Global Strategic Management

Building sustainable strategic advantage in global value chains

Prof. Dr. Ernst Verwaal

KU Leuven
Campus Carolus
Hendrik Conscienceplein 8
B-2000, Antwerpen, België

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1. General Course Content

Topic Literature to be prepared

Topic 1 Introduction Designing global strategies, Bruce Kogut, Sloan
Management Review, Vol 26, No, 4, reprint 2642.

Topic 2 Conceptual foundations Verbeke, Alain. (2022) “International Business Strategy”. 3rd
ed. Cambridge University Press. Ch. 1.

Honda’s answers to the seven basic questions in

international strategy formation.

Barney, Jay, Firm resources and sustained competitive

advantage, Journal of Management, 17: 99-120.
Topic 3 Home location advantage Verbeke, Alain. (2022) “International Business Strategy”. 3rd
ed. Cambridge University Press. Ch. 3.

Shiseido: Becoming an insider in the perfume business in

France.

Porter, Michael. Clusters and the new economics of

competition. HBR, November-December, 1998.
Topic 4 Distance in global value chains Boek: Verbeke, Alain. (2022) “International Business
Strategy”. 3rd ed. Cambridge University Press. Ch. 4.

Case: Coping with the four dimensions of distance in the

international expansion of Starbucks

Berry, Heather et al (2010), An institutional approach to

Topic 5 Organizing firm and location
specific advantages in global
value chains
cross-national distance. Journal of International Business
Studies.
Verbeke, Alain. (2022) “International Business Strategy”. 3rd
ed. Cambridge University Press. Ch. 5.
Case: Nestle’s transformation.

From global to metanational: How companies win in the

knowledge economy. Santos, Williamson, Doz, Harvard
Business School.
Topic 6 Upstream GVC strategy Verbeke, Alain. (2022) “International Business Strategy”. 3rd
ed. Cambridge University Press. Ch. 6, 7.

Case: Flextronics.

Verwaal, E. (2017). Global outsourcing, explorative

innovation and firm financial performance. Journal of World
Business, 52, 17-27.
Topic 7 Downstream GVC strategy Verbeke, Alain. (2022) “International Business Strategy”. 3rd
ed. Cambridge University Press. Ch. 9,11.

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 Case: The direct sales model or a dual system model: Dell’s
distribution strategy in China.

Abdelnour et al (2022). How distributors can self-disrupt to

win in a new digital world. McKinsey & Company.
Topic 8 Alliances and acquisition GVC Verbeke, Alain. (2022) “International Business Strategy”. 3rd
strategy ed. Cambridge University Press. Ch. 12/13.

Case: CEMEX: Growing and growing stronger.

Wiklund et al, The effectiveness of alliances and

acquisitions. ETP, 2009.
Topic 9 Emerging markets in GVC Verbeke, Alain. (2022) “International Business Strategy”. 3rd
strategy ed. Cambridge University Press. Ch. 14/15.

Case: Just Google it in China and India

Gary Gerefi, Global value chains, development, and

emerging economies.Routledge, 2020.

Topic 10 Responsible GVC strategies Verbeke, Alain. (2022) “International Business Strategy”. 3rd
ed. Cambridge University Press. Ch. 17A,B.

Case: Shell’s environmental management strategy,

Verwaal, E, Klein, M., and La Falce, J., (2022), Business

Model Involvement, Adaptive Capacity, and the Triple
Bottom line at the Base of the Pyramid. Journal of Business
Ethics, 2022.
Topic 12 Trial exam

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2. ORGANISATION AND COURSE MATERIALS
Lecturer: Professor Dr. Ernst Verwaal, office CAR 3.22, email: Ernst.verwaal@kuleuven.be
Literature, chapters from the textbook International Business Strategy, 2022, 3rd edition, Cambridge University
Press, Alain Verbeke, and articles posted on Toledo.
Case assignments.
Papers and slides on Toledo.

3. EVALUATION
written exam. 1 bonus point (out of 20) for excellent participation in class.

4. Exam
1. Essay questions
2. Analytical case questions.

See an example exam in the appendix.

