9 7 8 1 1 0 8 4 2 B B EIGHTH EDITION 2 “In this eighth edition, the authors have maintained the unique pedagogic philosophy E A 4 3 A R 7 that has been a hallmark of this special book for so long. With a full suite of M T B companion teaching and learning materials, the three parts of the book, strategic I L a S E r tle imperatives, the organizational challenge and managerial implications have captured H T t T t the tensions that continue to dominate cross-border management… This remains an & & B outstanding book.” e a m Peter W. Liesch, Professor of International Business, UQ Business School, ish The University of Queensland T P P R C “If I were an MBA student studying anywhere in the world this is the book I would C A M want as the textbook for my global strategy course. As a faculty member, this is the N Y book I would pick for my case-based global strategic management course.” K S Lorraine Eden, Professor of Management, Texas A&M University. N President, Academy of International Business A “I have been using Transnational Management in my MBA International Competitive T Strategy Courses for over 10 years. Since then I have not been able to find another I O text which compares with the relevance, applicability, and readability of this one.” N P. Roberto Garcia, Ph.D., Young-Jin Kim Distinguished Clinical Professor of International A Business. Director, Center for International Business Education & Research L M Transnational Management offers an integrated framework describing the strategic tasks, organizational capabilities, and management roles and responsibilities of A successful and responsible managers of international businesses in today’s global N environment. A G NEW TO THIS EDITION: E • Integrated conceptual framework M TR ANSNATIONAL • Ten brand new cases have been added, and four others have been updated E • New academic and practitioner recommended readings have been added to N each chapter T MANAGEMENT Suitable for MBA, executive education, and senior undergraduate students studying international management, international business, or global strategy courses, E E D I G Transnational Management offers a uniquely global perspective on the subject. I T H IO T H N Text and Cases in Cross-Border Management cambridge.org/bartlett&beamish CHRISTOPHER A. BARTLETT & PAUL W. BEAMISH Cover images: ‘Silhouettes in a Meeting’, Rawpixel / iStock / Getty Images. ‘World map’, roripond / iStock / Getty Images Cover design by Zoe Naylor Transnational Management Text and Cases in Cross-Border Management Transnational Management provides an integrated conceptual framework to guide students and instructors through the challenges facing today’s multinational enter- prises.Throughtextnarrativeandcases,theauthorsskilfullyexaminethedevelopment of strategy, organizational capabilities, and management roles and responsibilities for operating inthe global economy. Thekeyconceptsaredevelopedineightchaptersthataresupplementedbycarefully selected practical case studies from world-leading case writers. All chapters have been revisedandupdatedforthiseightheditiontoreflectthelatestthinkingintransnational management while retaining the book’s strong integrated conceptual framework. Ten new cases have been added, and four others updated. A full range of online support materials are available, including detailed case teaching notes, almost 200 PowerPoint slides, and atestbank. Suitable for MBA, executive education, and senior undergraduate students studying international management, international business, or global strategy courses, Trans- national Management offers auniquely globalperspective onthe subject. ChristopherA. Bartlett is Professor Emeritus at Harvard Business School. His research and teaching have focused on strategic and organizational challenges confronting managers in multinational corporations. He is the author or co-author of nine books, including Managing Across Borders: The Transnational Solution (co-authored with Sumantra Ghoshal 2002), which was named by the Financial Times as one of the 50 most influential business books of the twentieth century. He has also researched andwrittenover100casestudiesandteachingnotes,andisHarvard’sbest-sellingcase author with over 6million copies sold. In 2001, he received the Academy of Manage- ment’s International Division’s Distinguished Scholar Award. He is a Fellow of the Academy of Management, the Academy of International Business, the Strategic Man- agement Society, and the World EconomicForum. Paul W. Beamish is the Canada Research Chair in International Business at the Ivey Business