What competitive advantages underlie the success of IMAX? Are these sustainable? What motivates IMAX to expand internationally into emerging economies, such as the BRIC countries? How would you evaluate IMAX’s international expansion to date? If 400 of the remaining 1,550 screens are to be allocated to the BRIC economies, how would you distribute them by country? Within each country, how would you distribute them among cities? Identify key business risks in international expansion to the BRIC economies

1. What competitive advantages underlie the success of IMAX? Are these sustainable?
2. What motivates IMAX to expand internationally into emerging economies, such as the BRIC countries?
3. How would you evaluate IMAX’s international expansion to date?
4. If 400 of the remaining 1,550 screens are to be allocated to the BRIC economies, how would you distribute them by country? Within each country, how would you distribute them among cities?
5. Identify key business risks in international expansion to the BRIC economies. How should IMAX address these business risks? 

“I have been using Transnational Management in my MBA International Competitive Strategy Courses for over 10 years. Since then I have not been able to find another text which compares with the relevance, applicability, and readability of this one.” P. Roberto Garcia, Ph.D., Young-Jin Kim Distinguished Clinical Professor of International Business. Director, Center for International Business Education & Research Transnational Management offers an integrated framework describing the strategic tasks, organizational capabilities, and management roles and responsibilities of successful and responsible managers of international businesses in today’s global environment. NEW TO THIS EDITION: • Integrated conceptual framework • Ten brand new cases have been added, and four others have been updated • New academic and practitioner recommended readings have been added to each chapter EIGHTH EDITION Suitable for MBA, executive education, and senior undergraduate students studying international management, international business, or global strategy courses, Transnational Management offers a uniquely global perspective on the subject. TRANSNATIONAL MANAGEMENT “If I were an MBA student studying anywhere in the world this is the book I would want as the textbook for my global strategy course. As a faculty member, this is the book I would pick for my case-based global strategic management course.” Lorraine Eden, Professor of Management, Texas A&M University. President, Academy of International Business BARTLETT & BEAMISH 9781108422437 Bartlett & Beamish PPC C M Y K “In this eighth edition, the authors have maintained the unique pedagogic philosophy that has been a hallmark of this special book for so long. With a full suite of companion teaching and learning materials, the three parts of the book, strategic imperatives, the organizational challenge and managerial implications have captured the tensions that continue to dominate cross-border management… This remains an outstanding book.” Peter W. Liesch, Professor of International Business, UQ Business School, The University of Queensland EIGHTH EDITION TRANSNATIONAL MANAGEMENT Text and Cases in Cross-Border Management cambridge.org/bartlett&beamish Cover images: ‘Silhouettes in a Meeting’, Rawpixel / iStock / Getty Images. ‘World map’, roripond / iStock / Getty Images Cover design by Zoe Naylor CHRISTOPHER A. BARTLETT & PAUL W. BEAMISH Transnational Management Text and Cases in Cross-Border Management Transnational Management provides an integrated conceptual framework to guide students and instructors through the challenges facing today’s multinational enterprises. Through text narrative and cases, the authors skilfully examine the development of strategy, organizational capabilities, and management roles and responsibilities for operating in the global economy. The key concepts are developed in eight chapters that are supplemented by carefully selected practical case studies from world-leading case writers. All chapters have been revised and updated for this eighth edition