The ABB Transformers case is designed to be used to help develop an understanding of conflicts that can develop within a transnational company between the corporate, division, and country level operations. The case is also designed to demonstrate the inherent conflicts that can develop within a matrix form of organizational structure.

The case looks at decisions that are made at the division level of a large, transnational company. In such companies, there are a variety of conflicting goals and objectives. These lead to different priorities between different levels of management. When the reward system of the organization does not fully account for these differences, conflicts and disagreements are bound to develop. The ABB case looks at just such conflicts by discussing a managerial decision that has to be made concerning to appropriate positioning of manufacturing facilities on a global scale.

Finally, the ABB case is designed to provide students with the ability to analyze the structure, process, management style, and political realities of organizational life. The decision that has to be made has to be done within the context of all of these factors.

These case was prepared through field research and interviews with the key players involved in the decision.

Johannes Prahl, the CEO of ABB Transformers, in Odense, Denmark was faced with the need to decide how to proceed with the requests by his supervisors concerning the potential closing of one of the plants operated by the company. Prahl reported to his Business Area (BA) Manager, Olaf Mehus, as well as the Danish Country Manager (CM), Kaare Vagner, as a result of the matrix organizational structure adopted by the parent company, ASEA Brown Boveri, ABB, upon the merger of the two predecessor firms.

The BA manager has proposed that the Odense transformer be closed and its equipment be transferred to Thailand, to take advantage of the growth being encountered in the Asian market. This was opposite to the stagnation of the European market. Also, Mehus pointed to the fact that the Transformer Division, comprising companies in Germany, Norway, Finland, and the United States, was faced with over capacity in the European market. Vagner, on the other hand, was arguing that the Odense plant was now the most efficient of all the transformer plants owned by ABB. The Odense plant was to be the first plant to be closed and transferred to another location by ABB. All three managers knew that they would be evaluated, in no small part, on the growth and profitability of the operations reporting to them. As a result, there was a conflict over the decision to close the plant in Odense.

The ABB CEO, Percy Barnevik, had stated that the company valued managers who were able to work as part of a team. The company also valued managers who were able to develop these and other skills, including communications, in subordinates.

The BA manager was responsible for the global strategy of the companies reporting to him. The CM was responsible for maintaining positive relations within the country where he was operating, as well as overseeing the implementation of the strategies of the operating companies within his country.

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Contact Person: William Naumes, Associate Professor of Management,
Whittemore School of Business and Economics
University of New Hampshire, Durham, NH 03824;
Phone: (603) 862-2618; E-mail: bill.naumes@unh.edu

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This case illustrates the complexities of operating a government owned enterprise in an environment of economic depression, changing political and economic system, runaway inflation, and the prospect of privatization. It is appropriate for use in courses in Strategic Management, International Business, and Public Administration at both the graduate and undergraduate levels. This case is believed to be the first one about modern Bulgarian business. It will appear in both English and Bulgarian, and is expected to provide a model for further case research as Bulgarian scholars attempt to add more practicality to the curriculum in management and business education. The case will be made available for use in Bulgaria.

This case focuses on the relationship between the CEO and the governing Commissioners Board (directors). The CEO wants the board to approve the purchase of additional river ships, but is having difficulty persuading the board members. The summary of points of argument from board members allows for much speculation about divergent economic philosophies and the purposes of a business enterprise. Saying one wants a free market system is much easier than making it happen. Fifty years of believing that a centrally planned economy is best is not easy to forget or dismiss, particularly when the early efforts at free market do not seem to be working very well.

For Western analyst, the case provides a foundation for further research of the culture of Bulgaria. For the Bulgaria analyst, this case used in conjunction with other cases about Western or Central/Eastern European business may form the basis for interesting comparisons and contrasts.
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Contact Person: Tim Singleton
Mail: North Georgia College, Dahlonega, Georgia 30597
Voice: (706) 864-7295; Email: tsingleton@nugget.ngc.peachnet.edu

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This decision-based case asks students to make a decision on whether or not Coors Brewing Company should pursue its expansion in Asia. It challenges them to analyze the company’s overall financial position, as will as the operations of Jinro-Coors Brewing Company (JCBC), the political and economic environment in South Korean and the long-term opportunities in developing a majority ownership in that part of the world. The decision-focus rests on Coors decision to re-invest in the Korean market, and if so, then what should that investment look like? The case presents options including establishing a majority ownership in JCBC, finding a new joint venture partner, or contributing foreign investment into a new Coors brewery in country.

This case has been prepared for international business courses at the undergraduate and graduate levels. It would also be useful in courses focused on international policy and strategy at the graduate level. It is intended to assist students in understanding and making decisions about international strategy, and applying various strategy models to a real-life business situation.

