GLOBAL MANAGEMENT

SPRING 2009

Professor Office Office Hours Phone E-Mail Course Web Page Teaching Assistant

John N. Doggett CBA 5.124k Thursdays from 5:10 to 6:10 pm or by appointment (512) 232-7671 john.doggett@mccombs.utexas.edu via Blackboard Emily Anderson emily.anderson@mba09.mccombs.utexas.edu

Course Objectives
The emergence of China, India, Brazil, Russia and a host of other emerging economies has fundamentally changed how we think about global business. This course will help you understand how managers anticipate and respond to competitive pressures in a rapidly changing global marketplace. It will help you enhance your analytical, decision-making and implementation skills in an intense, highly competitive classroom environment. It will also help you understand and apply analytical tools used by managers and management consultants to exploit competitive opportunities and effectively respond to competitive threats. This course will focus on significant international marketing, managerial and operational challenges and opportunities from the perspective of managers with decision-making responsibility in many parts of the world. We will pay significant attention to the impact the growth of the Chinese and Indian economies are having on the rest of the world. We will also explore the impact that Globalization and Sustainability are having on how people manage, work and live.

Leadership and this Course

Each of you must participate in a group case analysis competition during the semester. The goal of this case competition is to give you experience working together under tremendous pressure with a short time frame when the choice of strategies to pursue is not clear. Each of you will be "energetically" questioned by me during the in class case competition. This case competition will help you develop your leadership skills in a number of ways. First, you will learn how to manage groups of peers where each student cannot be the group leader. Second, you will learn to manage a decision making process with inadequate information and time. Finally, by observing and reflecting on the dynamics of your team and your interaction

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with me during the class room competition, you will develop a deeper understanding of what leadership requires.

Materials
Books: I have assigned three books that will help you understand the dynamics of global management. While I have not assigned specific pages for you to read each week, you cannot pass the midterm without reading all three books. Redefining Global Strategy: Crossing Borders in a World Where Differences Still Matter, Pankaj Ghemawat, HBS Press, 2007. China Shakes the World: a Titan's Rise and Troubled Future - and the Challenge for America, James Kynge, Houghton Mifflin, 2006. In Spite of the Gods: The Rise of Modern India by Edward Luce, Doubleday, 2007.

Course Requirements and Grading

Class Participation = 50% This course will require a minimum of 14 hours of work per class. You must spend at least 3 hours analyzing each case and at least 1 hour preparing an action plan that is supported by rigorous analysis for each case prior to class. Each student must also join a study group of fellow students and spend a minimum of one hour discussing each case prior to class. During our class sessions, each student must be prepared to actively participate in the discussion of every case. Your class participation grade will be based primarily on the quality of your comments, not on the quantity. Comments that demonstrate a thorough analysis of the issues presented by each case, an awareness and appreciation of the comments made by fellow students, implementation of the frameworks from the readings that add to the learning process of the class will receive high grades. Comments that ignore the content and flow of the discussion or that reflect inadequate preparation will receive low grades. Group Presentations = 20% During the semester, each of you will participate in a group presentation of cases that are assigned. The group presentations will be held three weeks prior to the last week of class. The group presentation process will require the active participation of each group member in the analysis of the group case, in the development of an action plan and in the development of

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materials to assist the group in making an effective forty minute presentation to the entire class. Group presentation grades will be based upon the quality of analysis, the "do ability" of the action plan, the quality of the presentation and the ability of the group to respond effectively on their feet to the questions posed by members of the class and the instructor. Each group member must actively participate in the presentations. Your classmates will grade each presentation. We will have a full day of presentations. The class will self divide itself into six groups. Three groups will present one case and the other three will present the second case. The groups not presenting will grade the groups presenting. One group for each case will receive an A, one will receive a B and one will receive a C. Your individual grade for group presentations will be the grade that your group receives. Mid-term Exam = 30% Each of you will have the opportunity to spend four hours for reading, analyzing and developing an action plan for a case for a mid-term exam. Examination grades will reflect your success in identifying key challenges faced by the manager, developing a realistic plan of action to respond to the managerial challenges presented by the exam Case and performing in-depth quantitative and qualitative analysis to support your action plan.

