empower them as
legitimate economic participants in international supply chains.

Most CSR pricing involves the MNE lowering prices, often by adopting differential pricing benefiting poorer
customers less able to pay

To improve access to drugs in developing countries:

1. Drug donation
2. Out-licensing: a host country manufacturer produces the drugs under license
3. Differential pricing: selling the same product at different prices in different markets

Dunn and Yamashita

 CSR initiatives should be aligned with MNE strategy and build upon the company´s FSAs
if these initiatives are to be sustained in the longer run
 The doing well by doing good approach also increases MNE competitiveness by allowing
the firm to develop new FSAs through participating in CSR initiatives.

One important theme shared by 3 articles: The importance of engaging and partnering with multiple
stakeholders when pursuing CSR projects.

Partnering with appropriate stakeholders may help reduce bounded rationality and bounded
reliability challenges.

First LIMITATION: Focus on CSR solely within the developing/emerging economy context

Second LIMITATION: Lack of attention devoted to the different ways CSR initiatives can develop
within the MNE.

MNE transfers FSAs and other resources to the host environment so as to pursue CSR initiatives.

Third LIMITATION: Lack of attention devoted to bounded reliability in CSR initiatives. The need to
align CSR initiatives with the MNE´s business interests if the initiatives are going to be sustained
over longer periods of time
(VERBEKE, 2009) CAPÍTULO 15B: INTERNATIONAL STRATEGIES OF CORPORATE ENVIRONMENTAL SUSTAINABILITY

 Los dos principales Porter y Van Der Linde dicen: que el gobierno regule los efectos de la
industria en el medio ambiente incentiva a que las empresas se preocupen por buscar maneras de
mitigar estos efectos, así se crean formas innovadoras de utilizar recursos y esto a la larga se
traduce en nuevos FSA’s.
 Se cree que si la regulación ambiental ayuda a las empresas de la forma propuesta, los altos
directivos deberían dejar de ser reacios al tema y preocuparse más por el mismo.
 Proponen el resource productivity model of environmental regulation, que explica como en
cualquier parte de la cadena de valor pueden aparecer ineficiencias al aprovechar recursos. Los
desechos requieren solución.
 La regulación medioambiental genera dos formas de innovación: tecnologías que reducen los
costos de lidiar con la contaminación, y la reducción de la raíz de la contaminación mejorando la
productividad de los recursos.
 Muchas compañías innovan para elaborar productos verdes que no solo ayuden a combatir la
contaminación sino que ayuden a generar ingresos. Por ejemplo los productos eco, productos que
generan ahorro tanto a la empresa como al consumidor y recuden su impacto en el medio ambiente.
 Porter y Van Der Linde describen 5 factores que deben tomar en cuenta al regular el medio
ambiente:
o Crea la máxima oportunidad para innovar permitiéndole a las empresas resolver solas sus
problemas de contaminación
o Las regulaciones deben ser estrictas y deben generar un cambio en el comportamiento de
las empresas
o Les permite entrar de a pocos al mundo del I&D
o Las regulaciones incentivan mejoras en las emisiones
o Algunos países desarrollan culturas de cuidado ambiental antes que otras, lo que las vuelve
pioneras y les permite ser más competitivos relativamente a otros países.
 Cuando las regulaciones son anunciadas pero impuestas luego de un periodo de tiempo, son más
efectivas puesto que les dan espacio a las empresas para adaptarse, este modelo es mas efectivo y
es seguido por países como Escandinavia. Por ejemplo, en USA las anuncian e imponen, mientras
que en Escandinavia las anuncian y tiempo después las imponen.
 George Bush decía que se debían reducir los costos de transacción al transferir tecnologías buenas
para el medio ambiente.

