Chapter 1 Case Study

WIPRO LTD. OF INDIA & GENERAL ELECTRIC OF UNITED STATE OF

AMERICA JOINT VENTURE

Question 1a) how did outsourcing work to Wipro improve General Electric’s ability to compete
in the global economy?
Question 1b) does such outsourcing harm or benefit the American economy?
Answer 1a)
GE was able to reduce the labor portion of costs by outsourcing to Wipro. *This increased their
ability to be competitive in the global marketplace. *GE’s work with Wipro gave GE access to
local knowledge to penetrate the Indian market *GE’s work with Wipro gave GE a launching
pad to other Asian markets.
Answer 1b)
In short-term, such outsourcing did hurt American workers whose jobs were outsourced, of
course, yet long-term, it improved the economy through job growth.

Question 2) did General Electric help to create Wipro? How?

Answer 2)
- It provided work (provided financial stability).
- It provided a management model (six-sigma) for Wipro to emulate and learn.
- By playing Wipro against other Indian companies, GE provided pressures to which Wipro had to
respond by increasing efficiency and improving quality.
- It provided credibility (brand cachet, brand name, good will) for Wipro to work with other
multinationals (after all, people tend to know GE, and not Wipro, in the beginning).

Question 3a) if India’s information technology companies continue to prosper, over time what
do you think will happen to the income differential between software programmers in the United
States and India?
Question 3b) what are the implications for the American economy?
Answer 3a)
After receiving GE’s investment as well as help from it, Wipro began to move up the value
chain. In different expression, Wipro began to prosper. As we mentioned, wage of programmers
in the United States is around $64.000 but those in India only want $10.000. If this Indian
company keeps prospering like today, wage rates between the US and India will be more or less
equalized. The income gap will 7 be as close as possible, but not mathematically equal because
of competition from other high-skilled workers from other countries preventing them to equalize
with US’s level. New American programmers will be paid less than they formerly received. Vice
versa, Indians require more from company because of fairness in human resources policies.
Moreover, demand for Indian engineers grows, so Indians can move to higher-wage companies,
so owners of firms must increase their engineer’s income, and there would be an insufficient
supply of skilled Indian engineers.
Answer 3b)
Clearly, unemployment in information technology fields in the United States would happen. New
programmers must compete with their colleagues from India, and if they are not content with the
income, they lose their jobs. Standard of living and good consumption in the US labor market on
global scale because the world has more options to choose suitable candidates for their company
with cheaper price from. But, it is not the end of the road for workers in US. They can move to
other high paid companies to work, with higher knowledge level and stronger competition. It’s
called global division of labor but it is still controlled by government. On the other hand, the
price of IT products will be cheaper due to declining wages and decreasing good consumption.

Question 4a) since 2000, Wipro has moved abroad, establishing sales offices in 35 nations and
design centers in nine, why is Wipro doing this?
Question 4b) what would happen to the company if they did not follow this strategy?
Answer 4a)
Because globalization is a popular trend, so it’s normal if one company wants to extend their sale
and commerce to make profit from other sides of the world. Wipro must not be outside of this
tendency. In the 1990s, Wipro expanded by doing larger software projects, taking over whole IT
systems and back-office functions. Its scale got bigger and bigger, so they must find other
markets to maximized profits.
GE taught Wipro a hard lesson, but it’s a necessity. GE is a successful global brand, considering
the perfect globalization of production. So GE is an ideal model for Wipro to learn. They don’t
want to do normal work anymore, but they want to do something more profitable.
A true global company is one which appeared to be local wherever it does business. Hiring a
local talent and buying a company that gave it instant industry presence help Wipro come closer
to its customers and it constantly seek opportunities to arbitrage labor market.
In other cases, Wipro can witness their archrivals even in their nations and their traditional
market.
Answer 4b)
If they miss the opportunities on account of not following this strategy, they will forever do
normal work for giants in this field and lose the competitive advantages as well as postpone their
growth. Bankruptcy is also a common obsession. Few companies can survive when doing
business in a small area after ten to fifteen years. Wipro might have been forever dependent on
giants like GE.
Question 5) what does the rise of Wipro teach you about the nature of the global economy in the
first decade of the 21st century?
Answer 5)
By analyzing the rise of Wipro, we can understand more clearly the beneficiary and an
indispensable trend of Globalization today.
When entering a new market, the most important thing to do is keeping local presence, and
customizing to the clients’ tastes and preferences in local nation.” We invest in people. In three
years, we will have a far more global footprint. Around 10% of our employee population will be
based out of Philippines, Europe and other parts of the world”- Sangita Singh, senior Vice
President and Head of Enterprise Application Services, Wipro Technologies. It has the same
meaning that we should focus on expanding domestic workforce in target markets.