to re?ect the latest thinking in transnational management while retaining the book’s strong integrated conceptual framework. Ten new cases have been added, and four others updated. A full range of online support materials are available, including detailed case teaching notes, almost 200 PowerPoint slides, and a test bank. Suitable for MBA, executive education, and senior undergraduate students studying international management, international business, or global strategy courses, Transnational Management offers a uniquely global perspective on the subject. Christopher A. Bartlett is Professor Emeritus at Harvard Business School. His research and teaching have focused on strategic and organizational challenges confronting managers in multinational corporations. He is the author or co-author of nine books, including Managing Across Borders: The Transnational Solution (co-authored with Sumantra Ghoshal 2002), which was named by the Financial Times as one of the 50 most in?uential business books of the twentieth century. He has also researched and written over 100 case studies and teaching notes, and is Harvard’s best-selling case author with over 6 million copies sold. In 2001, he received the Academy of Management’s International Division’s Distinguished Scholar Award. He is a Fellow of the Academy of Management, the Academy of International Business, the Strategic Management Society, and the World Economic Forum. Paul W. Beamish is the Canada Research Chair in International Business at the Ivey Business School, University of Western Ontario. He has received best research awards from the Academy of Management and the Academy of International Business. He was previously Editor-in-Chief of the Journal of International Business Studies. His cases have been studied over 3 million times, with over 20 winning awards. In 2012, he was the recipient of the International Management Outstanding Educator Award and, in 2017, the recipient of the International Management Eminent Scholar Award, both from the Academy of Management. He is the editorial director of Ivey Publishing, and director of Ivey’s International Business Institute. He is a Fellow of the Academy of International Business, Royal Society of Canada, and Asia Paci?c Foundation of Canada. Transnational Management Text and Cases in Cross-Border Management CHRISTOPHER A. BARTLETT Harvard University, Massachusetts PAUL W. BEAMISH University of Western Ontario University Printing House, Cambridge CB2 8BS, United Kingdom One Liberty Plaza, 20th Floor, New York, NY 10006, USA 477 Williamstown Road, Port Melbourne, VIC 3207, Australia 314–321, 3rd Floor, Plot 3, Splendor Forum, Jasola District Centre, New Delhi – 110025, India 79 Anson Road, #06-04/06, Singapore 079906 Cambridge University Press is part of the University of Cambridge. It furthers the University’s mission by disseminating knowledge in the pursuit of education, learning, and research at the highest international levels of excellence. www.cambridge.org Information on this title: www.cambridge.org/9781108422437 DOI: 10.1017/9781108500067 © Christopher A. Bartlett and Paul W. Beamish 2018 This publication is in copyright. Subject to statutory exception and to the provisions of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press. This book was previously published by Harvard Business Review Press 1991, 1998 This book was previously published by McGraw-Hill Education 2000, 2003, 2007, 2010, 2013 Eighth edition ?rst published by Cambridge University Press 2018 Printed in the United States of America by Sheridan Books, Inc. A catalogue record for this publication is available from the British Library. ISBN 978-1-108-42243-7 Hardback ISBN 978-1-108-43669-4 Paperback Additional resources for this publication at www.cambridge.org/bartlett&beamish. Cambridge University Press has no responsibility for the persistence or accuracy of URLs for external or third-party internet websites referred to in this publication and does not guarantee that any content on such websites is, or will remain, accurate or appropriate. CONTENTS List of Figures List of Tables Preface Acknowledgments Editorial Advisory Board 1 2 3 Introduction: So What Is Transnational Management? 