 Se utiliza a Hart y Milstein para respaldar a los primeros: Las empresas deben desarrollar
nuevos FSA a través de innovación ambiental no sólo para ayudar a satisfacer su demanda, sino
también para alimentar la demanda de futuras generaciones. Cuando las regulaciones son
anunciadas pero impuestas luego de un periodo de tiempo, son más efectivas puesto que les dan
espacio a las empresas para adaptarse, este modelo es más efectivo y es seguido por países como
Escandinavia. Por ejemplo, en USA las anuncian e imponen, mientras que en Escandinavia las
anuncian y tiempo después las imponen.
 Schumpeter, un famoso pensador del emprendimiento e innovación, habla de la destrucción
creativa, y hace referencia a este caso. Cuando destruyes la materia que no te sirve debes idear
maneras menos costosas de hacerlo y esto desarrolla capacidades.
 Las MNE’s pueden realizar esta destrucción creativa a través de la transferencia de tecnologías
ambientales radicales, y FSA’s relacionados a través de países. Para esto hay 3 tipos de
economías: desarrolladas, emergentes y sobrevivientes.
o Las desarrolladas son 1 billion (1,000 Millones) de clientes con mucho dinero y se
caracterizan por infraestructura avanzada que es utilizada para manufactura y distribución
rápidas.
o Las emergentes son 2 billions con clientes que principalmente pueden cubrir sus
necesidades básicas pero no tienen mucho poder adquisitivo.
 o Las sobrevivientes tienen 3 billions de potenciales consumidores que en su mayoría
trabajan en el agro y no pueden satisfacer sus necesidades básicas. Cuentan con
infraestructura mínima o inexistente.
o Dependiendo de la industria, es más propensa la destrucción creativa.
 Las oportunidades de negocio aparecen enfocándose en cualquiera de los 3 tipos de economía. En
este caso hacer el bien (doing good) implica estrictamente una condición para ser eficiente/ hacer
bien las cosas (doing well).

 Se utiliza también a Kolk & Pinkse para respaldar a los primeros: Clasifican las estrategias que
podrían mitigar el impacto ambiental que generan las empresas, las cuales son dos:

A través de innovación y a través de compensación. Schumpeter, un famoso pensador del emprendimiento

e innovación, habla de la destrucción creativa, y hace referencia a este caso. Cuando destruyes la materia
que no te sirve debes idear maneras menos costosas de hacerlo y esto desarrolla capacidades. Más
específicamente se dividen en 6 tipos:

o Cautious planners Se preparan para mitigar los efectos negativos sobre el medio ambiente
pero no hacen mucho.
o Emergent planners Se encuentran en la linea de los que cada vez están más motivados
por reducir su impacto pero todavía no han implementado medidas.
o Internal explorers Enfocados en lograr objetivos internos que permitan reducer emisiones
y mejorar eficiencia de energía.
o Vertical explorers Tienen muy arraigado dentro de su cadena de abastecimiento que
deben mitigar el impacto ambiental.
o Horizontal explorers Buscan mitigar su impacto ambiental fuera de su Mercado actual.
o Emission traders Buscan participar en proyectos donde se mitiguen los efectos negativos
sobre el medio ambiente y participant en mercados de emisiones (mercados donde se
transan capacidades de emisión de CO2, como el que aparece tras el protocolo de Kyoto)
 El cambio climátio genera dos problemas: business risk y business opportunities. Si las empresas
optan por atacar business risk, lo harán a través de compensación; y si buscan atacar una business
opportunity, lo harán a través de innovación.
 Las más comunes son las compañías cautious planners y las emergent planners.
 Estos autores proponen que si bien el ser innovador o compensador ayuda a hacer más eficiente la
empresa, el ser compensador no afecta directamente a los FSA’s (a menos que sea una empresa
que se especialice en el mercado compensador como los traders de emisiones). Entonces, para
alcanzar objetivos que le hagan bien al medio ambiente y se desarrollen FSA’s, lo mejor sería ser
innovador.