Chapter 2 Case Study

THE POOREST CONTINENT REGION IN THE WORLD – SUB SAHARAN
AFRICA (SAHARA DESERT)

Question 2a) what steps can be taken by the nations of sub-Saharan Africa to address the causes
of poverty?
Question 2b) Can the governments of developed nations help in this process? Should they?
How?
Answer 2a)
The nations of sub-Saharan Africa should develop a democratic system. With only 11 of the
region’s 48 countries have an open democratic system (Hill, 2007, p.83). This lack of democracy
is due to the wide spread of AIDS in the region, the perennial wars that have occurred, and
overall poor leadership, all of which have contributed to the intense poverty. Good leaders
always provide the best to their people without favoring on the basis of tribe, race or background.
These countries should also tackle the issue of corruption, as it is the monster that eats up these
countries economy. Corruption is the cause of unequal distribution of resources in a country thus
leading to poverty especially to citizens who lack the resources. The governments of these
countries should also educate their youth, putting them in a public like school setting, where they
can educate themselves to become business owners and retailers, providing jobs to the local
economy instead of being engaged in criminal like activity.

Answer 2b)
Chapter 3 Case Study
MATSUSHITA’S AND JAPAN’S CHANGING CULTURE

Question 1a) what were the triggers of cultural change in Japan during the 1990’s?
Question 1b) how is cultural change starting to effect traditional values in Japan?
Answer 1a)
During the 1990s, Japan’s economy began to slow. The prolonged economic slump forced many
Japanese companies to abandon their traditional ways of doing business like lifetime
employment. This caused younger people just entering the workforce to question whether the
loyalty that workers had traditional given companies, and that had been traditionally
reciprocated, made sense. %any younger people concluded that it no longer made sense to be
tied to a single company, that instead it could be beneficial to take advantage of new
opportunities when and where they arose.
The younger generation, which grew up in a world that was richer, where & western ideas were
beginning to make themselves flet and concluded that loyalty to one company might be not the
best or themselves.
The difference between the generation born after 1964 and their parents is the change in the
Japanese culture. In addition, Japan’s companies need many younger staff who have more
creative, dynamic than older employees. Moreover, the companies want to abandon the
lifetime employment.

Answer 1b)
Cultural change effects tradition of Japan & these event’s led towards individualism:
- Change in perceptions of traditional workplace orientation, lack of trust.
- Younger generation exposed to necessary business culture compromise.
- Shit from collectivist to individualist values.
- Younger generation uncertainties of lifetime employment system.
Question 2a) how might Japan's changing culture influence the ways Japanese businesses

operate in the future?

Question 2b) what are the potential implications of such changes for the Japanese economy?

Answer 2a)

According to the changing culture of Japan, the new generation, which resisted the lifetime
employment concept of their parents, has pushed for more freedom to more from company to
company. Japanese businesses can’t operate the way they used to due to Japan’s changing
culture. Companies especially have and had to change their human resource strategies such as
the pay schemes or the recruiting system. Matsushita changed the pay scheme for its 11,000
managers. In the past, the traditional twice a year bonuses had been based almost entirely on
seniority, but now Matsushita said they would be based on performance. The payment according
to work Performance will be the best motivation to stimulate employees to the highest efficiency.
Beside, staff bonus is the way to enjoy the success of the company but not a gift for the
older worker. Gradually abandon its policy of lifetime, eliminating the excessive benefits are not
based on merit and practical contributions. However, the company ready fired in order to
organizational renewal. Specifically, reducing apparatus can easily change and reduce personnel
costs and management costs in a difficult period. Similarly, the lifetime employment system and
the associated perks also disappearing instead the company accept changes to identify
opportunities and face challenges. The new system will be aim to the younger worker who have
a lot of creative idea and power. Given the opportunity and conditions for youth talents have a
greater say in the operation
of the company. There are better incentive to entice and keep the creative youth component, bold
and rapid access to new knowledge in the company.

Answer 2b)
Such changes can have both beneficial and harmful effects on Japanese economy. Focusing on
individualism brings a high level of entrepreneurial activity with it, which involves the
opportunity for new products and new ways of doing business. These can help the economic
growth and pulling out the economic slump. In otherwise, this trend might be bad for firms. For
instance, when a worker frequently switches workplaces, he might lack the company-specific
knowledge and thus might not be so valuable for a company. Likewise, the high fluctuation
makes it also very difficult to build a team within an organization to perform collective tasks.
Therefore, these factors may influence the highs and lows of Japan’s economy in a more direct
way.

Question 3a) how did traditional Japanese culture benefit Matsushita during the 1950s-1980s?
Question 3b) did traditional values become more of a liability during the 1990s and early 2000s?
How so?

