InstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.
Instructor Manual
Chapter 14: Building Global Strategies
to accompany Mike Peng & Klaus Meyer: International Business, Cengage Learning
Prepared by Klaus Meyer
version February 2011
Introduction to the Topic
Learning Objectives
1. articulate the strategic advantages of globally operating firms
2. explain different business modes to exploit the advantages of a globally operating firm
3. explain why global firms engage in mergers and acquisitions, and alliances
General Teaching Suggestions
This chapter integrates two themes, firstly the strategies that allow internationally (or
worldwide) operating firms to use their international scope to attain competitive advantages,
and secondly, the role of acquisitions in the context of building a global company.
Opening Case Discussion Guide
The case of Danisco shows how one company has changes the scope of its activities from
competing in multiple industries in its home country to becoming a specialist in a much more
InstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.
As an update, in early 2011, Du Pond of America may a friendly take-over bid to acquire
Danisco at a price that is more than 50% above the average market value of the company
Chapter Outline, Section by Section
Section 1: Competitive Advantages of the Global Firm
Key Ideas
This section presents some arguments as to why a global firm may gain competitive
advantage over a local firms, and thus linking this section to several other chapters.
Key Concepts
global strategies
Strategies that take advantage of operations spread across the world
Section 2: Global Business Models
Key Ideas
InstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.
This section builds on Pankaj Ghemawat’s distinction of three types of strategy indicated by
the AAA terminology (Figure 14.1). Note that this terminology is an extension of the Bartlett
and Ghoshal’s integration-responsiveness framework.
Key Concepts
AAA typology
Aggregation, adaptation and arbitrage strategies
Section 3: Growth of Acquisitions
Key Ideas
This section introduces acquisitions as key path of growth for MNEs on the global stage. It
introduces the M&A terminology and discusses various motives for acquisitions, and
distinguishes acquisitions from loose collaboration from alliances.
Key Concepts
acquisition
The transfer of the control of operations and management from one firm (target) to another (acquirer),
the former becoming a unit of the latter.
InstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.
hubris
A manager’s overconfidence in his or her capabilities.
Section 4: Institutions Governing Acquisitions
Key Ideas
This section discusses how the institutional framework of countries affect M&A activity. The
Section 5: Resources influencing Acquisition Performance
Key Ideas
This section discusses resource dimensions of acquisitions focusing on the resources needed
to make acquisitions successful, especially in terms of managing the process of acquiring and
integrating a firm.
Key Concepts
InstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.
strategic fit
The effective matching of complementary strategic capabilities.
organizational fit
The similarity in cultures, systems, and structures.
Section 6: Debates and Extensions
Key Ideas
The first debate introduces the concept of hidden champions, which describes medium size
firms in Germany (and elsewhere in Europe), who compete on the global stage with niche
market strategies while keeping a low profile.
Key Concepts
Hidden champions
Market leaders in niche markets keeping a low public profile
Section 7: Implications for Practice
Key Ideas
This concluding section emphasizes the need to strategize by thinking globally, consider the
costs of acquisitions, and understanding the pertinent regulatory institutions affecting M&A.
Key Concepts
No new concepts.
InstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.
Review Questions
Review questions are provided to students on the website accompanying the book. They
directly ask to summarize the material provided in the text. Instructors may also use the
questions to structure their lectures or review sessions.
Review Questions
(as provided to students on the website)
Material in the Book
1. How can global strategies help firms to build
competitive advantages?
5. What are international M&As?
6. Why do MNEs acquire other MNEs?
7. When do MNEs use strategic alliances rather than
acquisitions?
11. How do the resources of an MNE affects its ability
to manage acquisitions?
12. What are the key challenges of managing an
acquisition?
13. Why do acquisitions frequently fail?
14. How can small companies develop global leadership
strategies?
Page 424-26
Page 431
Page 432, incl In Focus 14.1
Page 434-35
Page 437-40
Page 438-439, In Focus 14.3
Page 438-40
Page 440
InstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.
Critical Discussion Questions
At the end the chapter, we provide discussion questions that aim to stimulate students
thinking beyond memorizing the material learned in the chapter. They are designed to be
used at a basis for in-class discussions, group work, or individual assignments. Below,
provide some indicative answers of issues that may be raised in response to these questions.
Discussion Questions
(as provided in the book)
Indicative Responses
1. As an employee in a middle management role,
you hear that your company has been acquired
by a competitor based in a different country.
What are your immediate and long-term
concerns? What actions might you take?
3. As a CEO, you are trying to acquire a foreign
firm. The size of your firm will double, and it
will become the largest in your industry. On the
one hand, you are excited about the opportunity
to be a leading captain of industry and the
associated power, prestige, and income (you
expect your salary, bonus, and stock option to
1. Take-overs almost always lead
to organizational upheaval,
especially if the acquirer makes
major promises to its own
shareholders about ‘synergies’
opportunities.
2. This question challenges
students to demonstrate their
strategic thinking and reasoning
to explain which ever solution
they favour.
3. This question challenges
students to demonstrate their
InstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.
their true intentions. What are the ethical
dilemmas here?
course of action they consider
ethically appropriate.
Closing Case
The closing case provides further opportunities to apply ideas and concepts learned in this
chapter in a real world setting. The Closing Case for this Chapter is “INSERT” and focuses
on “INSERT”. Below are some indicative responses to the case discussion questions.
Case Discussion Questions
(as provided in the book)
Indicative Responses
1. From an institution-based perspective, what
influences may have influenced Kärcher’s path of
growth?
These question challenges students to
demonstrate their strategic thinking and
reasoning to explain which ever
Further Learning Activities
In addition to the cases and discussion questions provided in the book, instructors may want
to use any of the following activities to further engage students with the material.
1. Identifying new sources of energy has been an important business opportunity for quite some
time. Given recent growth in Asia, your company is seeking the acquisition of geothermal and
solar energy firms in the region. Based on your firm’s energy and resource development
emphasis, identify three Asian countries in which this is most possible.
One resource which can be used is “EarthTrends”. This website can be found by entering the
InstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.
Errors and Corrections
In the Danisco case, the turnover in 2009 is reported as €1.7 million. Obviously, this should
be €1.7 billion. Thanks to my Executive MBAs for picking up this misleading typo.
Further Readings
At the end the chapter, suggested further readings are provided. The primary aim is to
provide students a starting point for further work, for example when preparing a class
assignment or dissertation. These references also are recommended for instructors not
familiar with the topic and wishing to ‘get ahead of the students’ before lecturing on a topic.
P. Ghemawat, 2007, Redefining global strategy, Boston: Harvard Business School Press. – A practitioner
oriented book outlining ideas how companies can develop global strategies.
T. Lewit, 1984, The globalization of markets, HBR, May-June: 92-102 – classic article arguing for the
merits of a global strategy.
K.E. Meyer, 2006, Globalfocusing: From domestic conglomerates to global specialists, JMS, 43: 1109-
1144. – a study following acquisitions and divestments of two companies over time, and interpreting the
process from an resource-based view by introducing the concept of globalfocusing.