5. Detailed Course Outline

Session 1 Introduction to Global Strategic Management
Description
This lecture will begin with a brief introduction to the module content, structure, learning aims and teaching methods.
The remainder of the lecture will discuss the question “What is global competitive advantage?” and how does it relate
to the fundamental strategic questions of multinational firms in global value chains?

Readings
Designing global strategies: comparative and competitive value-added chains. Bruce Kogut, Sloan Management
Review, vol 24, issue 4.

Session 2 Conceptual foundations and the role of FSAs in multinational business strategy
Description
This lecture will introduce you to the conceptual foundations that unify the different schools of thought in the field of
multinational management. The lecture will show you how to apply these foundations to the case of Honda of
America.

Readings
Core Text: Verbeke, Alain. (2022) “International Business Strategy”. 3rd ed. Cambridge University Press. Ch. 1.
Prepare case: Honda’s answers to the seven basic questions in international strategy formation.
Barney, Jay, Firm resources and sustained competitive advantage, Journal of Management, 17: 99-120.

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Session 3 Home country advantage
Description
This lecture will introduce you to the role of home location-specific advantages and how they interact with global
business strategies. The lecture will discuss the various views on that interaction and show you how to draw strategic
implications for action.

Readings
Core Text: Verbeke, Alain. (2022) “International Business Strategy”. 3rd ed. Cambridge University Press. Ch. 3.
Prepare case Shiseido: Becoming an insider in the perfume business in France.
Porter, Michael. Clusters and the new economics of competition. HBR, November-December, 1998.

Session 4 Distance in global value chains

Description
This lecture will introduce you to the role of host location specific advantages and how they interact with the four
dimensions of distance in multinational business strategies. The lecture will discuss the various views on that
interaction and show you how to draw strategic implications for action.

Readings
Core Text: Verbeke, Alain. (2022) “International Business Strategy”. 3rd ed. Cambridge University Press. Ch. 4.
Prepare case: Wal-Mart’s retreat from Germany: How distance made the replication of a domestically successful
model impossible.
Berry, Heather et al (2010), An institutional approach to cross-national distance. Journal of International Business
Studies.

Session 5 Combining firm specific advantages and location advantages

Description
This lecture will introduce you to the interaction between firm specific advantages and location specific advantages.
Central in the lecture are the sources of international distance and the role of subsidiary managers in reducing the
negative impact of distance. The lecture concludes with an analysis and discussion of the organizational
transformation of the Nestle.

Readings
Core Text: Verbeke, Alain. (2022) “International Business Strategy”. 3rd ed. Cambridge University Press. Chapter 5.
Prepare case: Nestle’s transformation.
From global to metanational: How companies win in the knowledge economy. Santos, Williamson, Doz, Harvard
Business School.

Session 6 Global upstream strategy

This lecture will introduce you to the complexity of sourcing in a MNE. The lecture will discuss the potential value
creation and responsibility challenges in international sourcing and production networks.

Readings
Core Text: Verbeke, Alain. (2022) “International Business Strategy”. 3rd ed. Cambridge University Press. Ch. 6,7.
Prepare case: Flextronics.
Verwaal, E. (2017). Global outsourcing, explorative innovation and firm financial performance. Journal of World
Business, 52, 17-27.

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Session 7 Global downstream strategy
Description
This lecture will introduce you to the complexity of international distribution in host countries and how alliances can
facilitate the access to host country location advantages. The lecture will identify elements of the ecosystem and how
it helps to support decisions of MNEs.

Readings
Core Text: Verbeke, Alain. (2022) “International Business Strategy”. 3rd ed. Cambridge University Press. Ch. 11.
Prepare case: The direct sales model or a dual system model: Dell’s distribution strategy in China.
Abdelnour et al (2022). How distributors can self-disrupt to win in a new digital world. McKinsey & Company.

Session 8 Global Alliances and Acquisitions

Description
This lecture will introduce you to the complexity of international alliances and acquisitions and how they facilitate the
access to host country location advantages. The lecture will identify how bounded rationality and bounded reliability
affect the governance decisions of multinational companies.