1 Part I The Strategic Imperatives 9 Expanding Abroad: Motivations, Means, and Mentalities Cases 1.1 Sher-Wood Hockey Sticks: Global Sourcing 1.2 Cameron Auto Parts: Early Internationalization 1.3 Mabe: Learning to be a Multinational (A) Understanding the International Context: Responding to Con?icting Environmental Forces Cases 2.1 Global Wine War 2015: New World Versus Old 2.2 MTN and the Nigerian Fine 2.3 IMAX: Expansion in BRIC Economies (Revised) 2.4 Mahindra & Mahindra in South Africa Developing Transnational Strategies: Building Layers of Competitive Advantage Cases 3.1 United Cereal: Lora Brill’s Eurobrand Challenge 3.2 Yushan Bicycles: Learning to Ride Abroad 3.3 Beer for All: SABMiller in Mozambique 3.4 GE’s Imagination Breakthroughs: The Evo Project Part II The Organizational Challenge 4 page vii x xv xvii xix Developing a Transnational Organization: Managing Integration, Responsiveness, and Flexibility Cases 4.1 Kent Chemical: Organizing for International Growth 4.2 Lundbeck Korea: Managing an International Growth Engine 11 29 39 47 64 83 104 118 134 151 167 176 183 193 213 215 235 245 vi Contents 4.3 Philips versus Matsushita: The Competitive Battle Continues 4.4 Beiersdorf AG: Expanding Nivea’s Global Reach 5 Creating Worldwide Innovation and Learning: Exploiting Cross-Border Knowledge Management Cases 5.1 P&G Japan: The SK-II Globalization Project 5.2 Applied Research Technologies, Inc.: Global Innovation’s Challenges 5.3 Cisco India (A): Innovation in Emerging Markets 6 Engaging in Cross-Border Collaboration: Managing Across Corporate Boundaries Cases 6.1 Nora-Sakari: A Proposed JV in Malaysia (Revised) 6.2 Eli Lilly in India: Rethinking the Joint Venture Strategy 6.3 Amazon and Future Group: Rethinking the Alliance Strategy Part III The Managerial Implications 259 276 293 306 324 333 345 364 376 392 405 7 Building New Management Capabilities: Key to Effective Implementation Cases 7.1 Levendary Café: The China Challenge 7.2 Unilever’s Lifebuoy in India: Implementing the Sustainability Plan 7.3 Silvio Napoli at Schindler India (A) 7.4 Larson Inc. in Nigeria 407 8 Shaping the Transnational’s Future: De?ning an Evolving Global Role Cases 8.1 IKEA’s Global Sourcing Challenge: Indian Rugs and Child Labor (A) 8.2 Barrick Gold Corporation – Tanzania 8.3 Unilever’s New Global Strategy: Competing Through Sustainability 476 Index 425 436 452 468 496 507 520 541 LIST OF FIGURES Figure 1 The structure of the book page 5 Figure 1.1 A learning model of internationalization 23 Figure 1.2 Approaches to foreign market entry 24 Case 1.1 Exhibit 3 Evaluation of Global Sourcing 34 Case 1.3 Exhibit 1 Mabe’s Company History, 1946 to 2009 49 Case 1.3 Exhibit 2 Mabe’s Historical Revenues, 1987 to 2010 50 Case 1.3 Exhibit 3 Mabe Income by Region, 1990 to 2011 51 Case 1.3 Exhibit 9 Mabe’s Product Line in Russia 59 Case 1.3 Exhibit 10 Main Appliance Players in Russia 60 Case 2.1 Exhibit 2 Wine Industry Value Chain 88 Case 2.1 Exhibit 3 Wine Consumption Per Capita, Selected Countries (1980–2014) 90 Case 2.1 Exhibit 5 Global Wine Sales by Volume and Value (1999–2013) 92 Case 2.1 Exhibit 8 Exports as % of Production Volume by Source: EU, New World, and Globally, 1961–2009 96 Case 2.1 Exhibit 9a China Wine Sales Volume by Retail Sale Point and Country of Origin, 2009 99 Case 2.1 Exhibit 9b Bottle Wine Positioning in China by Price Segment and Area of Origin (%), 2014 99 Case 2.2 Exhibit 4 MTN’s Organizational Structure, 2014 110 Case 2.3 Exhibit 4 IMAX Corporation Stock Performance, 2008–2013 124 Case 2.3 Exhibit 6 Economic Comparison of the BRIC Economies 127 Case 2.3 Exhibit 7 Population and Average Household Income for 15 Most Af?uent Cities 128 Case 2.3 Exhibit 8 Country Culture Comparison of BRIC Countries 131 Case 2.3 Exhibit 10 BRIC Countries’ Governance Indicators (Percentiles) 133 Case 2.3 Exhibit 11 BRIC Population Age Distribution 2013 and 2020 (Projected) 133 Case 2.4 Exhibit 5 Mahindra and Mahindra – Business Segments 142 Figure 3.1 The integration–responsiveness framework 