 Las principales limitaciones para hacer efectivas estas acciones que mitigan el impacto
ambiental en las MNE’s son:

o Es difícil transferir estas actividades de un país a otro puesto que los países en regulación y
cultura empresarial son distintos
o Existe una falta de interés por enfocarse en desarrollar FSA’s que surjan de una cultura
verde.
o La tercera limitación está relacionada a la escasa práctica de directivos respecto al cuidado
ambiental. No se suele hacer, por lo que no se incentiva a hacerse.
(CAVUSGIL, KNIGHT, & RIESENBERGER, 2013), CAPÍTULO 13: GLOBAL SOURCING

 Outsourcing: refers to the procurement of selected value-adding activities, including production of

intermediate goods or finished products, from external independent suppliers.
 Business process outsourcing: occurs when firms procure, from an external supplier, such services
as accounting, human resources, etc.
 BPO can be divided into 2 categories:
1. Back office activities: include internal, upstream business functions such as payroll and billing.
The back office is comprised of the areas that don’t directly generate revenue for the business,
but provide vital support and administration.
2. Front office activities: include downstream, customer-related services such as marketing and
technical support. Front office staff are the people who directly generate revenue for the
company. The front office largely consists of client-facing roles.
 2 key decisions when undertaking outsourcing:
1. Outsource or not?
o Decide between internalization or externalization
o Internalization  when you want to control the company’s business and secrets.
o Externalization lower costs
2. Where in the world should value- adding activities be located?
o Configuration of value adding activity: pattern of locations where the firm carries out value-chain
activities.
o Many firms configure activities across the world to save money, reduce delivery time, access
factors of production, etc.

Global sourcing
 Global sourcing: procurement of products or services from independent suppliers or company-owned
subsidiaries located for consumption in the home country or a third country. (importar, inward
internationalization)
 Global sourcing is a low-control strategy in which the focal firm sources from independent suppliers
through contractual agreements, as opposed to the high- control strategy of buying from company-
owned subsidiaries.
 Captive sourcing: a type a sourcing. When focal firms source from its own subsidiary.
 Contract manufacturing: an arrangement in which the focal firm contracts with an independent supplier
to manufacture products according to well-defined specifications. The focal firm only does the marketing,
selling and distributions. (nike)

Offshoring

 Offshoring: the relocation of a major business process or entire manufacturing facility to a foreign
country.
 Firms based in advanced economics outsource the most services by volume.

Benefits of global sourcing

 Cost efficiency
 Ability to achieve strategic goals:
o Global sourcing allows the firm to free expensive analysts, engineers and managers from routine
tasks to spend more time researching that contribute more productively to increasing company
performance.
o Global sourcing becomes a catalyst to overhaul organizational processes and company
operations and increase the firms overall competitive advantages.
 Faster corporate growth
 Access to qualified workers abroad
 Increased speed to market
 Access to new markets

Risks of global sourcing

 Lower than expected cost savings: establishing an outsourcing facility con be sometimes expensive.
 Environmental factors: currency fluctuations, poor infrastructure, tariffs and other trade barriers, etc.
 Weak legal system: weak intellectual property laws, etc.
 Low skilled workers
 Risk of creating competitors: as focal firms shares its intellectual property with foreign suppliers 
increase risk of competitors.

Strategies for minimizing the risks of global sourcing

 Go offshore or the right reasons: management should examine tasks and activities in each of the firm’s
value chains and outsource those in which the firm is weak, or can be performed better by others.
 Get employees on board: management should seek employee support to reduce tension.
 Choose carefully between captive operation and contracting with outside suppliers
 Choose suppliers carefully
 Emphasize effective communications with suppliers
 Invest in supplier development and collaboration

Implementing global sourcing through supply-chain management

 Global supply chain: the firms integrated network of sourcing, production, and distribution, organized in
a worldwide scale and located in countries where competitive advantage can be maximized.
 Experienced firms use information and communications technologies to streamline supply chains,
reducing costs and increasing distribution efficiency.
 Specialized software enhances information sharing and improves efficiency.
 In an efficient system, the focal firm and its supply chain partners continuously communicate and share
information.
 Managers seek to reduce moving and storage costs. Internationally, logistics are complex due to wide
geographic distances. The more diverse the firm’s global supply chain the greater the cost of logistics.
 International logistics usually make use of multiple transportation modes, including land, ocean and air.

Global sourcing and corporate social responsibility

 Some people view global sourcing as a loss of local jobs.

 POTENTIAL HARM TO LOCAL AND NATIONAL FROM GLOBAL SOURCING:
1. Job losses in the home country
2. Reduced national competitiveness
3. Declining standards of living