paper

13 pages

· Corporate Globalization Assessment – You will pick a corporation which MUST be pre-approved by the Professor. You will analyze the company for its international readiness and / or improvement opportunities. Your assessment will come from models, tools and strategies learned in the class. Further details will be provided on the last day of class.

· Plz follow the outline to finish this paper

Company: Din Tai Fung

Topic: Opened a Din Tai Fung branch in Canada.
(Din Tai Fung in Toronto is fake Din Tai Fung)
Canada doesn’t have Din Tai Fung now)

Outline

1. Execute Summary

2. PESTLE Analysis module 1, p22-37

3. Culture & Hofstede’s Six Perspectives p38-51

4. Global Competitiveness,v3, p5-19

Resources and Capabilities

Value Chain

VRIO

Porter

Implications & implementation

· Resources vs Capabilities

· What are the resources Coe’s may use? • What are their capabilities? • How can they best exploit both?

· Value Chain

· Sketch out the international value chain for Coe’s. Summarize where the “cash” resides. What can we learn?

· VRIO

· Do a VRIO table and summary note for Coe’s. What can we learn from there VRIO positioning?

· Porter’s Competitive Analysis • Look at Coe’s through a Porter Competitive Strategy lens? Explain.

· Corporate/Organisation Structure

Which organisation structure do you think works best for Coe’s as they expand? Why ?

V3

Becoming International –
Strategic Assessment and Options

Entry Modes

International Management Topics – Competition and Collusion

Making Alliances Work

Strategy in the International Context

Global growth strategy

5.
Strategy and Structure Considerations

International Division

Separate focus for emerging international activities

Global Product or Service Structure

Supports global segments with limited differentiation locally Kotter view of the world

Geographic or Regional Structure

Multi-local structure views every region as different

Global Matrix – “best of all worlds”

Matrix structures with attendant complexity

6. International Functional Considerations

Specific effort will be given to:

1. Marketing – 4ps,

2. Operations and Technical

3. Capital Decisions and Financing;

4. Human Resources; and

5. Investor Relations, Governance/Board and Sustainability

7.Conclusion

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Module 2
Module 2 – Competitiveness, Global Strategies, Processes and Structure
2

Competitiveness and Strategy
Firm Competitiveness and International Impacts
Value Chain
VRIO
Porter’s Competitiveness Framework
Trade Fundamentals and Advantage
Becoming International
Managing and Succeeding Internationally
Making Alliances Work

This module will look at the international dynamics for start-ups and entrepreneurial companies as well as large international and MNCs.
Critical to this module will be a deeper understanding of:
Competitiveness
Trade
Alliances as a tool to enable global growth
3

Processes
How to think about strategy?
4
Strategy
Resources
Organisation
Strategy
Strategy is about choice
Simplicity is better
Be strategy driven – what are you trying to achieve?
What is your starting point?
From the competitiveness tools
Do not invert the pyramid
Set Strategy
Determine key processes (and resultant behaviours)
Determine relative resources – Capital, People/Talent, Technology and Capability
THEN, set the organisation structure
Source: Arthur D. Little

2.1 Global Competitiveness
How competitive are you?
Are you struggling at home?
Are you profitable?
Is there innate interest?

Changing Global Dynamics
What changes as you go global?
Can you extend those things that make you competitive at home?
Are you “ready” to be global?

5

Are you ready to compete?
Are you ready to compete internationally?

2.1 Global Competitiveness – Greenhouse Tomato Industry
Greenhouse
We are looking at the cherry tomato sector
From lab to store
Each team will play various roles in the context of understanding competitiveness:
Team 1 – Lab/Genetics
Team 2 – Seeds/Plant Materials
Team 3 – Greenhouse
Team 4 – Distributor
Team 5 – Farmers Market Store
Team 6 – Costco

6

2.1 Global Competitiveness – Resources and Capabilities
Resources
Tangible and intangible assets
Financial
Cash and Balance sheet strength
Cost of Capital
Fixed Assets
Plant, Equipment and Distribution
Raw materials and processing capacity
Technology – all aspects of IPR including trade secrets and corporate processes
People – trained and competent staff, aligned and mobile executive

Capability
Unique ability to utilize resources available for enhanced competitiveness
Financial
Investor relations
Capital raising prowess
Innovative use of financial structures
Branding
Create and grow brand(s)
Project Management
Ability to execute including proprietary processes for PM

7

Globally competitive firms (organisations) have both a resource base and a capability base which are competitive and readied for execution.