Readings
Core Text: Verbeke, Alain. (2022) “International Business Strategy”. 3rd ed. Cambridge University Press. Chapter 12 and
13.
Prepare case: CEMEX Growing stronger.
Wiklund et al, The effectiveness of alliances and acquisitions. ETP, 2009.

Session 9: The role of emerging markets in global value chains

Description
Emerging markets are increasing important in global value chains. How is the change in the power balance changing
global value chain strategies? Are disruptions of global value chains in emerging markets leading to new GVC models?

Readings
Verbeke, Alain. (2022) “International Business Strategy”. 3rd ed. Cambridge University Press. Chapter 14,15.
Case: Just Google it in China and India.
Gary Gerefi, Global value chains, development, and emerging economies.Routledge, 2020.

Session 10: International Corporate Social and Environmental Responsibility

Description
This lecture will introduce you to one of the fundamental questions nowadays in international management. It is
about sustainability and the role of various stakeholders. The influence of operations of multinational companies and
social and environmental impact will be addressed. The lecture will conclude with a discussion of Shell, for example its
environmental strategy in Nigeria.

Readings
Core Text: Verbeke, Alain. (2022) “International Business Strategy”. 3rd ed. Cambridge University Press. Chapter 17A
and 17B.
Prepare case17.B1: Shell’s environmental management strategies.

Verwaal, E, Klein, M., and La Falce, J., (2022), Business Model Involvement, Adaptive Capacity, and the Triple Bottom
line at the Base of the Pyramid. Journal of Business Ethics, 2022.

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Session 11: Global strategy practice
Description
This lecture will introduce you to a leading global strategy practitioner who will introduce you to the practical details
of global strategic management.

Readings
Sterling, J. (2003), Translating strategy into effective implementation: dispelling the myths and highlighting what
works, Strategy & Leadership, 31(3), 27-34.

Session 12: Exam preparation

Description
This lecture will show you what you can expect at the exam and how you need to address the essay questions.

Readings
Trial exam (see appendix)

6. Useful sources
Information on companies can be retrieved from different sources, such as corporate websites, company historical
studies and annual reports. General data sources (accessible through the university library website) include:
• Http://dmoz.org/business/major companies/
• Organisation for Economic Co-operation and Development
The OECD is an organization of 30 countries, most of them industrialized,that attempts to coordinate policies
to promote economic well-being. As part of this effort, it publishes a wide variety of economic data and
studies, including data on foreign direct investment and insightful country studies.
• Market Potential Index for Emerging Markets - 2008 | globalEDGE
GlobalEDGE is a portal created by the International Business Center at Michigan State University with funding
from the US government. It provides access to many sources of information that can help evaluate countries
for various business purposes.
• The 2005 Foreign Direct Investment (FDI) Confidence Index - Page 2The FDI Confidence Index summarizes the
climate for inbound FDI.
• Home - Doing Business - The World Bank Group
The World Bank, one of the world's two main international financial institutions (see below), produces an
annual report on business regulation and its impact on the ease of doing business in a large number of
countries.
• World Economic Forum - Global Competitiveness Report
The World Economic Forum is a Swiss-based non-profit organization that attempts to reconcile the demands
of economic progress and social development. Their Global Competitiveness Report is based on both
economic data and input from business executives.

