Examiners’ commentaries 2017

Examiners’ commentaries 2017

MN1178 Business and management in a global context

Important note

This commentary reflects the examination and assessment arrangements

for this course in the academic year 2016–17. The format and structure
of the examination may change in future years, and any such changes
will be publicised on the virtual learning environment (VLE).

Information about the subject guide and the Essential reading

references
Unless otherwise stated, all cross-references will be to the latest version
of the subject guide (2016). You should always attempt to use the most
recent edition of any Essential reading textbook, even if the commentary
and/or online reading list and/or subject guide refer to an earlier
edition. If different editions of Essential reading are listed, please check
the VLE for reading supplements – if none are available, please use the
contents list and index of the new edition to find the relevant section.

General remarks
Learning outcomes
At the end of the course, and having completed the Essential reading and
activities, candidates should be able to:
• demonstrate knowledge of, and the ability to assess, core institutions
of international business and how firms manage on the global stage
• assess regional, cultural and institutional differences in how business is
conducted globally
• apply core understandings, frameworks and management principles to
specific business contexts
• formulate choices and decisions in international business strategy and
operations
• operate as an informed employee in an international firm.
In summer 2017, 1,750 candidates sat the examination of MN1178
Business and management in a global context. As chief examiner,
I was again pleased with the conduct and outcomes of the examinations
for Zone A and Zone B. The feedback once more is that the module
remains popular with students. It is quite broad, but well structured and
detailed and with good support material in the subject guide and textbook.
A sizeable majority passed the examination, but, slightly disappointingly,
few candidates gained firsts or 2.1s. The good scripts had common
features. Candidates answered the questions with relevant information
and examples, and used the course and textbook material well, as well
as material from the additional references. They also used illustrative
examples throughout their answers. They answered all four questions
to at least pass requirement, and clearly allocated their time well on
the questions, dependent on the marks available. Candidates also gave
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MN1178 Business and management in a global context

detailed, well-written and well-argued answers, rather than simply

providing a list of bullet points and the occasional diagram.
This year’s pass rate was higher than in 2016, with fewer very poor scripts.
But, notably, the poor scripts show the same key characteristics that made
for failure in the 2015 and 2016 examinations. Candidates have plenty of
opportunities to avoid failing, if they note the following.
The candidates who failed this year had clearly not followed the course
thoroughly. Their answers showed little engagement with the contents
of the subject guide and Essential reading, except for a few subjects,
and even knowledge of those was insufficient. The subject guide and
Essential reading (Willcocks, 2013, 2016) are highly structured and give
precise directions on how and what to study. There are now three years
of published examples of examination questions and guideline answers.
In addition, the subject guide includes strong advice on examination
technique. There is also plenty of online guidance with worked examples.
Too many candidates sitting the module examinations this year failed
because they did not take proper advantage of the resources available.
Other candidates manifestly did. As last year, I noted that students from
the same teaching institution often recorded widely divergent results,
ranging from distinctions and strong marks in the 60–69 per cent range
right through to bad fails.
A worrying number of students who passed with a third could have done
much better. The advice they needed to follow was in the Examiners’
commentaries 2016, and needs to be revisited this year, especially by
those candidates intending to resit their examination in 2018.
Here are a number of points students need to action to avoid
underperformance in the MN1178 Business and management in a
global context examination in 2018.
First, there is no change in the syllabus, subject guide and Essential
reading. Therefore, your first task is to read and engage actively with the
subject guide. All the instructions needed for preparing for studying the
content and being successful in the examination are contained within
the subject guide. It has multiple educational tasks and questions. It also
refers specifically to relevant cases and pages in the textbooks. Successful
students carry out all the work as recommended.
Second, candidates who failed or underperformed significantly in the
examination manifestly demonstrated through the brevity and poor quality
of their answers that, unlike the more successful candidates, they had
not read, digested and used in their answers material from the textbook
written specifically for this module, namely
Willcocks, L. Global business management foundations (Stratford: Steve
Brookes Publishing, 2013) [ISBN 9780956414533].
(Either the 2nd or 3rd edition could have been used as both have the same
text but in different formats.)
As in previous years, failing and underperforming candidates were over-
reliant on the course teacher and slides provided by their educational
institution, and spent a lot of time studying sample questions and answers
in the subject guide as a substitute for engaging in detail with the subject
areas of the course. If you take more responsibility for your own learning,
you will carry out the self-study as prescribed in the subject guide. Using
the subject guide and textbook, you should combine this with the teaching
and materials provided by your teaching institution, together with the
considerable online support from the University of London.