154 Figure 3.2 Category-speci?c strategies to help companies serve middle-class consumers in emerging economies 157 Case 3.1 Exhibit 4 Organization Chart 175 Case 3.2 Exhibit 1 Yushan Bicycles Organizational Structure 178 Case 3.4 Exhibit 2 GE Corporate Structure 197 Case 3.4 Exhibit 3 GE’s Operating System 198 Case 3.4 Exhibit 4 Evolution Locomotive Product Speci?cations 201 viii List of Figures Case 3.4 Exhibit 6 CECOR Tool Kit Case 3.4 Exhibit 7 GE Transportation Organizational Chart Case 3.4 Exhibit 8 Comte’s Marketing Organization Figure 4.1 Stopford and Wells’ international structural stages model Figure 4.2 Organizational con?guration models Figure 4.3 Integrated network model Figure 4.4 Integration and differentiation needs at Unilever Figure 4.5 Model I: the traditional change process Figure 4.6 Model II: the emerging change process Case 4.1 Exhibit 2 KCP International Division Organizational Chart, 2000 Case 4.1 Exhibit 3 Kent Chemical Products Organizational Chart, 2006 Case 4.1 Exhibit 4 Decision Matrix for Resource-Allocation Decisions on the European Fire Protection Business Case 4.3 Exhibit 5 Organization of METC, 1985 Figure 5.1 Mobilizing knowledge Case 5.1 Exhibit 2 P&G European Organization, 1986 Case 5.1 Exhibit 3 P&G’s Worldwide Organizational Structure, 1990 Case 5.1 Exhibit 5 P&G Organization, 1999 (Post O2005 Implementation) Case 5.1 Exhibit 6 Beauty Counselor Work Flow Case 5.1 Exhibit 7 In-Store SK-II Counter Space Case 5.1 Exhibit 8 Representation of Global Cleansing Cloth Development Program Case 5.1 Exhibit 9 Illustration of Part of SK-II Product Line Case 5.2 Exhibit 1 ART Organization with Filtration Unit Detail Case 5.3 Exhibit 2 Cisco India R&D Evolution Case 5.3 Exhibit 3 Indian Telecom Industry Case 5.3 Exhibit 4 Telecom Network Structure Case 5.3 Exhibit 5 Cisco’s R&D Project Approval Process Figure 6.1 Range of strategic alliances Figure 6.2 Partner selection: comfort vs. competence Case 6.1 Exhibit 1 How 4G LTE (And Mobile Broadband) Works: A Simpli?ed Network Representation Case 7.1 Exhibit 1 Levendary Organizational Chart Case 7.2 Exhibit 2 Lifebuoy’s Indian Relaunch, February 2002 Case 7.2 Exhibit 3 Unilever Sustainable Living Program (USLP): Original Targets 2010 Case 7.2 Exhibit 4 Unilever Corporate Organization Structure Case 7.2 Exhibit 5 Lifebuoy Core Claim: Protection against Germs Case 7.2 Exhibit 6 Unilever Behavior-Change Model Case 7.3 Exhibit 2 Schindler Organization Chart, Elevator and Escalator Division Case 7.3 Exhibit 4 Schindler India Organization Chart Case 7.3 Exhibit 5 Indian Elevator Market, Structure, and Product Segmentation Case 7.3 Exhibit 6 Market Research on Indian Elevator Market, 1996 204 207 209 216 220 226 227 231 232 238 240 244 270 305 308 309 314 315 316 318 319 326 337 338 340 342 347 357 366 427 440 444 445 446 449 457 461 462 463 List of Figures Case 7.4 Exhibit 1 The Ridley Report Case 8.2 Exhibit 2 Barrick Spending on Corporate Social Responsibility in Tanzania Case 8.3 Exhibit 2 Unilever’s Compass Vision and USLP Goals Case 8.3 Exhibit 3 Unilever’s Virtuous Cycle Business Model Case 8.3 Exhibit 4 Unilever Corporate Organization Chart Case 8.3 Exhibit 5 Persil/ Omo “Dirt Is Good” Campaign Case 8.3 Exhibit 6 Unilever’s Transformational Change Priorities Case 8.3 Exhibit 7 Unilever’s Stock Price vs. DJIA and P&G, 2009–2014 Case 8.3 Exhibit 8 Unilever’s USLP Achievements, 2014 ix 470 517 523 525 527 530 533 535 536 LIST OF TABLES Table 1.1 Selected indicators of FDI and international production, 2010–2015 page 14 Table 1.2 Internationalization statistics of the 100 largest non-?nancial MNEs worldwide and from developing and transition economies 15 Table 1.3 Comparison of top MNEs and selected countries: 2016 16 Case 1.1 Exhibit 1 NHL Share of Hockey Stick Brands and their Manufacturing Sites 32 Case 1.1 Exhibit 2 Types of Global Sourcing 34 Case 1.1 Exhibit 4 Hourly Compensation Costs in Manufacturing (US$) 36 Case 1.2 Exhibit 1 Income Statements 41 Case 1.2 Exhibit 2 Balance Sheets 44 Case 1.2 Exhibit 3 Data on McTaggart Supplies Ltd 45 Case 1.3 Exhibit 4 Mabe’s Balance Sheet 2006–2008 (000s