School, University of Western Ontario. He has received best research awards fromtheAcademyofManagementandtheAcademyofInternationalBusiness.Hewas previously Editor-in-Chief of the Journal of International Business Studies. His cases have been studied over 3million times, with over 20 winning awards. In 2012, he was the recipient of the International Management Outstanding Educator Award and, in 2017,therecipientoftheInternationalManagementEminentScholarAward,bothfrom theAcademyofManagement.HeistheeditorialdirectorofIveyPublishing,anddirector ofIvey’sInternationalBusinessInstitute.HeisaFellowoftheAcademyofInternational Business,RoyalSocietyofCanada,andAsiaPacificFoundationofCanada. Transnational Management Text and Cases in Cross-Border Management CHRISTOPHER A. BARTLETT HarvardUniversity,Massachusetts PAUL W. BEAMISH UniversityofWesternOntario UniversityPrintingHouse,CambridgeCB28BS,UnitedKingdom OneLibertyPlaza,20thFloor,NewYork,NY10006,USA 477WilliamstownRoad,PortMelbourne,VIC3207,Australia 314–321,3rdFloor,Plot3,SplendorForum,JasolaDistrictCentre,NewDelhi–110025,India 79AnsonRoad,#06-04/06,Singapore079906 CambridgeUniversityPressispartoftheUniversityofCambridge. ItfurtherstheUniversity’smissionbydisseminatingknowledgeinthepursuitof education,learning,andresearchatthehighestinternationallevelsofexcellence. www.cambridge.org Informationonthistitle:www.cambridge.org/9781108422437 DOI:10.1017/9781108500067 ©ChristopherA.BartlettandPaulW.Beamish2018 Thispublicationisincopyright.Subjecttostatutoryexception andtotheprovisionsofrelevantcollectivelicensingagreements, noreproductionofanypartmaytakeplacewithoutthewritten permissionofCambridgeUniversityPress. ThisbookwaspreviouslypublishedbyHarvardBusinessReviewPress1991,1998 ThisbookwaspreviouslypublishedbyMcGraw-HillEducation2000,2003,2007,2010,2013 EightheditionfirstpublishedbyCambridgeUniversityPress2018 PrintedintheUnitedStatesofAmericabySheridanBooks,Inc. AcataloguerecordforthispublicationisavailablefromtheBritishLibrary. ISBN978-1-108-42243-7Hardback ISBN978-1-108-43669-4Paperback Additionalresourcesforthispublicationatwww.cambridge.org/bartlett&beamish. 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CONTENTS List of Figures page vii List of Tables x Preface xv Acknowledgments xvii Editorial Advisory Board xix Introduction: So What Is Transnational Management? 1 Part I The Strategic Imperatives 9 1 Expanding Abroad: Motivations, Means, and Mentalities 11 Cases 1.1 Sher-Wood Hockey Sticks: Global Sourcing 29 1.2 Cameron Auto Parts: Early Internationalization 39 1.3 Mabe: Learning to be a Multinational (A) 47 2 Understanding the International Context: Responding to Conflicting Environmental Forces 64 Cases 2.1 Global Wine War 2015: New World Versus Old 83 2.2 MTN and the Nigerian Fine 104 2.3 IMAX: Expansion in BRIC Economies (Revised) 118 2.4 Mahindra & Mahindra in South Africa 134 3 Developing Transnational Strategies: Building Layers of Competitive Advantage 151 Cases 3.1 United Cereal: Lora Brill’s Eurobrand Challenge 167 3.2 Yushan Bicycles: Learning to Ride Abroad 176 3.3 Beer for All: SABMiller in Mozambique 183 3.4 GE’s Imagination Breakthroughs: The Evo Project 193 Part II The Organizational Challenge 213 4 Developing a Transnational Organization: Managing Integration, Responsiveness, and Flexibility 215 Cases 4.1 Kent Chemical: Organizing for International Growth 235 4.2 Lundbeck Korea: Managing an International Growth Engine 245 vi Contents 4.3 Philips versus Matsushita: The Competitive Battle Continues 259 4.4 Beiersdorf AG: Expanding Nivea’s Global Reach 276 5 Creating Worldwide Innovation and Learning: Exploiting Cross-Border Knowledge Management 293 Cases 5.1 P&G Japan: The SK-II Globalization Project 306 5.2 Applied Research Technologies, Inc.: Global Innovation’s Challenges 324 5.3 Cisco India (A): Innovation in Emerging Markets 333 6 Engaging in Cross-Border Collaboration: Managing Across Corporate Boundaries 345 Cases 6.1 Nora-Sakari: A Proposed JV in Malaysia (Revised) 364 6.2 Eli Lilly in India: Rethinking the Joint Venture Strategy 376 6.3 Amazon and Future Group: Rethinking the Alliance Strategy 392 Part III The Managerial Implications 405 7 Building New Management Capabilities: Key to Effective Implementation 407 Cases 7.1 Levendary Café: The China Challenge 425 7.2 Unilever’s Lifebuoy in India: Implementing the Sustainability Plan 436 7.3 Silvio Napoli at Schindler India (A) 452 7.4 Larson Inc. in Nigeria 468 8 Shaping the Transnational’s Future: Defining an Evolving Global Role 476 Cases 8.1 IKEA’s Global Sourcing Challenge: Indian Rugs and Child Labor (A) 496 8.2 