2.1 Global Competitiveness – Exercise
Example – Greenhouse
You are running a large greenhouse that produces tomatoes.
You have lots of land, a large greenhouse building and permits to grow tomatoes.
Your tomatoes are a variety that is proprietary and you can also create other varieties from that genetic stock because of your partnership with a lab.
You also have automated the greenhouse so that the labor costs are low and the risk of damage to the crops is very low.
You are a preferred provider to Costco and Superstore today.

Capability
For each segment, discuss the difference between resources and capabilities.
Resources are what you “have”
What are your resources?
Capabilities are what you are “good at doing”
What are you good at doing?
8

2.1 Global Competitiveness – Value Chain Considerations
What is a Value Chain?
9

Increasingly, value chains crisscross the globe.
Any of these activities can be done in NA or globally?
IT Infra
Human Resources
Logistics & Supply Chain
Finance
Raw Materials
R&D / Design
Manufacturing or Production
Packaging
Market-ing
Functional Activities
Core Activities
Where is most of the money made in this business?
Does this change in other countries?

Bain & Co. introduced the idea of value chain mapping and profit pools.

2.1 Global Competitiveness – Value Chain Considerations
Fully Integrated In House Value Chain
Outsource Value Chain
10

Increasingly, value chains crisscross the globe.
Any of these activities can be done in NA or globally?
IT Infra
Human Resources
Logistics & Supply Chain
Finance

Company Activities

Outsourced Activities
Raw Materials
R&D / Design
Manufacturing
Packaging
Market-ing
IT Infra
Human Resources
Logistics
Finance
Raw Materials
R&D / Design
Manufacturing
Packaging
Market-ing
IT Infra
Human Resources
Finance
Raw Materials
R&D / Design
Manufacturing
Packaging
Market-ingv
Supply Chain
Exxon Mobil
Apple
Yeezy – Adidas and Kanye
Logistics
Supply Chain

2.1 Global Competitiveness – Value Chain Example
Fully Integrated In House Value Chain
Company Profile
11

Hanky Panky Limited –
https://www.hankypanky.com/

Look at breaking down the value chain and where the cash sits.
Design led
Wholesale history
Strong reliance on one supplier – little understanding of global quotas, tax and tariffs
Cuts and some sewing in-house
Wholesale is “outsourced customers”
DTC growing fast
International has never been a focus – distributors and agents

2.1 Global Competitiveness – Value Chain Example
12

2.1 Exercise – Value Chain
Tomato Industry
Seed Genetics (R&D)
Seed Distribution
Greenhouse Operations
Vegetable Marketing / Wholesale Distribution
Retail Farmer’s Market Store
Costco
Break into your [five] teams
Consider the tomato retail price of $4.99 per box of mini-tomatoes
Sketch the value chain back
Where do you think the most money is made? Cash resides? Why?
How would that change in other global markets? Pick an alternative market and compare
TWU – MBA 662: R. Ian Angell Oct. 2020
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2.1 VRIO – A framework for thinking through global competitiveness.
VRIO Framework
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Exploited (Exploitable)
Is the firm organized (or capable of being organized) to exploit the other three levers?
How can a firm be organized to develop and leverage the full potential of its resources and capabilities?
Paradoxically, it is both simple and complex. Apple’s appeal is simple but the combination of all these measures requires a consciously complex approach to sustaining advantage.
Imitable (Ease of Imitation / Replication)
If it is valuable and scarce, can competitors replicate what you have? Over what time frame?
It is incredibly important that the differentiation be clearly understood and articulated within the firm’s strategy and ethos – e.g.) GE management cadre / Harvard MBA – truly believed they are the best and so did everyone else
E.g.) shale oil in the US and Canada – unique combination of factors which make it incredibly hard to replicate elsewhere (but may not be valuable if prices stay low)

Rare
Is it valuable?
Is the rarity innate (scarcity) or erodible? E.g.) rare earths are innate but battery innovation will reduce premium and control
Can it be created and sustained? E.g.) new airplane design
Are the skills and people protectable? E.g.) Google coders – how to retain them, Tesla design and electrical engineers
Valuable
Does the firm, product, activity add value?
Where in the value chain is the value created? (Profit Pools – Bain Methodology)
Commoditization of the product or activity over time e.g.) patent positions
Or WORSE, value erosion e.g.) Transmission Grids, Department stores

