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Week 5

Group Strategy Project (Part 1): Global Industry Analysis

Group Strategy Assignment

A. Project Overview

The Group Strategy Project of this seminar involves writing a proposal for a foreign direct investment by a major real company into a foreign country. This Week 5 Assignment is designed to provide the global industry comparative analysis that will support your decision as to which industry (Week 5) / country (Week 6) / firm (Week 7) in which to make the foreign direct investment. Thus Week 5 focuses on industry choice and a preliminary country choice. In Weeks 6 and 7 you will continue your research and analysis by performing a more detailed country choice and in Week 7, a partner firm choice.

NOTE: In each part of the Group Strategy Project, use some of the strategic management frameworks (if applicable) you have been learning about in this course or in your prior courses. These include:

• Industry structural characteristics rationale

• Competitive advantage rationale

• Resource Based View of the firm rationale

• Value Chain rationale

• Vertical integration rationale

• Horizontal integration rationale

• Financial rationale

• Political, Economic, Social, Technological, Environmental, and Legal Factors

B. General Instructions

1. Only use scholarly and reliable non-scholarly sources such as Bloomberg, Reuters, Money, Forbes, and Fortune (no answer.com,QuickMBA, eHow, Wikipedia…….), in addition to the weekly readings, multimedia and data resources listed in the classroom.

2. Assignment should be written in a paper format; not a question and answer format.

3. A half page Introduction should be included. Also, a Conclusion should be included at the end of the report.

4. There are no page restrictions, however, paper should be with one inch margins, 12 point font, double-spacing, and should be posted as a PDF document. All graphics should be placed in the appendix.

5. Use APA format for in-text citations and the reference list.

6. Have 1 Group member post your Week 5 Group Strategy Project (Part 1) paper in the Assignment Folder.

C. Week 5 Overview & Deliverables

Chartering/organizing the project - The Part 1 paper is designed to answer three questions:

• What are the strategic growth needs of your clients’ business?

• What is the nature of the industry which allows you to grow and achieve competitive advantage?

• What markets (countries) are most attractive in achieving the growth goals?

More details on each element below. Note: earlier student teams have found it effective to do preliminary research around team interests and sources of data for the three phases before selecting a company and industry.

1. Your group should select an industry to analyze for your Group Strategy Project.

2. Your group should select a real multinational company from this industry to be your hypothetical consulting client, for which you will be making a strategic recommendation for investment into a foreign country.

3. Then, select 4 prospective countries and your client’s home country. Please post which industry, client company and countries you have selected into your Group Discussion Area as early in the week as possible.

Summary/overview

For this first part of your Group Strategy Project your country recommendation should be based upon your analysis only of the market size and growth data and commentary specific to your industry. for each country.

Based upon your market size, growth research and overall industry profit analysis, select a preliminary country that your team will be looking at to make an acquisition or joint venture in. Provide reasons for your decision based upon your research and on the various assigned readings so far this semester or from prior semesters (properly cite these).

In Week 6 you will be doing an expanded, more detailed, country comparison using a PESTEL analysis of risk versus opportunity which may result in a change in your recommendation. NOTE: A weighted attribute comparative analysis is helpful in comparing alternatives across multiple attributes and may be used in all three phases of the project.

The following is your Week 5 outline.

I. Description of your client company’s strategic growth objectives. Develop criteria that will allow you to compare markets (countries) and partners (acquisition or joint venture)

II. Description of the growth and profit potential of your client’s industry.

A. The home country structure and environment of the selected industry.

B. The global structure and environment of the selected industry.

III. Analysis of international markets

Identify 4 international markets (countries) that are attractive in meeting your client company’s growth goals. When selecting your markets (countries), your selections should provide new product and/or innovation market opportunity. Create a comparative benefit analysis based on the criteria of client need and the overall market (country) comparison questions below:

1. What is the comparative market size of the industry in each of the 4 countries by 2020? (Hint: Use something like the number of passenger car registrations to size the automobile industry, other metrics for other industries) and how might that impact your decision on prioritizing the countries in your global business strategy?

2. What is the comparative growth, both in absolute terms and in percentage terms from 2015 to 2020 for the industry you have selected in each of the 4 countries and how might that impact your decision on prioritizing the countries in your global business strategy?

3. What is the profitability of the industry based on the level of competition? Who are some of the key company players (both multinational and local) in your selected industry in each of the 4 countries and how competitive is the industry in each country, and how might that impact your decision on prioritizing the countries in your global business strategy?

IV. Provide a recommendation of which market (country) you are recommending and provide the reasons based on your comparative benefit analysis.

Week 6

Group Strategy Project (Part 2): Country Assessment Analysis

Group Strategy Assignment

A. General Instructions

1. Only use scholarly and reliable non-scholarly sources such as Bloomberg, Reuters, Money, Forbes, and Fortune (no answer.com,QuickMBA, eHow, Wikipedia…….), in addition to the weekly readings, multimedia and data resources listed in the classroom.