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 Examiners’ commentaries 2017

Third, as you read the comments on the examination questions below,

you will notice that for every question, marks are given for illustrative
examples. Spending time working on illustrative examples is also a good
way of making learning stick. Failing and underperforming students both
in 2016 and 2017 lacked illustrative examples in their answers. Internalise
the knowledge you gain and make it memorable through illustrative
examples. The subject guide has many activities where the student must
engage with cases and examples, while Willcocks (2nd and 3rd editions)
includes many illustrative examples. In the subject guide, students are
pointed to cases in the recommended text (now in its 2nd edition, while
the 1st edition remains useful):
Peng, M and K. Meyer International business. (London: Cengage Learning,
2011) [ISBN: 9781408019566].
Fourth, there was again some evidence that students tried to question
spot based on past sample papers and last year’s examination questions.
This is not advised, although learning from reviewing past examination
papers and looking at Examiners’ commentaries is a good idea. Failing and
underperforming students invariably gamble far too much on preparing
too few subject areas for the examination. We had too many examination
scripts where one or two questions were completed well, and the
remaining two questions scored very few marks indeed, not through time
pressure but because the candidate manifestly did not know the subject.
The examination requires the candidate to answer four questions, and
you would advisably be prepared for many more questions than just four.
A poor strategy is hoping to do two questions well and scrape by on the
other two. Note also that if a student wishes to take a high-risk gamble,
they should be aware that a question area may well cross several chapters
in the subject guide and textbook. This was the case in both the 2016 and
2017 examinations, and cannot be ruled out for the 2018 examination.
These questions tended not to be answered as well as a question based on
only one chapter in the subject guide or textbook.
Fifth, a real discriminator between candidates with good to very good
results and those who fail and underperform is examination technique.
Appendix 1 and Appendix 2 of the subject guide has explicit and detailed
advice on this, and candidates planning to sit an examination would be
advised to read these carefully.
In the 2017 examination, as in the 2016 examination, the good
students observed the following recommendations, while the poor and
underperforming students seemed not to understand these attributes of
good examination technique:
• Candidates need to answer all the questions set. Quite simply, no
answers, no marks.
• The best candidates allocate the appropriate time to each question.
If each question stands to earn up to 25 marks, then each question
should receive your attention for approximately one-quarter of the
time of the examination. Similarly, the best candidates understand that
each question is explicit about the marks given for each sub-question
and allocate their time and effort accordingly. For example, Zone A
Question 1 below gives 9 marks for part a), 8 marks for part b) and
8 marks for part c). Do not spend all your time on part a) when nearly
two-thirds of the marks are going for parts b) and c).
• The best candidates are also clear about answering the question set,
rather than a question they want to answer. In the 2017 examination,
there were too many examples of candidates not answering the
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MN1178 Business and management in a global context

question but filling one or even two pages with good detail from
course material that was not that relevant. Candidates should
understand that examiners cannot give marks for detail that does not
actually answer the question set.
• The best candidates also realised that they would be rewarded
for defining important terms or concepts. For example, in Zone A
Question 2 the candidate had to describe PESTEL and CAGE
frameworks, but also define formal and informal institutions and
international business strategy. Marks were given for these definitions.
Throughout the examination, candidates needed to demonstrate an
understanding of the terms and concepts in use, and they earned
marks for displaying this understanding.

Conclusion
Again, we really do hope that these comments will be read carefully and
acted upon in future years. As chief examiner, my key advice remains the
same:
Read the subject guide very carefully. Interact with it: do its tasks and
activities as instructed. Digest and learn from Willcocks (2nd or 3rd
edition). It is especially important to use this textbook for revision. You
really are expected to demonstrate, as a minimum requirement to pass,
strong knowledge of the contents of the subject guide and this textbook.
Use Peng and Meyer (2011) as instructed in the subject guide, especially
for its illustrative examples. Revise thoroughly. Observe the principles
of good examination technique detailed above in these Examiners’
commentaries and in the subject guide, Appendix 1 and Appendix 2.

Examination revision strategy

Many candidates are disappointed to find that their examination

performance is poorer than they expected. This may be due to a
number of reasons, but one particular failing is ‘question spotting’,
that is, confining your examination preparation to a few questions
and/or topics which have come up in past papers for the course. This
can have serious consequences.
We recognise that candidates might not cover all topics in the syllabus
in the same depth, but you need to be aware that examiners are free
to set questions on any aspect of the syllabus. This means that you
need to study enough of the syllabus to enable you to answer the
required number of examination questions.
The syllabus can be found in the Course information sheet available
on the VLE. You should read the syllabus carefully and ensure that
you cover sufficient material in preparation for the examination.
Examiners will vary the topics and questions from year to year
and may well set questions that have not appeared in past papers.
Examination papers may legitimately include questions on any topic
in the syllabus. So, although past papers can be helpful during your
revision, you cannot assume that topics or specific questions that have
come up in past examinations will occur again.
If you rely on a question-spotting strategy, it is likely
you will find yourself in difficulties when you sit the
examination. We strongly advise you not to adopt this
strategy.

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 Examiners’ commentaries 2017

Examiners’ commentaries 2017

MN1178 Business and management in a global context –
Zone A

Important note

This commentary reflects the examination and assessment arrangements

for this course in the academic year 2016–17. The format and structure
of the examination may change in future years, and any such changes
will be publicised on the virtual learning environment (VLE).

