1 Business 202 Managing in the Global Economy Fall 2010, Tues 6-8:45 Dr. Mark Fruin Office: BT665, (408-924-3570) [email protected] This is a re-designed course with a different title, thrust, and set of topics. The older version, taught until 2008, was titled “The Global Business Environment” and it looked at country level differences in markets, institutions, and firms in an international world. The new course climbs a level or two of abstraction. It investigates how markets, institutions, and organizations may vary from one country to another (the old course), plus looking at new global issues, like climate change/global warming, and transitioning from an economy based on making, growing and trading to services, especially information services. This shift is part of a larger digital revolution that is ongoing and worldwide The course emphasizes business and organizational transformations, and not simply expansions of pre-existing categories. The course shies away from indicating how managers should behave; the global economy is too complex and varied for that. Instead, the thrust is to understand how the global economy is changing, and on what organizations and managers can and might do in those circumstances. Course model: environmentsorganizationspolicies & strategiesorg members (individuals) A guiding question is, “can we build organizations – firms, complex and non-profit organizations - that adapt successfully (strategically) in a world of ongoing and fairly dramatic change?” To do so, firms have to understand the environments – entrepreneurial, techno-industrial, institutional, social, and regulatory - in which they find themselves. And because it’s a global economy, firms are likely to find themselves in many very different sorts of environments simultaneously. American ways of adapting are not the only ways of competing globally, but they may have a better chance of success because of the weight of the U.S. economy and size of U.S. firms. Still, American firms carry liabilities and rather significant ones at that: it’s hard to teach old dogs new tricks (a liability of age), it’s hard to maneuver and be agile when one is big and bureaucratic (a liability of size), and the geographical foci of worldwide business activities, based on demography and rising per capita and household incomes, are shifting away from North America (a liability of location). Indeed, 3 of the top 5 national economies in the world are now found in Asia. This weighting will only grow in the future. What are the implications of this for U.S. firms and, more generally, for companies and managers everywhere? There are three required readings and many recommended readings. A list of recommended readings is attached, but it barely covers the number and range of subjects covered. There’s lots to read; get started. Lester R. Brown, Plan B 4.0, Norton, 2010. There are two paperback ISBN numbers: 0-393-32831-7 and 978-0-393-32831-8 Jeffrey D. Sachs, Common Wealth – Economics for a Crowded Planet, Penguin Books, 2009, ISBN 978-0-14-311487-1 paperback. W. Mark Fruin, “Business Groups and Interfirm Networks,” in Geoff Jones & Jonathan Zeitland, eds., The Oxford Handbook of Business History, 2008. I’ll photocopy and distribute my chapter.2 As for grading, I prefer at least three data points, and four is better. There are one team project, two individual papers, and a third is optional. In many cases, there are no right or wrong answers. Your job is to read widely, gather relevant information, sift through and analyze materials, and work up an argument about what you think is going on. In essence, you are writing a briefing paper for your boss – me. You should know my thoughts about writing. If you can’t write clearly, you’re not thinking clearly. I’ve had plenty of experience with this problem myself. So, don’t just grab a bunch of stuff off the Internet and throw it together at the last moment. Reading, thinking, and good writing are what count. If you’re not up for these challenges, there are other Bus 202 classes and instructors – different, but not necessarily easier. I’m happy to look at drafts of your essays as long as they are turned in at least one week ahead of when they are due. The deadline is 6 p.m., at the start of class, a week before when an assignment is due. We hope to have a number of guest lecturers this term, including Rafiq Dossani, Director, Center for South Asia at Stanford, and perhaps Julian Gresser, author, lawyer, entrepreneur, all-purpose guru, and founder of energyvoyager.com. The course currently comes in seven parts, each of which occupies two weeks: I. What is globalization? II. What is global strategy? III. Towards a global theory of the firm and complex organization IV. “It’s the environment, stupid!” V. International institutions in a global corporate world: IMF, WB, WTO & Beyond VI. The Internet and other “global technologies”; global entrepreneurship and innovation VII. Emerging economies are changing the ole’ ball game; corporate governance in a world of national economies and global economics I-A, Aug. 31: What is globalization – in general and in terms of business and economics? 1. Globalization – what is a global economy? Traditional and non-traditional views: Guillen, Friedman, Stiglitz, and others. a. Globalization definitions – what it is, how it affects us; how definitions are changing; the list of definitions, b. Globalization drivers were originally trade, commercial & financial, c. More recent drivers – technical, financial, organizational, political, including bi- & multi-lateral agreements, NGOs, environmental issues, like Kyoto Protocol, multilayered evolution (in ecosystems, partners adapt in many ways; world economy as ecosystem), 2. What is a global firm? A brand and nothing more; a brand and something more? globalization and value chains, supply chains, and risk chains. HOMEWORK: read Guillen handout and start reading Common Wealth. I-B, Sept. 7: What is globalization? New transformations, not traditionally part of globalization: the digital economy, emerging economies, and environment sustainability. Are some definitions of