Answer 3a)

Matsushita was established in 1920 and become a giant consumer electronics company in Japan
within the next decades. Traditional Japanese culture is based on strong group identification,
reciprocal obligations, and loyalty to the company. With this sort of culture it was possible for
Matsushita to hire employees, who worked hard for the greater good of the company. On the
other hand Matsushita was mutual loyal to their workers and provided them with a wide range of
benefits. After the World War II people haven’t had as great prospects as they had a few years
later thus they were thankful for every job they could get and committed to it. Once hired they
would spend the rest of their lives working for the same company, which supported to develop
unique firm-specific knowledge. As a result Matsushita was at the fore front of the rise of Japan
to the status of major economic power.

- Traditional Japanese culture was important to Matsushita’s success from the 1950s to the
1980s. Group identification, reciprocal obligations, and loyalty to the company meant
that Matsushita took care of its employees from the “cradle to the grave.” Matsushita
take care of its employees for life providing benefits such as subsidized housing and
retirement bonuses in exchange for loyalty and hard work. Employees worked for the
greater good of Matsushita and in return, Matsushita bestowed its “blessings” on its
employees. .
 - Matsushita’s employees hard working to contribute for the development of company.

- Japan’s traditional culture helps Matsushita become a major economic power during the
post war years and through the 1980s

- Traditional culture of Japan during the period 1950-1980 suffered dominated by

Confucian values. This offers the advantage that the structure, organization manner
clearly manageable. Matsushita successes by saving time to arrange, structure.

Answer 3b)

These traditional values became a liability during the 1990s and early 2000s, when, after several
years of poor performance, Matsushita began to change. Many other companies had already
shifted away from the traditional business model to a model with a greater emphasis on
individual performance.

- The compensation based almost entirely on seniority that makes have problems such as
growth in manufacturing equipment slowdown and rising costs

- Traditional values became a liability, the new generation did not show interest in the
traditional values

- Apparatus cumbersome, inflexible and uncreative were losing gradually competitive

advantage

Question 4a) what is Matsushita trying to achieve with human resource changes it has
announced?

Question 4b) what are the impediments to successfully implementing these changes?

Question 4c) what are the implications for Matsushita if (a) the changes are made quickly or (b)
it takes years or even decades to fully implement the changes?

Answer 4a)
Matsushita’s changes to its human resource policy are an effort to essentially keep pace with the
modern workplace. However, while individual performance now takes precedence over
seniority for compensation, the company is implementing its changes slowly. Matsushita has
designed a three-tiered employment option that includes a choice of subsidized company housing
and a retirement bonus, or a higher salary and no subsidized services, or some combination of
these. Many students may suggest that the changes are not particularly popular. Just 3 percent
of new recruits chose the higher salary and no benefits option, while over 40 percent took the
combination package. This trend may become problematic for Matsushita which is now dealing
with an aging workforce.

Matsushita started to make changes in human resource practices in 2000. They offered the choice
of three employment options with differences in salaries, benefits and commitments. With this
choice they wanted employees to believe in democratization, to encourage individuality, to take
initiative and to seek risks.

The impediments to successfully implementing these changes: Difficulties in the cancellation of

commitments on mode lifelong work for employees who hired under the traditional method. The
costs for the change is too expensive.

Answer 4b)

Some advantages are;

- Having the opportunity to quickly overcome the difficulties to take the success.
- Attracting young human resources who are innovative and dynamic. They alternative
generation aging staff present passive.
And some of the disadvantages are;
- Negative impact on the psychology of the workers (because if it happened too quickly, it
would create a shock to the workers and they could not adapt and accept the change).
- Strong opposition from the ruling class and senior staff to protect their interests. (The
older employees in the company don't want the change to meet the new requirements of
the job).
Answer 4c)
The company has plenty of time to change. Firstly, have an impact for the employees change
ideas and cooperate with companies to change. Secondly, have time to train employees familiar
with the methods of new operation, new assessment procedures to ensure the job. Thirdly, have
time to experiment, change adjustment policies. Finally, they have chances to recruit and train
young workers to replace employees who do not perform well.
Costly, because the company have to do the change in the long time.

Questions 5) what does the Matsushita case teach you about the relationship between societal
culture and business success?
Answer 5)

Societal culture Business impact

Traditional Japanese post war culture Confucian values in workplace

Westernized culture Achievement of organizational goal

Individualism Changes to HR strategies

Societal culture and business success are interdependent. We have seen that Matsushita had and
has to consider the societal culture in order to gain greater or even any business success. As a
result any company needs always to regard the societal culture for the purpose of acquiring and
maintaining business success and needs to respond in an appropriate time to any changes of
culture.