Barrick Gold Corporation – Tanzania 507 8.3 Unilever’s New Global Strategy: Competing Through Sustainability 520 Index 541 LIST OF FIGURES Figure 1 The structure of the book page 5 Figure 1.1 A learning model of internationalization 23 Figure 1.2 Approaches to foreign market entry 24 Case 1.1 Exhibit 3 Evaluation of Global Sourcing 34 Case 1.3 Exhibit 1 Mabe’s Company History, 1946 to 2009 49 Case 1.3 Exhibit 2 Mabe’s Historical Revenues, 1987 to 2010 50 Case 1.3 Exhibit 3 Mabe Income by Region, 1990 to 2011 51 Case 1.3 Exhibit 9 Mabe’s Product Line in Russia 59 Case 1.3 Exhibit 10 Main Appliance Players in Russia 60 Case 2.1 Exhibit 2 Wine Industry Value Chain 88 Case 2.1 Exhibit 3 Wine Consumption Per Capita, Selected Countries (1980–2014) 90 Case 2.1 Exhibit 5 Global Wine Sales by Volume and Value (1999–2013) 92 Case 2.1 Exhibit 8 Exports as % of Production Volume by Source: EU, New World, and Globally, 1961–2009 96 Case 2.1 Exhibit 9a China Wine Sales Volume by Retail Sale Point and Country of Origin, 2009 99 Case 2.1 Exhibit 9b Bottle Wine Positioning in China by Price Segment and Area of Origin (%), 2014 99 Case 2.2 Exhibit 4 MTN’s Organizational Structure, 2014 110 Case 2.3 Exhibit 4 IMAX Corporation Stock Performance, 2008–2013 124 Case 2.3 Exhibit 6 Economic Comparison of the BRIC Economies 127 Case 2.3 Exhibit 7 Population and Average Household Income for 15 Most Affluent Cities 128 Case 2.3 Exhibit 8 Country Culture Comparison of BRIC Countries 131 Case 2.3 Exhibit 10 BRIC Countries’ Governance Indicators (Percentiles) 133 Case 2.3 Exhibit 11 BRIC Population Age Distribution 2013 and 2020 (Projected) 133 Case 2.4 Exhibit 5 Mahindra and Mahindra – Business Segments 142 Figure 3.1 The integration–responsiveness framework 154 Figure 3.2 Category-specific strategies to help companies serve middle-class consumers in emerging economies 157 Case 3.1 Exhibit 4 Organization Chart 175 Case 3.2 Exhibit 1 Yushan Bicycles Organizational Structure 178 Case 3.4 Exhibit 2 GE Corporate Structure 197 Case 3.4 Exhibit 3 GE’s Operating System 198 Case 3.4 Exhibit 4 Evolution Locomotive Product Specifications 201 viii ListofFigures Case 3.4 Exhibit 6 CECOR Tool Kit 204 Case 3.4 Exhibit 7 GE Transportation Organizational Chart 207 Case 3.4 Exhibit 8 Comte’s Marketing Organization 209 Figure 4.1 Stopford and Wells’ international structural stages model 216 Figure 4.2 Organizational configuration models 220 Figure 4.3 Integrated network model 226 Figure 4.4 Integration and differentiation needs at Unilever 227 Figure 4.5 Model I: the traditional change process 231 Figure 4.6 Model II: the emerging change process 232 Case 4.1 Exhibit 2 KCP International Division Organizational Chart, 2000 238 Case 4.1 Exhibit 3 Kent Chemical Products Organizational Chart, 2006 240 Case 4.1 Exhibit 4 Decision Matrix for Resource-Allocation Decisions on the European Fire Protection Business 244 Case 4.3 Exhibit 5 Organization of METC, 1985 270 Figure 5.1 Mobilizing knowledge 305 Case 5.1 Exhibit 2 P&G European Organization, 1986 308 Case 5.1 Exhibit 3 P&G’s Worldwide Organizational Structure, 1990 309 Case 5.1 Exhibit 5 P&G Organization, 1999 (Post O2005 Implementation) 314 Case 5.1 Exhibit 6 Beauty Counselor Work Flow 315 Case 5.1 Exhibit 7 In-Store SK-II Counter Space 316 Case 5.1 Exhibit 8 Representation of Global Cleansing Cloth Development Program 318 Case 5.1 Exhibit 9 Illustration of Part of SK-II Product Line 319 Case 5.2 Exhibit 1 ART Organization with Filtration Unit Detail 326 Case 5.3 Exhibit 2 Cisco India R&D Evolution 337 Case 5.3 Exhibit 3 Indian Telecom Industry 338 Case 5.3 Exhibit 4 Telecom Network Structure 340 Case 5.3 Exhibit 5 Cisco’s R&D Project Approval Process 342 Figure 6.1 Range of strategic alliances 347 Figure 6.2 Partner selection: comfort vs. competence 357 Case 6.1 Exhibit 1 How 4G LTE (And Mobile Broadband) Works: A Simplified Network Representation 366 Case 7.1 Exhibit 1 Levendary Organizational Chart 427 Case 7.2 Exhibit 2 Lifebuoy’s Indian Relaunch, February 2002 440 Case 7.2 Exhibit 3 Unilever Sustainable Living Program (USLP): Original Targets 2010 444 Case 7.2 Exhibit 4 Unilever Corporate Organization Structure 445 Case 7.2 Exhibit 5 Lifebuoy Core Claim: Protection against Germs 446 Case 7.2 Exhibit 6 Unilever Behavior-Change Model 449 Case 7.3 Exhibit 2 Schindler Organization Chart, Elevator and Escalator Division 457 Case 7.3 Exhibit 4 Schindler India Organization Chart 461 Case 7.3 Exhibit 5 Indian Elevator Market, Structure, and Product Segmentation 462 Case 7.3 Exhibit 6 Market Research on Indian Elevator Market, 1996 463