Information about the subject guide and the Essential reading

references
Unless otherwise stated, all cross-references will be to the latest version
of the subject guide (2016). You should always attempt to use the most
recent edition of any Essential reading textbook, even if the commentary
and/or online reading list and/or subject guide refer to an earlier
edition. If different editions of Essential reading are listed, please check
the VLE for reading supplements – if none are available, please use the
contents list and index of the new edition to find the relevant section.

Comments on specific questions

Please note that this Examiners’ commentary refers to a newer edition
of the essential textbook than the edition listed in the subject guide. You
should always attempt to obtain the most recent edition of any textbook,
and where references are made to page numbers of previous editions, use
the index of the new edition to find the relevant section.
Edition referred to in this Examiners’ commentary: Willcocks, L. Global
business management foundations. (Stratford: Steve Brookes Publishing,
2016) 3rd edition [ISBN 9780956414533].
Candidates were expected to answer FOUR questions of the following
EIGHT questions. Each answer carries a maximum of 25 marks.

Question 1
‘To become international, businesses need to enter new global markets. They
need to know how, why and when to do this’. Using illustrative examples,
answer the following questions:
a. Evaluate the factors a business would need to consider when deciding why to
enter a foreign country market, which market to enter, when to enter, and the
scale and ownership required. (9 marks)
b. When are fully owned subsidiaries an attractive market entry mode? When
are they less attractive? (8 marks)
c. Describe the differences between franchising and licensing as modes of
entry, and discuss when each is most suitable. (8 marks)
Reading for this question
Relevant material and references are in pages 114 to 121 and pages 55 to
59 of the subject guide.

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MN1178 Business and management in a global context

Willcocks, L. Global business management foundations. (Stratford: Steve

Brookes Publishing, 2013) [ISBN 9780956414533] Chapter 6.
Approaching the question
a. There are many factors and we expected nine for the nine marks.
Examples include:
Will entering a foreign country market increase sales and/or
improve competitive positioning?
Can we sell on products developed for a saturated domestic
market?
Are there location factors that give us an advantage? (For example,
cheaper labour and/or resources, favourable government policies
or local institutions, being part of an economic cluster of related
industries.)
Do we get a first-mover advantage by establishing a brand early, or
create switching costs if customers move to later competitors?
b. Scale and ownership (i.e. level of commitment) depend on strategy.
Ownership can be attractive – we expected four reasons here (e.g.
reduces risk of losing control over core competences; gains all the
profits; protects key technologies/knowledge/IP). But there are risks
(e.g. the firm bears the full risk and costs; greenfield sites are slower to
establish and are often risky and require a lot of local knowledge and
fit with PESTEL factors; and acquisitions may fail).
c. Franchising – This required a description and some points on when
it is a suitable option (e.g. it is important to reduce costs and risks
but retain control over key areas such as location to enable speed to
market).
Licensing – A description is required, as well as a discussion of the
pros and cons (e.g. licensing is less risky than franchising and avoids
barriers to investment such as from government restrictions).

Question 2
‘International businesses still greatly underestimate the strategic constraints and
challenges formal and informal institutions represent in the specific countries
and markets they want to operate in.’ Discuss this statement under the following
headings, using illustrative examples throughout your answers:
a. What are the major political, economic and legal institutions an international
business has to take into account when designing its international business
strategy? (8 marks)
b. What major informal institutions will an international business likely have to
assess and design a strategy for? (8 marks)
c. Certain analytical frameworks help the business practitioner to assess
external environments and internal capabilities. Describe and assess the
usefulness of PESTEL, CAGE and SWOT analyses. (9 marks)
Reading for this question
The relevant material and references appear in the subject guide, pages 89
to 96, and Willcocks (2013) Chapters 2, 3 and 4.
Approaching the question
a. We expected a description of the composition of political, economic
and legal (PEL) institutions. As an example of the level of detail
expected, for the political system, we required a discussion of
collectivism versus individualism and different types of ‘totalitarian’
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 Examiners’ commentaries 2017

and ‘democratic’ systems, with examples, for which we allocated

two marks. A discussion as to how PEL institutions impinge upon an
international business gained two marks.
b. We expected informal institutions to cover cultural, social, language,
religious and ethical dimensions. This should have included some
discussion of culture, types and their importance and the roles of
language and social class and role of different types of religion and
ethics. Students were expected to point out the relevance of these
institutions to international business.
c. A good answer includes a discussion of strengths, weaknesses,
opportunities and threats (SWOT) illustrated by a company example.
A very good answer includes a worked example of how strengths and
opportunities are used to gain competitive advantage, how strengths
are used to meet threats, how opportunities are used to minimise
weaknesses, and how strategies are generated to minimise weaknesses
and threats.
Both CAGE (cultural, administrative, geographical and economic
distance) and PESTEL (political, economic, social, technological,
environmental and legal) should be described in detail with illustrative
examples drawn from the subject guide or reading.