2. Assignment should be written in a paper format; not a question and answer format.

3. A half page Introduction should be included. Also, a Conclusion should be included at the end of the report.

4. There are no page restrictions, however, paper should be with one inch margins, 12 point font, double-spacing, and should be posted as a PDF document. All graphics should be placed in the appendix.

5. Use APA format for in-text citations and the reference list.

6. Have 1 Group member post your Week 6 Group Strategy Project (Part 2) paper in the Assignment Folder.

B. Week 6 Overview & Deliverables

Examine each of the 4 countries that your group selected plus your client’s home countryand provide a PESTEL analysis on each country. Once you have concluded your PESTEL analysis on each country, incorporate these results into the following outline.

The following is your Week 6 outline.

V: Determination of the Target Country for the Proposed Acquisition or Joint Venture

1. Comparative risk, opportunity and overall business climate of the countries.

2. Comparative industry market potential and structure of the countries.

3. Selection, with rationale of the target country.

In developing your rationale, be sure to address the following strategic dimensions.

• What are the benefits of the country for your overall strategy? Why would you move in that country: resources, raw materials, lower cost production, labor force, technology, markets, etc.?

• How would you tradeoff the degree of country risk versus the business environment ratings, taking into consideration the market size in 2020?

• How would you tradeoff the degree of country risk versus the business environment ratings, taking into consideration the market growth from 2015 to 2020.

• As a result of answering the above three questions, how would you prioritize the countries that your group researched in terms of developing a global business strategy?

Note: Write this up, integrating your answers in a way that demonstrates your critical reasoning supporting your prioritization of the countries that your group researched.

Week 7

Group Strategy Project (Part 3): Firm Analysis

Group Strategy Assignment

A. General Instructions

1.Only use scholarly and reliable non-scholarly sources such as Bloomberg, Reuters, Money, Forbes, and Fortune (no answer.com,QuickMBA, eHow, Wikipedia…….), in addition to the weekly readings, multimedia and data resources listed in the classroom.

2.Assignment should be written in a paper format; not a question and answer format.

3.An Executive Summary and half page Introduction should be included. Also, a Conclusion should be included at the end of the report.

4.There are no page restrictions, however, paper should be with one inch margins, 12 point font, double-spacing, and should be posted as a PDF document. All graphics should be placed in the appendix.

5.Use APA format for in-text citations and the reference list.

6.Have 1 Group member post your Week 7 Group Strategy Project (Part 3) paper in the Assignment Folder.

B. Week 7 Overview & Deliverables

Identify a short list of potential target companies (at least two) for acquisition or as joint venture partners in the country you have selected for the project and provide a rationale for considering each one, and select one to be the target based upon your analysis. Provide reasons for your decision based upon your research and on the various assigned readings/multimedia so far this semester or from prior semesters (properly cite these). Specify whether this will be an acquisition or joint venture and your reasons why.

The first sentence of your Executive Summary should read as follows:

“Team _____________ recommends that _______________, a major multinational company in the ______________industry, target ___________ as the first country, through an acquisition (or joint venture with) ___________, one of the key local companies in the ___________industry.

The following is the outline for your Week 7 paper.

VI. Determination of the Target Company for Acquisition or Joint Venture

1. Short list and profile potential company candidates and provide comparative benefits to your client company.

2. Selection of the Target Company for Acquisition or Joint Venture.

3. Description of the target company and its fit with strategic objectives of Client Company. Use comparative analysis of the potential companies in terms of strategic fit with your client. What is the structure of your partnership: joint venture/acquisition?

4. Suggest operational roles and activities of the partners of the new venture. What will your client firm and target firm each be responsiblefor in terms of the new venture? Break this into strategic responsibilities and operating responsibilities. How will these responsibilities be broken out?

Use the following models to analyze the benefits of the acquisition:

• Internal resources: Competitive advantage rationale / Value chain rationale / Resource Based View of the firm rationale. In other words, focus on the skills transfer potential between the two firms. How will the two firms strengthen each other as a result of their partnership?

• Shared resources: Vertical integration rationale / Horizontal integration rationale. How will efficiency be increased as a result of the combined operation?

• Financial rationale: Consider the deal from a financial point of view and effects on rate of return and debt load for example. Note: Acquisitions in the past have focused on the first two issues but ignored this dimension and incurred huge debts to make the deal only to find the financial aspects undermined or negated the strategic benefits.

Finally, add this phase to your previous work from Weeks 5 and 6 to produce one term paper which includes the following:

1. Company Characteristics and Analysis. Identification of a client company and a description of its characteristics and strategic needs and intent. Why is making a foreign diversification move necessary in terms of its strategy and performance effects? (Week 5)

2. Industry Characteristics and Analysis. Profile of the client firm’s industry indicating the Critical Success Factors in the industry and how these relate to the decision to diversify abroad. (Week 5 Phase)

3. Country Characteristics and Analysis. Conclusions of your analysis of attractive countries to fulfill your strategic intent. What specific country are you recommending and why? (Week 6 Phase)

4. Investment Partner/ Target Firm Analysis. Discussion of your choice of an investment partner. (Week 7 Phase)

5. Summary of your recommendations.