USD) 52 Case 1.3 Exhibit 5 Mabe’s Income Statement 2006–2008 (000s USD) 53 Case 1.3 Exhibit 6 Global Appliance Players, 2011 53 Case 1.3 Exhibit 7 Appliances Market Size in China, India, and Russia 2005 to 2010 54 Case 1.3 Exhibit 8 Marginal Contribution Per Appliance in China, India, and Russia 2008 (per cent) 54 Case 1.3 Exhibit 11 Mabe’s Entry Strategy and Positioning, 2008 and 2012 61 Table 2.1 Changes in national investment policies, selected years 2003–2015 73 Case 2.1 Exhibit 1a Retail Price Structure of a Typical EU Wine in Select Export Markets (€ per bottle), 2014 87 Case 2.1 Exhibit 1b Bottle Wine Segments by Retail Price (European Commission’s Categories), 2014 87 Case 2.1 Exhibit 4 Wine Production and Consumption: Selected Old World and New World Countries, 2014 91 Case 2.1 Exhibit 6 Penfolds Red Wine U.S. Brand Structure, 2009 93 Case 2.1 Exhibit 7a Top-10 Global Wine Companies by Volume, 2003 and 2014 94 Case 2.1 Exhibit 7b Top-10 Global Wine Brands, 2009 and 2014 94 Case 2.2 Exhibit 1 MTN Subscribers, June 2015 106 Case 2.2 Exhibit 2 MTN’s Top Risks and Mitigation Strategies, 2014 108 Case 2.2 Exhibit 3 MTN’s Strategy 109 Case 2.2 Exhibit 5 Nigerian Telecommunications Usage, 2015 112 Case 2.2 Exhibit 6 Telecommunications Industry in Nigeria in November 2016 113 List of Tables Case 2.2 Exhibit 7 Nigeria Worldwide Governance Indicators Case 2.2 Exhibit 8 Nigeria’s Economic Trends Case 2.3 Exhibit 1 IMAX Worldwide: Screens, Box Of?ce, Demographics, and Urbanization Case 2.3 Exhibit 2 IMAX Corporation Balance Sheets, 2010–2013 (in Thousands of $) Case 2.3 Exhibit 3 IMAX Corporation Income Statements, 2010–2013 (in Thousands of $) Case 2.3 Exhibit 5 Exhibitor-Branded Premium Large Format Screens, by Region Case 2.3 Exhibit 9 Risks in the BRIC Economies Case 2.4 Exhibit 1 South Africa – Business Environment Rankings Case 2.4 Exhibit 2 South Africa: Total Vehicle Sales, Production, Exports and Imports, 2006–2010 Case 2.4 Exhibit 3 Mahindra & Mahindra South Africa – Leader Brands’ Production Case 2.4 Exhibit 4 South Africa – Customer Segmentation, December 2010 Case 2.4 Exhibit 6 Mahindra & Mahindra – Consolidated Income Statement Case 2.4 Exhibit 7 Mahindra & Mahindra – Indian Domestic Market Shares by Volume Case 2.4 Exhibit 8 Mahindra & Mahindra South Africa – Income Statement Case 2.4 Exhibit 9 Mahindra & Mahindra South Africa – Sales Volume Table 3.1 Scope economies in product and market diversi?cation Table 3.2 Worldwide advantage: goals and means Table 3.3 Strategic orientation and con?guration of assets and capabilities in international, multinational, global, and transnational companies Case 3.1 Exhibit 1 United Cereal Selected Financial Results (USD in 000s) Case 3.1 Exhibit 2 United Cereal SG&A by Market (USD in 000s) Case 3.1 Exhibit 3 Test Market and Consumer Panel Results Case 3.2 Exhibit 2 Yushan Bicycles Selected Financial Data, 2015 (NT$) Case 3.2 Exhibit 3 Yushan Bicycles Australia Subsidiary Selected Financial Data, 2015 (NT$) Case 3.4 Exhibit 1 GE Financial Performance, 1995–2006 ($ millions) Case 3.4 Exhibit 5 IB Review Preparation: Sample Questions Table 4.1 Organizational characteristics of decentralized federation, coordinated federation, and centralized hub organizations Case 4.1 Exhibit 1 Kent Chemical: Summary of Financial Data, 2003–2007 ($ millions) Case 4.2 Exhibit 1 Top Pharmaceutical Markets, 2005 Case 4.2 Exhibit 2 Leading Anti-Depressants and Alzheimer’s Disease Medications in the Global CNS Market, 2005 Case 4.2 Exhibit 3 Lundbeck Financial Highlights, 2005 xi 114 115 120 122 123 126 132 136 138 138 140 143 144 146 147 158 159 163 170 171 172 179 180 195 203 222 237 246 248 250 xii List of Tables Case 4.3 Exhibit 1 Philips Group Summary Financial Data, 1970–2008 (Reported in millions of Dutch Guilders (F) to 1996; Euros (€) after 1997 Case 4.3 Exhibit 2 Philips Group, Sales by Product and Geographic Segment, 1985–2003 (Reported in millions of Dutch Guilders (F) to 1996; Euros (€) after 1997 Case 4.3 Exhibit 3 Philips Research Labs by Location and Specialty, 1987 Case 4.3 Exhibit 4 Matsushita Creed and Philosophy (Excer...