Question 3
International business strategy can be arrived at through both competitive
positioning and resource-based theories of how to achieve strategic advantage.
Discuss this statement under the following headings:
a. What are the four main types of international business strategy? (8 marks)
b. Explain Porter’s three generic competitive strategies and Porter’s five forces
positioning framework. (9 marks)
c. Describe the resource based theory of competing, assessing its strengths and
weaknesses as an analytical tool for international business practice.
(8 marks)
Reading for this question
The material appears in the subject guide, Chapters 7 and 8 and Willcocks
(2013) Chapters 4 and 5.
Approaching the question
a. The four main types are global standardisation, transnational,
international home replication and localisation – multi-domestic.
We expected illustrative examples.
b. We needed a description of Porter’s five forces (see the subject guide,
Section 8.2) and Porter’s generic strategies (see the subject guide,
Section 8.3) and we expected a critique of the frameworks, including
strengths and weaknesses.
c. The description should cover the VRIO or VRIN concepts – valuable
rare, inimitable and O – Organization or N – non-substitutable,
and pull out how all these qualities are needed to give sustainable
competitive advantage. We expected illustrative examples and
strengths and weaknesses to be spelled out. As examples: conceptual
blurring of resources and capabilities; a capability is only potential
and has to be directed and proven in performance; competing involves
building from the bottom – the time horizon might not fit with short-
term survival.

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MN1178 Business and management in a global context

Question 4
‘Globalisation consists of many trends and represents both benefits and
challenges to countries and businesses alike.’
a. Define globalisation and describe the major trends in globalisation over the
last twenty years. (5 marks)
b. For an individual country, or countries, of your choice, assess the major
business and economic advantages and disadvantages that come with
globalisation. (8 marks)
c. What major challenges does globalisation present to an international
business? Use illustrative examples. (6 marks)
d. How can an international business leverage globalisation trends to its
advantage? Use illustrative examples. (6 marks)
Reading for this question
Relevant material and references are in pages 14 to 21 of the subject
guide. See also Willcocks (2013) Chapter 1.
Approaching the question
a. The answer needs a definition, for example: ‘The shift towards a more
integrated and interdependent world economy’, with elaborations on
the basic definition and a discussion of trends, such as:
reduced barriers to trade, and capital investment
increased foreign direct investment (FDI)
growing affluence in many countries, creating more attractive
markets globally.
Mention of Friedman’s 10 flatteners gained some marks, depending on
the level of detail supplied.
b. This question can be approached in many ways. We allowed some
flexibility in the answers to be given. On pros and cons, these may
well be different for a company than for a nation or an individual.
Examples for a country include: more inward investment, more open
foreign markets for exporting, but increasing economic instability and
dynamism due to a connected world and loss of economic sovereignty
to regional blocs.
c. Challenges for an international business include: globalisation
promotes protectionism and regional barriers as a reaction, and
heightened competition from diverse countries and industries.
d. We expected up to five advantages for an international business
using globalisation, for example, technological advances promote
international trade and lower barriers to trade and investment.

Question 5
‘Operationally, it is critical for an international business to align its organisation
structure and architecture with its IT enterprise architecture.’ Assess this
statement under the following headings:
a. What are the main types of organisation structure? (6 marks)
b. What are the main components of organisation architecture? (5 marks)
c. Describe the four main types of IT enterprise architecture, using illustrative
examples. (6 marks)
d. Assess which international business strategy and structure best fits each IT
enterprise architecture. (8 marks)

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 Examiners’ commentaries 2017

Reading for this question

Relevant material and references are in the subject guide. See also
Chapters 8 and 10 of Willcocks (2017).
Approaching the question
a. The main types of organisation structure are: international division,
geographic area, global product division and global matrix.
We expected candidates to include illustrative examples.
b. The main components of organisation architecture are: structure,
control systems and incentives, processes culture and people.
We expected some definitions and a discussion on fit.
c. The four types of architecture may follow the Kettinger et al. typology
– international, multinational, global and transnational – but others
were acceptable.
d. We expected a discussion of the need for business and IT alignment
and the fit between international strategy and enterprise IT
architecture, including a definition. International strategy fits
international division and international IT architecture; localisation
strategy fits geographic area and multinational IT architecture; global
standardisation strategy fits global product and global IT architecture;
and transnational strategy fits global matric and transnational IT
architecture.