Societal culture and business culture are strongly intertwined. A society’s culture has a direct
impact in a company’s culture. Social cultural impact on business success through business
culture Business success when we change in enterprises culture suitable with the leaders and
staffs. In order to succeed, the managing parties should anticipate changes in society which lead
to social-cultural changes.
Every culture experience modifications should be applied slowly and also may not be changed
completely. So, the staff also had time to adapt to change, the employees will probably become
another cessation of work and employees are mainly conductive to a company’s success. In this
case the change from Confucian values to western values, and the company has to adapt its
working conditions.

Chapter 3 Case Study

THE EVOLUTION OF STRATEGY AT PROCTER & GAMBLE
Question 1) what strategy was Procter & Gamble pursuing when it first entered foreign markets
in the period up until the 1980s?
Answer1)
P&G established its first foreign factory in 1915 in Canada to produce Ivory soap and Crisco.
The company’s first foreign subsidiary was established in 1930 in Britain. Since then till the 50s
and 60s, the pace of international expansion became very quick. P&G entered a nation by
acquiring an established competitor and its brand and then promoted its business through that
company. But it many cases, it started everything from the scratch. By 1970s, the strategy for the
company was well established. They developed new products in Cincinnati and then relied on
semi autonomous foreign subsidiaries to manufacture, market and distribute those products in
different nations. The foreign subsidiaries had their own packing, brand name and marketing
message to local tastes and preference.
But as the company continued to move on, the growth of the company gradually was slowing
down which was indicated by a decrease in the profit growth. They had the strategy of
decentralized market, that is, every nation had its own production unit. Having the production
unit in each country was justified, as the import tariffs rates were very high then which would
make the product very expensive. As the products would be produced locally, it could address
the needs of the local market avoiding the need for local responsiveness. Thus, the decentralized
organization of P&G until 1980s was considered to be the best strategy for the company as it
first entered the foreign market.

Question 2) why do you think this strategy became less viable in the 1990s?
Answer 2)

The strategy was working well for the company till 1990s but from 1990s a decrease in the
growth of the profit was marked which suggested that the strategy was becoming less viable
from 1990s. A number of reasons can explain why the profit growth was declining and the major
reason being the high cost of P&G products. The products had a high cost because of extensive
duplication of manufacturing, marketing and administrative facility in different national
subsidiary. Until 1960s, the duplication of products made sense when barriers to cross-border
trade segmented the national market from each other. Product produced in one country could not
be sold in another country, as the price would be too high due to the high tariff duties charged on
imports.

But as the barrier to cross-border trade was eliminated, the products could be easily exported to
another country or imported from another country. The retailers through which P&G distributed
its product were growing larger and global and these emerging global retailer were demanding
price discounts from P&G. Initially retailer chain like Wal-Mart and Tesco needed product from
P&G to sell but now P&G needed retailer chain like Wal-Mart and Tesco to sell its product. In
other words, bargaining power shifted from P&G to these Retailer chains. But as P&G had their
manufacturing plants in many countries which caused the duplication of their product and they
lacked economics of scale which led to high price of the product.

Question 3a) what strategy does P&G appear to be moving towards?

Question 3b) what are the benefits of this strategy?

Question 3c) what are the potential risks associated with it?

Answer 3a)

As the company’s growth rate was declining, it had to come up with new business strategy. In
1993, P&G embarked on a major reorganization in an attempt to control its costs structure and
reorganize the new reality of emerging global market. The company shut down 30 of its
manufacturing plant around the world and 13,000 employees were out of job. They concentrated
production in fewer plants that could better realize the economics of scale and serve regional
market. Even with such reorganization, the profit growth remained sluggish. In 1998, the
company came up with another strategy named “organization 2005” with a goal of transforming
the company into a global company.

The company tore up its old organizations, which were countries and regions and replaced it with
one based on seven self-contained global business units. Each business unit was given complete
responsibility for generating profits from its products and for manufacturing, marketing and
product development. Each business unit was told to rationalize production and concentrate on
eliminating marketing difference between countries. This strategy seemed to work for the
company as it increased both profit and sales. But, as every coin has two sides, it too had benefits
as well as risks.

Answer 3b)

Benefits are;
- The company could reduce the cost of its product due to the economies of scale, lower
factor costs and flexibility to seek lowest cost and enhance bargaining power to reduce
input costs.
- As the numbers of production units were lowered, the company now could focus on the
quality of the product resulting in the improved quality of the product.
Answer 3c)
Risks are;
- Since many production units were shut down, the reorganization of existing plants would
require a significant management costs for coordinating the staff and designating new
authority employees.
- The standardization of the product may not satisfy all customers.
- The integrated competition may lead to losses in particular countries.

References
https://www.academia.edu/37011710/Case_Studies_of_Gloobal_Business

https://www.coursehero.com/file/24730842/Chapter-2-The-Poorest-Continent-case-Studydocx/

https://www.academia.edu/13477198/Case_study_Matsushita

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