Schedule
1. Friday Morning, January 9, 2009 a. Case: b. Lecture: 2. Where Have You Been? Global Management in the 21st Century

Saturday Afternoon, January 10, 2009 a. Note: b. Case: Note on Low-tech Marketing Math

Republic Flour
Study Questions for Republic Flour Mills Case

1. 2. 3. 4.

What business does Republic think it is in? Who are Republic's customers? What are they buying? What business do you believe Republic Flour is really in? What are the Key Factors for Success in the business that they should be in?

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5. 6.

What are their most pressing problems and how much are these problems costing them? What does your break-even analysis (# of bags they need to sell per month to cover their costs) tell you about Republic Flour's condition?

Your Breakeven Analysis must be turned in at the beginning of class. Make sure that you keep a copy for yourself!
7. 8. 9. 10. Should they open their second plant? If not, what should they do with it and how much will your recommendation cost? What are the most realistic options to solve Republic's problems, how much do each of them cost and how much money will each of them make Republic? Do you think this company will be successful? Would you invest your money in it? Prepare an Action Plan that tells me: a. How long can they last before they go bankrupt? b. What should they do and why should they do it? c. What options you considered and abandoned? d. When should they take action? e. How much will it cost and where will the money come from? f. Who will do what to whom when? g. When will results start to show? h. How much money will your strategy make Republic Flour and when will their cash flow turn positive? i. What happens if you are wrong? The Competitive Advantage of Nations

3.

Saturday Morning, January 24, 2009 a. Note: b. Case: c. Case:

Monsanto: Realizing Biotech Value in Brazil Saffronart.com

Study Questions for Monsanto

1. 2. 3. 4.

What are the sources of Monsanto's competitive advantage in agricultural biotechnology and seeds? Why did Monsanto need to implement a delivery based collection system in Brazil? Why was POD successful? Should Monsanto increase its breeding and biotechnology investment in Brazil? Should Monsanto apply the POD system to other countries? Study Questions for Saffronart.com

Saffronart leads the market for modern Indian art and now faces competitors in the market it created. Established in 2000 by the wife and husband team of

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Minal and Dinesh Vazirani, Saffronart.com now faces new internal and external pressures; particularly worrisome was the entry of auction giants Christie's and Sotheby's into the market. The Vazirani's main challenge now is to consolidate their leading position in the market they created in the face of the unpredictable cyclicality of the secondary art market and increasingly strong competitors. Your job is to develop an action plan that tells Vaziranis what to do. Your action plan must answer the following questions: 1. What business is Saffronart.com in and what are its most significant growth challenge and/or opportunity? 2. What should the Vaziranis do and how much time do they have? Be as specific as possible and support your recommended action plan with financial analysis. 3. What will be the economic impact of your recommendations of the economic future of Saffronart.com? Please show me your financial projections that support your analysis and recommended action plan. 4. Friday Afternoon, February 6, 2009 a. b. c. d. Note: Note: Case: Case: An Introduction to Islamic Finance Strategies that Fit Developing Countries

The International Investor WildChina (A)

Study Questions for the International Investor 1. 2. Is Equate an attractive investment opportunity for the sponsors? What are the expected internal rates of return for equity investors? For subordinated debt holders? Are the returns commensurate with the risks? What are the major operating and financial risks? What is the minimum debt service ratio (DSCR) for the term loans only (for total debt including subordinated debt)? When does it occur and why? What is the average DSCR and what does it tell you? DSCR = Cash Available for Debt Service (CADS) / Principle and Interest Average DSCR = # years * DSCR/# years Should the sponsors use a trance of Islamic finance? If so, how big should it be and what form should it take? How would the inclusion of an Islamic trance affect the deal? How would you address these complications? How much of the Islamic tranche should TII underwrite? Study Questions for WildChina (A)

3. 4. 5. 6. 7.