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• KPMG Competitive Alternatives 2008
This report by the global accounting firm KPMG focuses on comparing tax regimes across multiple
jurisdictions.
• Asia: Worldwide Cost of Living survey 2008
This cost of living survey is intended as a guide to adjusting expatriate compensation in line with the cost of
living in major cities around the world.
• Transparency International
Transparency International is an organization focused on reducing corruption around the world
• Geert Hofstede Cultural Dimensions
Dr. Geert Hofstede's path-breaking research has been by far the greatest influence on the study of cultural
differences and their effect on international business. His website describes the dimensions of cultural
difference he identified and reports scores for many countries, providing important measures of cultural
distance and guidance on training requirements for expatriates.
• WTO | Welcome to the WTO website
The World Trade Organization, the successor organization to GATT, organizes rounds of multilateral
negotiations to reduce trade barriers. The current Doha Round has focused on agriculture and development
issues.
• UNCTAD.ORG >> Home
The United Nations Conference on Trade and Development publishes a multitude of statistics and reports on
trade and investment, particularly as they affect developing countries, as well as a journal on Transnational
Corporations. UNCTAD's annual World Investment Report provides a comprehensive analysis of world trends
in foreign direct investment.
• EUROPA - Gateway of the European Union
The website of the European Union, the world's most prominent regional trade organization, includes data
and reports on every aspect of the organization's activities (available in many languages besides English).
• NAFTA Secretariat - Secrétariat de l'ALÉNA - Secretariado del TLCAN
The North American Free Trade Association links the USA, Canada and Mexico (in English, French and
Spanish).
Mercosur/Mercosul
• Portal Official MERCOSUL / MERCOSUR (Spanish and Portuguese only).
Mercosur (Mercosul in Portuguese) is a regional trade agreement linking many Latin American countries.
The national statistical agency of a country often has more detailed and up-to-date data on its own foreign
trade than the international agencies listed above. The following websites of some major English-speaking
countries provide examples of such detailed data.
• FTD - Statistics
Foreign trade figures for the United States.

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• HM Revenue & Customs uktradeinfo - Data - Trade Data
Foreign trade figures for the United Kingdom.
• Statistics Canada – Imports and exports (International trade statistics)
Foreign trade figures for Canada.
• Statistical publications - Department of Foreign Affairs and Trade
Foreign trade figures for Australia.
• Overseas merchandise trade - Statistics New Zealand
Foreign trade figures for New Zealand.
• IMF -- International Monetary Fund Home Page
The International Monetary Fund is best known for organizing aid to countries experiencing financial crises,
but its activities include monitoring and advising on economic performance and publishing financial statistics
as well. It also publishes a quarterly journal entitled Finance and Development.
• The World Bank
The World Bank Group's main focus is providing funding intended to assist in the development of poor and
middle-income countries.
• Bank for International Settlements
The Bank for International Settlements attempts to coordinate central bank activities around the world to
ensure global economic stability.
• International Labour Organization - Home
The International Labour Organization is a UN agency whose goal is to ensure adequate working conditions
for all employees around the world.
• WHO | World Health Organization
The World Health Organization is a UN agency aimed at improving health conditions.
• UNESCO - Homepage | UNESCO.org | United Nations Educational, Scientific and Cultural Organization
The United Nations Education, Scientific and Cultural Organization's goal is to forge agreement on emerging
ethical issues while promoting development and the preservation of the world's rich heritage of cultures.
• Amnesty International | Working to Protect Human Rights
Amnesty International is an NGO devoted to the protection of human rights internationally.
• Home | Greenpeace International
Greenpeace International is an NGO whose work emphasizes environmental and sustainable development
issues.
• friends of the earth international — Friends of the Earth International
Friends of the Earth is an environmental NGO that has been particularly active in issues related to the
environmental and social impact of resource extraction.

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 • Economist.com
Contrary to what the name might suggest, this is not an economics journal but an authoritative UK-based
weekly newsmagazine.
• World business, finance and political news from the Financial Times – FT.com US
The Financial Times is one of the world's premier financial newspapers.
• Business Financial News, Business News Online & Personal Finance News at WSJ.com - WSJ.com
The Wall Street Journal is the best-known financial newspaper in the USA.
• International finance banking and capital markets news and analysis - Euromoney magazine
Euromoney focuses primarily on international banking and finance.
• The New York Times - Breaking News, World News & Multimedia
The New York Times is widely read across the USA.
• globeandmail.com: Canada's National Newspaper
The Globe and Mail is Canada's most respected daily newspaper with strong international and business
coverage.
• Far Eastern Economic Review | Home
A Hong Kong-based weekly newsmagazine.
• The Wall Street Journal Asia
The Wall Street Journal's Asian edition.
• THE NIKKEI WEEKLY
A weekly newspaper put out by the publisher of Japan's leading business newspaper group.
• The best company level information including analysis of firm-specific advantages is usually in proprietary
databases available through libraries with subscriptions. Well-known sources include Investext, Mergent On-
line, Bloomberg, GMID (Global Market and Information Database), TableBase and Factiva Global Brand
Rankings Interbrand: Best Global Brands 2007.