Question 6
‘Marketing is critical to international business strategy and increasingly has a
corporate social responsibility dimension.’
a. What are the four main marketing strategies available to a business
operating internationally? (4 marks)
b. Describe the major components of the marketing mix. Illustrate, with
examples, the contribution of each component to effective marketing.
(8 marks)
c. Describe the major areas in which companies need to demonstrate corporate
social responsibility (CSR) when operating internationally, in order to protect
their brand and market positioning. (5 marks)
d. Describe the four CSR strategies that an international business can adopt,
and assess the merits and challenges for each strategy. (8 marks)
Reading for this question
The relevant material on marketing appears in Willcocks (2013)
Chapter 7. CSR appears in the subject guide Chapter 3, Sections 3.4 and
3.5 and in Willcocks (2013) Chapter 3, Sections 3.4, 3.5 and 3.6. Also
Peng and Meyer (2011) Chapter 10 is very relevant.
Approaching the question
a. We gave one mark for each of:
market penetration
market development
product development
diversification.

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MN1178 Business and management in a global context

b. The four main components are:

price
place
product
promotion.
We expected a description of each. Some discussion points might be:
Price – challenges include pricing for different markets,
and finding what the market will bear, whether to use price
discrimination and whether demand is elastic/inelastic.
Place – challenges include establishing distribution channels
that are cost-efficient and deliver goods to customers in a timely
fashion and choosing between the logistics options.
Product – definitions of product will help here. What are
customers buying? We expected a discussion of content, aura,
support and service personalisation. Candidates needed to discuss
physical product, features, quality levels, accessories, installation,
instructions, fit in the overall product line and fit with the other
three of the four Ps.
Promotion – different types of communication and different types
of channels. Challenges include noise levels and cultural barriers.
c. The four major CSR concerns students should be aware of are the
environment, employment practices, human rights and corruption.
We expected the answer to include a discussion of what CSR is and the
notion of a triple bottom line – economic, social and environmental.
d. The four strategies for responding to ethical challenges faced by firms
are reactive, defensive, accommodative and proactive – Peng and
Meyer (2011), pages 312 to 315, provides the best illustration of the
relevant content here (but Willcocks (2013) includes a good summary
of the arguments on pages 61 and 62).

Question 7
Using relevant concepts and illustrative examples:
a. Distinguish and elaborate upon the primary activities and the support
activities that contribute to a firm’s value chain. (8 marks)
b. Explain how location economies, experience curves and economies of scale
enable international firms to attain global cost advantages. (9 marks)
c. With regard to international business strategy, explain the forces that create
pressures for cost reductions and the forces that create pressures for local
responsiveness. (8 marks)
Reading for this question
The relevant material appears in Willcocks (2013) Chapter 4 and the
subject guide, Chapter 7.
Approaching the question
a. This required a definition of value chain and primary and support
activities. We expected a detailed exposition of value chain analysis
covering primary and support activities. We allocated marks for an
explanation of the relevance of value chain analysis for a firm and any
illustrative examples.

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 Examiners’ commentaries 2017

b. See page 90 in the subject guide and pages 70 and 71 in Willcocks

(2013) for the type of description and illustration required for each
of the three terms: location economies, experience curve effects and
economies of scale.
c. Forces that create cost pressure include producing commodity
products, competitors in low-cost locations, persistent excess
capacity, consumer power and low switching costs. Forces that create
localisation pressure include differences in consumer tastes and
preferences, differences in traditional practices and infrastructure,
differences in distribution channels and economic and political
demands imposed by host country governments.

Question 8
‘A firm must aspire to align its organisational structure with its organisational
strategy’
a. Why might an international firm choose to engage in decentralised decision-
making? (5 marks)
b. Besides structure, explain the role of the other four elements which comprise
the organisational architecture of an international firm. (8 marks)
c. Discuss with suitable examples, the advantages and disadvantages of the
different types of organisational structures that international firms might
choose to have. (12 marks)
Reading for this question
The content of the answer is covered in the subject guide, Chapters 7 and
11, and Willcocks (2013) Chapters 4 and 8, as well as in Peng and Meyer
(2011).
Approaching the question
a. The relevant arguments are well covered in Section 11.2 of Chapter
11 (pages 138 and 139) in the subject guide. They are also covered in
Section 8.2 of Chapter 8 in Willcocks (2013) on page 134. We looked
for arguments in support of decentralisation.
b. The components of organisational architecture, apart from structure,
are:
people
processes
culture
incentives and controls.
c. We expected a definition of structure. The four main types of
organisation structure and the strategies they support are:
international division – international (home replication)
geographical area – localisation
global matrix – transnational
global product division – global standardisation.
We expected a discussion of the advantages and disadvantages of the
different types of organisational structures. The discussion merited
12 marks but many candidates did not do this question justice.

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MN1178 Business and management in a global context

Examiners’ commentaries 2017

MN1178 Business and management in a global context –
Zone B

Important note

This commentary reflects the examination and assessment arrangements

for this course in the academic year 2016–17. The format and structure
of the examination may change in future years, and any such changes
will be publicised on the virtual learning environment (VLE).