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Mei Zhang, a Chinese born MBA, is the founder of WildChina, a tour company targeting a high-end clientele with unusual and high quality products. After an initial period of success, WildChina is facing the abyss. Mrs. Zhang must reevaluate the opportunity afresh given all that has happened and decide whether her firm is still viable or should be shut down. Your job is to develop an action plan that tells Mrs. Zhang what to do. Your action plan must answer the following questions: 1. What business is WildChina in and what are its most significant growth challenge and/or opportunity? 2. What should the Mrs. Zhang do and how much time does she have? Be as specific as possible and support your recommended action plan with financial analysis. 3. What will be the economic impact of your recommendations of the economic future of WildChina? Please show me your financial projections that support your analysis and recommended action plan. 5. Friday Morning, February 20, 2009 a. Note: b. Note: c. Case: d. Case: Blue Ocean Strategy Emerging Giants: Building World Class Companies in Developing Countries

Global Wine Wars: New World Challenges Old (A) Shangri-La Hotels

Study Questions for Global Wine Wars: New World Challenges Old 1. How did the French become the dominant competitors in the increasingly global wine industry for centuries? What sources of competitive advantage were they able to develop to support their exports? Where were they vulnerable? What changes in the global industry structure and competitive dynamics led France and other traditional producers to lose market share to challengers from Australia, United States and other New World countries in the twentieth century? What advice would you offer today to the French Minister of Agriculture? To the head of the French wine industry association? To the owner of a mid-size, well regarded Bordeaux vineyard producing wines in the premium and super premium categories? What advice would you offer today to the Australian Minister of Agriculture? To the head of the Australian wine industry association? To the owner of a mid-size, well regarded vineyard in the Barossa Valley (a premier Australian wine region) producing wines in the premium and super premium categories?

2.

3.

4.

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Study Questions for Shangri-La Hotels Symon Bridle, the newly appointed chief operating officer of Shangri-La Hotels and Resorts must ensure that Shangri-La's signature standards of "Asian Hospitality" were maintained during its expansion. Your job is to prepare an Action Plan that tells him how to do so. Your Action Plan must answer the following questions: 1. What is the Shangri-La Hotel chain selling and who are its customers? 2. How should Shangri-La compete in Europe and North America? 3. How should Shangri-La manage the delegation of decision making challenge in China? 4. What should Shangri-La do to hold onto its experienced staff without destroying its profitability? 5. What is the financial impact of your Plan of Action? 6. Saturday Afternoon, February 21, 2009

In Class Midterm
7. Friday Afternoon, March 20, 2009 a. Discuss Midterm b. Note: c. Case: Strategy as Active Waiting
CEMEX: Rewarding the Egyptian Retailers

Study Questions for CEMEX: Rewarding the Egyptian Retailers 1. 2. 3. 4. 5. 6. What is CEMEX=s strategy in Egypt? How does the Reward Program fit in this strategy? Why did Llontop choose the Reward Program and not another incentive program for retailers? Did the Reward Program motivate retailers to sell more CEMEX products? What characteristics of the Reward Program do you like the most? And the least? Why? Looking at the Qena dataset, what can you say about the evolution of the program's incentive effects? What are the advantages and disadvantages of specifying quantities of each type of product in retailer targets? Would you think a generic target of dollar sales, or dollar contribution margin, could have been more effective in supporting CEMEX strategy?

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8. Saturday Afternoon, March 21, 2009 GROUP PRESENTATIONS A. B. C. Note: Emerging Giants: Building World Class Companies in Developing Countries Case: HCL Technologies (A) Case: Fu Ji Food and Catering Study Questions for HCL Technologies (A) When Vineet Nayar became president of HCL Technologies, a global IT services business, in April 2005, he knew the company needed drastic change. Since its founding as a hardware company in the 1970s, HCL had grown into an enterprise with $3.7 billion in revenues and a market capitalization of $5.1 billion. The company had 41,000 employees in 11 countries, but it was ill prepared for the increasingly competitive market. With the shift from hardware to software and services, HCL had slipped behind its Indian competitors and multinational companies. . Some of the issues that most concern Mr. Nayar are spelled out on page 13 of the case. Your job is to develop an Action Plan that tells Mr. Nayar what to do. It is crucial that your proposed Action Plan's business strategy be supported by your proposed Action Plan. As you prepare your Action Plan, please make sure that you answer the following questions: 1. 2. 3. 4. Who are HCL's customers and what is HCL's strategic competitive advantage? 20% Which competitors should Mr. Nayar fear the most? Perform a gap analysis of HCL and this competitor. 20% What should be HCL's strategy going forward? What are the challenges that HCL will face to execute your recommended strategy? What must HCL do to overcome these challenges? 30% What will be the economic impact of your proposed Action Plan on HCL? Please be very specific. 30% Study Questions for Fu Ji Food and Catering Fu Ji, the largest corporate caterer in China, is at a crucial point in its history. Fu Ji has enjoyed phenomenal growth as the corporate catering market in China