Coors was founded in 1873 when Adolph Coors, along with his partner Jacob Schueler, opened a modest brewery in Golden, Colorado. Nineteen-ninety eight marked the company’s 125^th anniversary. The third largest brewery in the United States, Coors had become increasingly focused on its international operations and expansion. In 1992, the company was approached by a Korean conglomerate, Jinro Company, Ltd., for a joint venture relationship. Six years later the joint venture relationship had produced a state-of-the-art brewing facility, a flagship beer that held 20% of the Korean market, and a foothold in the Asian beer industry. In the end of 1997, following turbulent economic times across Asia, Coors exercised its put option and relinquished all ownership of the joint venture. By the spring of 1998, Coors was looking for ways in which it could re-enter the Korean market, perhaps by developing a majority ownership position in Jinro-Coors Brewing Company (JCBC).

There were several strengths in this relationship that Coors could not have achieved on its own, including a strong distribution network, local influence, knowledge and expertise, and a top quality product. Coors also had to access the threats in this relationship, including the risk of unclear expectations, limited knowledge of one another’s culture, and the complexities inherent in dealing with the convoluted credit systems within the typical Korean chaebol.

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Contact Person: Sarah Sittig, University of Denver, Denver, CO 80208
Mail: 3404-21 E. Country Line Road, Highlands Ranch, CO 80126 USA
Voice: (303) 753-0492; email: ssittig@du.edu

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CSN (Compania Siderurgica Nacional) is one of the clearest examples of Latin American privatization efforts of the last two decades. The company successfully converted from public ownership with political management using personal favoritism as the base of administrative decision making to private ownership with professional management using return on investment as the base of administrative decision making. The company has shown remarkable strides toward adoption of free market methods and the results have been encouraging: decreased costs and increased productivity. Nevertheless, the company still struggles in the world steel market. An overall strategic orientation is needed and the case focuses on the dilemma faced by a senior manager who must make a recommendation.

The case has been used in undergraduate courses in organizational theory and international business ethics. The objectives of the case are to enable students to (1) understand privatization and the difficulties of developing a strategic plan in the light of decades of government mandated plans, (2) develop an increased awareness of the importance of cultural factors in management and (3) develop skill in researching large international companies which are located in different countries.

Garcia Ardeo, General Manager of Market Planning for CSN has to make a recommendation for a strategic initiative for the company. He is considering three alternatives: (1) enhance market share; (2) increase operational productivity; (3) decrease costs. His decision will be affected by a possible contract with an American company which has sent a team of executives and staff persons to discuss a possible long term agreement. It had been almost three years to the day since the company had made the transition from government management to privatized management in April, 1993. The results had been astounding, surprising even the most ardent critics of privatization by dramatic increases in production with similarly dramatic decreases in costs.

However, these results had come at the expense of severe layoffs which meant more misery for working class Brazilians. If the company were to proactively decrease costs, perhaps there would be opportunities to rehire displaced workers. This was a positive aspect. And if these opportunities were to be in technologically sophisticated areas, then the company’s technical college would benefit as would employees in that they could move to semi or fully skilled classifications. If these initiatives were to fail, however, more layoffs would occur, the prospect for future expansion would diminish.

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Contact Person: Steven K. Paulson, University of North Florida, Jacksonville, FL 32224
Mail: College of Business; E-mail: spaulson@unf.edu; FAX: (904) 620-2780

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Employee participation (management consultation) in the modern Japanese industrial enterprise is dramatically explored by presenting students with a crisis in managerial prerogative faced by the 1988 enterprise labor union and labor union executive of Okuma Corporation, a global leader in machine tools manufacture based in Aichi Prefecture, Japan. An unusual feature of the Okuma Case concerns the agent for managerial change with whom students are invited to identify: the executive of Okuma Corporation’s enterprise labor union.

The case proceeds in two parts. Part 1 is a preparatory reading with assignment. It combines background information on Japanese management consultation with the management crisis faced in 1988 by the Okuma labor union executive. The immediate source of crisis, in January 18, 1988, is the announced appointment of the son of the resigning president as the new company head. This is in apparent violation of a decade earlier commitment by the resigning president to end "family management" of the firm. The first assignment invites development of specific steps to be taken by the Okuma labor union executive in the face of this presidential succession crisis. Part 2 builds on student proposals and class discussion by presenting a reading assignment that recounts the 1988 Okuma labor union coup, through which the union successfully restored rational management practices to the firm. The second round of discussion centers on student reaction to the "Okuma coup," opinion about whether the coup evidences success or failure of Japan’s approach to management consultation, and the potential significance of management consultation in the emerging global economy.
 