Information about the subject guide and the Essential reading

references
Unless otherwise stated, all cross-references will be to the latest version
of the subject guide (2016). You should always attempt to use the most
recent edition of any Essential reading textbook, even if the commentary
and/or online reading list and/or subject guide refer to an earlier
edition. If different editions of Essential reading are listed, please check
the VLE for reading supplements – if none are available, please use the
contents list and index of the new edition to find the relevant section.

Comments on specific questions

Candidates were expected to answer FOUR of the following EIGHT
questions. All questions carry equal marks.

Question 1
‘To become international, businesses need to enter new global markets. They
need to know how, why and when to do this’. Using illustrative examples,
answer the following questions:
a. Evaluate the factors a business would need to consider when deciding why to
enter a foreign country market, which market to enter, when to enter, and the
scale and ownership required. (9 marks)
b. When are fully owned subsidiaries an attractive market entry mode? When
are they less attractive? (8 marks)
c. Describe the differences between franchising and licensing as modes of
entry, and discuss when each is most suitable. (8 marks)
Reading for this question
Relevant material and references are in pages 114 to 121 and pages 55 to
59 of the subject guide.
Willcocks, L. Global business management foundations. (Stratford: Steve
Brookes Publishing, 2013) [ISBN 9780956414533] Chapter 6.
Approaching the question
a. There are many factors and we expected nine for the nine marks.
Examples include:
Will entering a foreign country market increase sales and/or
improve competitive positioning?

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 Examiners’ commentaries 2017

Can we sell on products developed for a saturated domestic

market?
Are there location factors that give us an advantage? (For example,
cheaper labour and/or resources, favourable government policies
or local institutions, being part of an economic cluster of related
industries.)
Do we get a first-mover advantage by establishing a brand early, or
create switching costs if customers move to later competitors?
b. Scale and ownership (i.e. level of commitment) depend on strategy.
Ownership can be attractive – we expected four reasons here (e.g.
reduces risk of losing control over core competences; gains all the
profits; protects key technologies/knowledge/IP). But there are risks
(e.g. the firm bears the full risk and costs; greenfield sites are slower to
establish and are often risky and require a lot of local knowledge and
fit with PESTEL factors; and acquisitions may fail).
c. Franchising – This required a description and some points on when
it is a suitable option (e.g. it is important to reduce costs and risks
but retain control over key areas such as location to enable speed to
market).
Licensing – A description is required, as well as a discussion of the
pros and cons (e.g. licensing is less risky than franchising and avoids
barriers to investment such as from government restrictions).

Question 2
‘Global sourcing is a key part of any international business strategy. Make-
or-buy, outsource and offshoring are three key decision areas.’ Discuss this
statement under the following headings, using illustrative examples throughout:
a. In the context of international business, describe what is meant by a ‘Make-
or-Buy’ decision. (2 marks)
b. Assess under what conditions a ‘Make’ or a ‘Buy’ decision is more
appropriate. Use relevant examples from service and/or manufacturing
industries to support your answers. (9 marks)
c. What risks in offshore outsourcing should a firm take into account and how
can these risks be mitigated? (6 marks)
d. What factors make the offshore outsourcing of global services or production
attractive to a firm? (4 marks)
e. What are the advantages of establishing a captive centre offshore?
(4 marks)
Reading for this question
Relevant material and references are in Chapter 12 of the subject guide.
See also Willcocks Chapter 9.
Approaching the question
a. A Make decision is deciding to make your own components or
run your own services in-house. A Buy decision is deciding to get
someone else to produce the part/product or outsource the service.
The examiners expected an illustrative example from international
business.
b. Candidates needed to suggest when Make is appropriate. For example,
Make is appropriate when the following issues are important: lower
costs where the company is the most efficient producer already and
the need for investment in specialised assets. On the other hand, Buy

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MN1178 Business and management in a global context

is useful when, for example, the part or service is a commodity that

doesn’t critically underpin business strategy or there are good suppliers
available at a competitive price.
c. The risks and challenges of offshore outsourcing are many and
the following are examples: not spending enough time and effort
in transitioning work or choosing the right supplier; not training
the supplier for cultural compatibilities; exposure to exchange rate
fluctuations; and not monitoring costs.
The ways in which these risks and challenges can be reduced and
managed are also multiple. For example, exchanging information,
transferring knowledge, troubleshooting, coordinating and monitoring;
close collaboration with suppliers on co-development and co-design
activities; and building strong relationships that promote trust and
communication.
d. There are many such factors, and here are examples of what to expect.
The focus is on offshoring here. A good answer considered location
attractiveness – this could be a long discussion of factors such as costs,
skills, business and living environment, quality of infrastructure risk
profile and market potential.
e. Examples of the advantages of an offshore captive centre include:
maintaining control over quality, personnel and processes; protecting
intellectual and technological proprietary property; and lower
transaction costs than if dealing with a third party.