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develops. But that growth has entailed a transition from a single restaurant to a restaurant chain, then to a catering business. Mr. Wei Dong, Fu Ji's founder, must decide whether Fu Ji should continue growing, and if so, develop a business and financial strategy that will maximize growth and profitability. Some of the issues that most concern Mr. Dong are spelled out on page 7 of the case. Your job is to develop an Action Plan that tells Mr. Dong what to do. It is crucial that your proposed Action Plan's business strategy be supported by your proposed financing strategy. As you prepare your Action Plan, please make sure that you answer the following questions: 1. 2. 3. 4. Who are Fu Ji's customers and what is Fu Ji's strategic competitive advantage? 20% Which competitors should Mr. Dong fear the most? Perform a gap analysis of Fu Ji and this competitor. 20% What should be Fu Ji's strategy going forward? What are the challenges that Fu Ji will face to execute your recommended strategy? What must Fu Ji do to overcome these challenges? 30% What is the funding need to accommodate your proposed strategy? What will be the economic impact of your proposed Action Plan on Fu Ji? Please be very specific. 30%

9. Friday Morning, April 3, 2009 a. Note: b. Case: c. Case: Clusters and the New Economics of Competition Metro Cash and Carry Minsheng Bank: Penetrating the US Market Through Acquisition Study Questions for Metro Cash and Carry 1. 2. 3. What have been MCC's key competitive advantages as it has moved into emerging markets? What role did institutional context play in challenging MCC's efforts to prove the value proposition of its unique wholesaling format and establish itself as an accepted corporate citizen in Russia, India, and China? How would you rethink MCC's approach to strategic expansion and public relations in India going forward?

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Study Questions for Minsheng Bank 1. 2. 3. 4. 5. Is this acquisition a win-win situation in terms of value creation for both parties? How does government regulation affect a bank's expansion in the global market? What are the possible strategies to deal with those constraints? Evaluate Minsheng's global expansion strategy. How should Minsheng position itself to compete in the global banking industry? Does this acquisition offer real opportunities for UCBH to penetrate the banking industry in China? Will the investment in the US enable Minsheng to know more about US banking practices that can be applied to the Chinese market?

10. Friday Afternoon, April 17, 2009 a. b. c. Note: Case: Case:

From Niches to Riches: Anatomy of the Long Tail Microfinance International Corporation elBulli: The Taste of Innovation

Study Questions for Microfinance International Corporation CEO and founder Atsumasa Tochiasako (52) sat in his Washington D.C. headquarters, looking with pride at the copy of a press release that would announce the latest in a broadening line of financial services that Washington D.C.-based Microfinance International Corporation (MFIC) had been providing for two years to a growing number of "unbanked" Hispanic nationals in the United States and their home countries.

What impact will the current global economic slowdown have on MFIC? What changes, if any, should Atsumasa make given the current financial climate? Study Questions for elBulli

Ferran Adri, chef at elBulli, the highest-ranked restaurant in the world for two consecutive years, faces two related decisions. First, Adri and his team must continue to develop new and different dishes for the ground-breaking cuisine at elBulli to guarantee a continuous stream of innovation, the cornerstone of the restaurant's success. In addition, they are also faced with the challenge of growing the business, exploring whether the core concepts from elBulli - this "taste of innovation" - can be applied to domains ranging from consulting to fast food. Tell Ferran what he should do.