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Contact Person: Charles T. Tackney
Mail: International Studies Department, Bunkyo University, 1100 Namegaya, Chigasaki-shi, Kanagawa Prefecture 253, Japan
Email: ctackney@aol.com
 

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This case demonstrates the unusual complexity present in business negotiations across national cultures. The student is encouraged to contrast the perceptual and behavioral patterns between American and Chinese business people. The cultural conflicts are confounded with the contractual issues and uncontrollable natural environmental factors in international business. Finally, the case illustrates a typical process in export/import transaction, particularly the mechanism of letters of credit.

The teaching note was written for MBA or executive MBA courses in international marketing and international business. The case is expected to be used later in the course after the student has obtained an understanding of the cultural environment of international business and the basics of foreign trade payment methods. It is also useful in management and communication courses to illustrate the cultural differences in negotiation and conflict resolution styles.

BBT, a Beijing-based Chinese biotech company was looking for a supplier of lecithin in the US through PII, a consulting company with expertise in Asian-Pacific business. In turn, PII relied on Mr. Wright of U.S. Fortune to find a manufacturer. Mr. Wright did not allow BBT to communicate with the manufacturer—NutriNex, but instead used back-to-back letter of credit (L/C) as the payment method to maintain control. The negotiation for an agreement between Mr. Wright and BBT took a longer period of time than expected.

When the agreement was eventually signed and BBT issued a L/C to Mr. Wright, the supply situation was disrupted by natural disasters. NutriNex refused to make the shipment based on the agreement between BBT and Mr. Wright. Mr. Wright was unable to make NutriNex to comply because he did not have a written contract with NutriNex. PII, being between the two cultures, made all efforts to search for a compromise to save the deal, but these efforts were in vain. Mr. Wright kept complaining the Chinese bureaucratic delays in the initial negotiation of the agreement, whereas BBT blamed Mr. Wright for violating the agreement and for refusing to offer a sincere apology.
 

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Contact Person: Xiaohua Lin, Penn State Great Valley, 30 E. Swedesford Rd. Malvern,PA 19355
Voice: (610) 648-3223; Fax: (610) 725-5224; email: hx1165@psu.edu

This case illustrates many of the differences and similarities between doing business in Saudi Arabia (for by extension, many other developing countries) and the U.S. The information provided gives a rich background for students unfamiliar with operations outside of the U.S. It also describes problems presented by competitors, illustrates management shortcomings, and highlights succession problems faced by family-owned businesses around the world.

This case would be used in an introductory level international business or international management class. Since many of the problems that are described are faced by domestic companies as well, the case might also be used in a leadership or OB class to provide international flavor.

Youssef Mohammed has returned from Britain where he has just completed a Ph.D. in Organizational Development. He is expected to take his place in a leadership position within the family businesses. The business he chose to become involved with is experiencing many problems. Financial losses, managerial inefficiency, and structural problems, a dated marketing concept, morale and turnover problems, and increased competition from well-financed competitors are only the beginning. At the heart of the problem for Youssef is whether his role in the organization will be one where he directs an organizational change effort (where he believes he can be most effective) or a position as a hands-on manager as family tradition dictates. The case provides background information business operations in the Kingdom of Saudi Arabia and highlights unique characteristics of conducting business in a foreign country.

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Contact Person: Paula S. Weber, University of Houston-Victoria
Mail: Division of Business, UHV, 2506 E. Red River, Victoria, TX 77901
Voice: (512) 582-1161; Fax: (512) 582-1192; E-mail: weberp@cobalt.vic.uh.edu

The case has the following objectives:

    (1)  Provide students with knowledge of the important economic, social and political challenges facing the U.S. economy in 1998 and how these relate to the future international competitiveness of US companies.

    (2)  Help them appreciate the trade-offs between competitiveness and national objectives such as Economic growth, social equity, national security and preservation of human rights.

• Capstone MBA course on strategy and environment.
• Senior level undergraduate capstone course on strategy and environment.
• Executive MBA course on strategy and environment. (An earlier draft of this case was successfully used in an Executive MBA course in spring 1998.)
• Graduate and undergraduate electives on international business environment.

The case describes a number of factors about the U.S. economy, business environment and government policies that affect the international competitiveness of U.S. companies.

The case is organized in three major sections. The first titled, "Economic Position," includes information on economic aspects of the U.S. environment, such as productivity growth, corporate restructuring, factors that foster entrepreneurship, the U.S. budget and debt position, and the debate around how to change the budget if surpluses are generated (reduce debt, reduce taxes, new or greater spending on new initiatives).

The second section, "The People," includes information on non-economic aspects such as immigration, progress of women in the workplace, poverty and social welfare programs (social security, Medicare), racial disparities and education.

In the third and last section, "Future Competitiveness," the case provides information more directly pertinent to the global competitiveness of U.S. companies: Asian flu, R&D, shortage of high-technology workers, and the relationship between politics, economic sanctions and business interests.