Question 3
‘Regional integration has been an imperfect, but valuable way of protecting
trade amongst member countries, but creates challenges for international
businesses’.
a. Describe the major types of regional integration, giving an example of each.
(5 marks)
b. What are the political and economic arguments in favour of, and against
regional integration? Give examples from existing blocs, e.g. ASEAN, NAFTA,
EU to illustrate your points. (10 marks)
c. Using illustrative examples, evaluate the challenges and opportunities
regional integration presents to an international business? (10 marks)
Reading for this question
The material appears in the subject guide, Chapter 5 and Willcocks (2013)
Chapter 2, as well as Peng and Meyer (2011) Chapters 8 and 9.
Approaching the question
a. This required a discussion of a free trade area, customs union,
common market, economic union, political union, and the different
levels of integration they represent.
b. There are many such arguments. Examples in favour of regional
integration include: gains from free trade on a limited basis, protection
from foreign competition, reduced problems with exchange rate
fluctuations (this depends on the type of integration). Examples
against include: regional integration lessens a country’s ability
to protect its own economy and borders, leaving it open to more
dominant bloc members and external entities with which the whole
bloc has agreements; and common currencies do not always work
well.

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 Examiners’ commentaries 2017

c. Candidates could have provided as many as five challenges here in

the time available. Examples include: it is difficult to penetrate tariffs
and regulations from outside the economic bloc; and international
businesses have to negotiate with administrators of the whole
economic bloc as well as individual countries.
The ways in which regional economic integration can help
international business include: trade creation, bigger markets
and economies of scale, regional supply chains and regulatory
harmonisation. These are just some examples of many points
that could be made. Looking at ways in which regional economic
integration can hinder international business, examples include: trade
diversion, intensification of competition and limits on government
help.

Question 4
‘Globalisation consists of many trends and represents both benefits and
challenges to countries and businesses alike.’
a. Define globalisation and describe the major trends in globalisation over the
last twenty years. (5 marks)
b. For an individual country, or countries, of your choice, assess the major
business and economic advantages and disadvantages that come with
globalisation. (8 marks)
c. What major challenges does globalisation present to an international
business? Use illustrative examples. (6 marks)
d. How can an international business leverage globalisation trends to its
advantage? Use illustrative examples. (6 marks)
Reading for this question
Relevant material and references are in pages 14 to 21 of the subject
guide. See also Willcocks (2013) Chapter 1.
Approaching the question
a. The answer needs a definition, for example: ‘The shift towards a more
integrated and interdependent world economy’, with elaborations on
the basic definition and a discussion of trends, such as:
reduced barriers to trade, and capital investment
increased foreign direct investment (FDI)
growing affluence in many countries, creating more attractive
markets globally.
Mention of Friedman’s 10 flatteners gained some marks, depending on
the level of detail supplied.
b. This question can be approached in many ways. We allowed some
flexibility in the answers to be given. On pros and cons, these may
well be different for a company than for a nation or an individual.
Examples for a country include: more inward investment, more open
foreign markets for exporting, but increasing economic instability and
dynamism due to a connected world and loss of economic sovereignty
to regional blocs.
c. Challenges for an international business include: globalisation
promotes protectionism and regional barriers as a reaction, and
heightened competition from diverse countries and industries.
d. We expected up to five advantages for an international business
using globalisation, for example, technological advances promote
international trade and lower barriers to trade and investment. 15
MN1178 Business and management in a global context

Question 5
‘Operationally, it is critical for an international business to align its organisation
structure and architecture with its IT enterprise architecture.’ Assess this
statement under the following headings:
a. What are the main types of organisation structure? (6 marks)
b. What are the main components of organisation architecture? (5 marks)
c. Describe the four main types of IT enterprise architecture, using illustrative
examples. (6 marks)
d. Assess which international business strategy and structure best fits each IT
enterprise architecture. (8 marks)
Reading for this question
Relevant material and references are in the subject guide. See also
Chapters 8 and 10 of Willcocks (2017).
Approaching the question
a. The main types of organisation structure are: international division,
geographic area, global product division and global matrix. We
expected candidates to include illustrative examples.
b. The main components of organisation architecture are: structure,
control systems and incentives, processes culture and people. We
expected some definitions and a discussion on fit.
c. The four types of architecture may follow the Kettinger et al. typology
– international, multinational, global and transnational – but others
were acceptable.
d. We expected a discussion of the need for business and IT alignment
and the fit between international strategy and enterprise IT
architecture, including a definition. International strategy fits
international division and international IT architecture; localisation
strategy fits geographic area and multinational IT architecture; global
standardisation strategy fits global product and global IT architecture;
and transnational strategy fits global matric and transnational IT
architecture.