7. Exam

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Name (capitals):
First Name (capitals):
Student number:
Programme:

Y50735 Global Strategic Management

Teacher(s): Professor Dr. Ernst VerwaalChoose an item.

zaterdag 2 september 2023Duration of the exam: 3 hours
Nos. of pages exam copy, including cover sheet: 11 # pages Nos. of attachments: 1 #

1. Write your name, first name and student number legibly on each sheet.
2. Switch off your mobile phone/smartphone and put it, together with other electronic devices (smartwatch,
headphones...), and backpack out of reach.
Follow the instructions of the invigilator.
3. Pencil cases are not allowed, writing materials may be placed in a transparent plastic bag clearly visible
on the bench/table.

4. The following aids are allowed:

Choose an item.Non-programmable calculatorChoose an item.Choose an item.
The student is allowed to request the invigilator for translation help in case of some difficult to
understand (key) words, used in the CEMEX case. This within reasonable boundaries.

5. Write the answer only in the answer space provided on the front of the exam sheet. The back of the
exam sheet Choose an item.
6. You may not use your own paper. If necessary and if allowed, ask the invigilator for extra scrap paper.
7. You may not detach the exam bundle. Submit all sheets after the exam, including the separate scrap
paper sheets.
8. For multiple-choice questions Choose an item. not applicable.

Explanation of the guess correction: not applicable

The exam consists of 8 essay questions. Case questions are related to the
CEMEX case - attached to this exam.

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Question 1 (3/20)
CEMEX opted for acquisition as an entry mode for its internationalization. Explain why companies
sometimes opt for acquisitions as entry mode when they don't need it. What alternatives would CEMEX have
had to enter the foreign market and explain why acquisition could be a good choice for CEMEX in this case.

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Question 2 (2/20)

In the case, CEMEX has to deal with different forms of distance. Clearly indicate which forms of distance
apply and which forms of distance had the most influence on the performance of CEMEX as a global
company.

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Question 3 (2/20)
CEMEX is a multinational company with a global value chain in many countries. Explains why CEMEX’
subsidiary in Spain could benefit from this global value chain and why the subsidiary as an independent
Spanish company would not have these advantages?

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Question 4 (3/20)
Bartlett & Ghoshal distinguish different roles for subsidiaries based on their research. Verbeke (2022)
expands these roles with reference to the place of the subsidiary in the global value chain (GVC). Explain
whether this extension can be applied to CEMEX and why it could have benefits for the management of the
subsidiaries-headquarter relationships?

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Question 5 (2/20)
Verbeke distinguishes three motives for multinational companies to invest in foreign markets. Discuss these
motives and explain to what extent they apply to the CEMEX case.

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Question 6 (3/20)

Arnold's fifth guideline is about maintaining strategic control over international distribution. Explain which
pattern of firm specific advantages (FSAs) development in the foreign market Arnold warns against with this
guideline and which patterns Arnold prefers to develop in international distribution.

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Question 7 (3/20)

In the new EU Corporate Sustainability Due Diligence Directive, EU companies will be responsible for the
social and environmental impact of all companies in their global value chain. Explain what consequences this
will have for CEMEX and whether this is an advantage for a company like CEMEX as an “international
coordinator” compared to competitors who often follow the model of the “multi-centered multinational
enterprise” (multi-centered MNE).

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Question 8 (2/20)
CEMEX is a company from a country that is considered an emerging economy. Explain how the
development of CEMEX may have been influenced by this home country background of CEMEX.

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This page is left empty as extra space for answering questions

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