Question 6
‘Marketing is critical to international business strategy and increasingly has a
corporate social responsibility dimension.’
a. What are the four main marketing strategies available to a business
operating internationally? (4 marks)
b. Describe the major components of the marketing mix. Illustrate, with
examples, the contribution of each component to effective marketing.
(8 marks)
c. Describe the major areas in which companies need to demonstrate corporate
social responsibility (CSR) when operating internationally, in order to protect
their brand and market positioning. (5 marks)
d. Describe the four CSR strategies that an international business can adopt,
and assess the merits and challenges for each strategy. (8 marks)
Reading for this question
The relevant material on marketing appears in Willcocks (2013)
Chapter 7. CSR appears in the subject guide, Chapter 3, Sections 3.4 and
3.5 and in Willcocks (2013) Chapter 3, Sections 3.4, 3,5 and 3.6. Also
Peng and Meyer (2011) Chapter 10 is very relevant.

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 Examiners’ commentaries 2017

Approaching the question

a. We gave one mark for each of:
market penetration
market development
product development
diversification.
b. The four main components are:
price
place
product
promotion.
We expected a description of each. Some discussion points might be:
Price – challenges include pricing for different markets,
and finding what the market will bear, whether to use price
discrimination and whether demand is elastic/inelastic.
Place – challenges include establishing distribution channels
that are cost-efficient and deliver goods to customers in a timely
fashion and choosing between the logistics options.
Product – definitions of product will help here. What are
customers buying? We expected a discussion of content, aura,
support and service personalisation. Candidates needed to discuss
physical product, features, quality levels, accessories, installation,
instructions, fit in the overall product line and fit with the other
three of the four Ps.
Promotion – different types of communication and different types
of channels. Challenges include noise levels and cultural barriers.
c. The four major CSR concerns students should be aware of are the
environment, employment practices, human rights and corruption.
We expected the answer to include a discussion of what CSR is and the
notion of a triple bottom line – economic, social and environmental.
d. The four strategies for responding to ethical challenges faced by firms
are reactive, defensive, accommodative and proactive – Peng and
Meyer (2011), pages 312 to 315, provides the best illustration of the
relevant content here (but Willcocks (2013) includes a good summary
of the arguments on pages 61 and 62).

Question 7
‘International human resource management is a vital activity for many large
firms nowadays’.
a. Discuss the three main approaches to staffing policy within international
firms. (6 marks)
b. Explain the challenges a firm faces when managing expatriate employees
working abroad. (10 marks)
c. How can a firm deal with these challenges and manage expatriates
effectively? (9 marks)
Reading for this question
The relevant material appears in Willcocks (2013) Chapter 11 and the
subject guide, Chapter 14.

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MN1178 Business and management in a global context

Approaching the question

a. We expected a definition of HR management, for example, the
activities an organisation carries out to use its human talent effectively.
The three approaches are:
Ethnocentric – This approach best underpins an ‘international’ type
strategy. Foreign talent is used to support local management where
there is a shortage. It helps to transfer core competencies from the
home base.
Geocentric – This approach underpins global standardisation or
transnational strategies. Managers are trained centrally. It helps
to build a strong culture and develop informal management
networks.
Polycentric – This approach supports a localisation strategy by
using local talent to alleviate the possibility of cultural differences.
It is inexpensive to implement.
b. The challenges can be many, but we looked for a discussion of
them, not just a listing, and gave marks for illustrative examples.
Challenges include: selection, failure of the expatriate or family to
adapt, training and development, compensation, transitioning in or
out and performance appraisal. Candidates also needed to display an
understanding of what is meant by expatriate workers.
c. The answer rests in effective human resource policies developed for
the international dimension of the business. Here, we expected an
explanation of the resource life-cycle for HR – i.e. attracting the right
candidates, the selection process, motivation, incentives and pay
approaches, appraisal and measuring performance, as well as handling
disputes, conflicts and poor performance.

Question 8
‘Exchange rate management is a very important issue for many international
firms which are engaged in cross-border trade and investment activities.’
a. Explain the determinants of a currency’s exchange rate. (5 marks)
b. Describe, with examples, the three types of exchange rate exposure that
international firms face. (6 marks)
c. How can an international firm reduce its exposure to exchange rate risks?
(9 marks)
d. Explain the disadvantages of the strategies identified in part c) above.
(5 marks)
Reading for this question
The relevant material appears in the subject guide, Chapter 6 and Peng
and Mayer (2011) Chapter 7.
Approaching the question
a. Factors include relative price differences, inflation and monetary
supply, interest rates, productivity and balance of payments, investor
psychology and the bandwagon effect. We expected a discussion of
these factors and not just bullet points.
b. The three types of exchange rate exposure that international firms face
are transaction exposure, translation exposure and economic exposure.
These should have been discussed and not just listed.

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 Examiners’ commentaries 2017

c. Many strategies are possible but we expected mention of strategic

hedging, risk diversification, currency hedging and currency swap.
Candidates could talk about these in depth with illustrative examples
or supply a broader range of strategies.
d. The disadvantages depend on which were identified in c) but see page
79 of the subject guide. For example, strategic hedging involves big
FDI and sourcing decisions and risks; risk diversification may be sub-
optimal on opportunities; and currency hedging can be highly risky in
volatile and less volatile economic times.

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