2.1 VRIO – The benefits compound both the competitive advantage and, ultimately, returns.
VRIO Framework
15

2.1 Exercise 2 – VRIO
Tomato Industry
Seed Genetics (R&D)
Seed Distribution
Greenhouse Operations
Vegetable Marketing / Wholesale Distribution
Retail Farmer’s Market Store Farmer’s Market
Costco
Break into up to six teams
Apply VRIO to your segment?
Does it have extendable global competitiveness (using VRIO)?
Which of these segments has the most extendable competitive global advantage using VRIO?
Where would you rather play? Why?
Is that different than in the domestic context?
TWU – MBA 662: R. Ian Angell Oct. 2020
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2.1 Porter Industry Competitiveness
Four Measures
Bargaining Power of Suppliers
Extent of suppliers ability to dictate price and terms?
Can they forward integrate?
Threat of Substitutes
How quickly and strongly can substitute products come into the market?
Be clear that substitutes are different than New Entrants
Bargaining Power of Buyers
How many and how strong are the buyers? Can they control the price and terms? Are certain aspects controlled by regulation, etc.?
Threat of New Entrants
How easily and quickly can competitors enter the market?
17

How does this change in a new global market?
Bargaining Power of Suppliers
Are suppliers protected or preferentially enabled (licenses, domestic production, etc.) – bad
Is there more competition? (good)
Threat of Substitutes
Is there anything different in this market that could change the industry product/service mix?
Bargaining Power of Buyers
Again, what changes in the buying structure in the new market?
Threat of New Entrants
Is there a more open or favorable market for new entrants in this new market?

2.1 Exercise – Porter
Tomato Industry
Seed Genetics (R&D)
Seed Distribution
Greenhouse Operations
Vegetable Marketing / Wholesale Distribution
Retail Farmer’s Market Store
Costco
Break into five teams
Think about the vegetable production business.
Are there any of the components where the industry rivalry may be less intense and, therefore, more attractive?
Pick a country and compare that to Canada. Is the competitive intensity greater or lesser?
TWU – MBA 662: R. Ian Angell Oct. 2020
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Team Exercise – Comparing Competitiveness Tools
For your company,
Use ALL FOUR competitive analytical tools to examine your business
Prepare a summary of the competitiveness of your business
So What?
What does that mean or imply about your ability to grow internationally?
What are the gaps and opportunities? How would you address them?
What would be the implementation steps you would take to fill the gaps or address opportunities?
Prepare a slide deck.
One summary slide
Four competitive analysis slides
One implications slide
One implementation slide
Prepare to present
Presentation tomorrow morning.
10 marks – will adjust from final project.
Remember the pyramid thinking structure
Use good ppt practices
TWU – MBA 662: R. Ian Angell Oct. 2020
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2.2 International Trade Fundamentals
Classical Trade Theories
Mercantilism
Trade is good and generates foreign currency…
…but self reliance is better as it preserves reserves
Absolute Advantage
Nations are endowed with resources and have natural advantages
Comparative Advantage
Nations are relatively better off to trade even if they are not the “best” in the world in a given resource or activity
Encourages optimization – produce as much of you can of that which you are best at and then produce alternatives
What is the country endowed with? People, manufacturing capacity, PhD’s, etc.
Modern Trade Theories
Product Life Cycle
Creation and innovation is an endowment (New Products)
Demand is satiated in home country (Mature Product)
As a product commoditizes, production shifts elsewhere, as does demand (Standard Product)
E.g.) clothes washing machines
Does this still work as a construct?
Basic Android phones
Trade in used clothing and vintage market development
Strategic Trade
Industrial policy actively encourages investment in innovation and the control of the “next” segment
Governments are notoriously bad a predicting winners and losers and which segments will emerge
National Competitive Advantage
See next page
20

2.2 International Trade Fundamentals (cont’d)
National Competitive Advantage
Factor Conditions – Endowments
Basic – Natural Resources, Unskilled Labor
Advanced – Specialist Education, Unique Capital structures (VC)
Demand Conditions
Local demand drives innovation; nurturing and growing demanding customers is GOOD
Firm Structure and Rivalry
Internal competitiveness creates innovation, drives down costs and creates efficiency
Protection, licenses and monopolies do not help
Related and Supporting Industries
Multiple options along the supply chain; part of the innovation
Government
Contrary to popular belief, regulation and related pressures HELP drive innovation
Centres of Excellence, Consolidation of certain services (testing, science centers, labs, infrastructure, etc.)

21

Source: Competitive Advantage of Nations – Michael Porter

2.2 Porter National Competitiveness – Example
National Competitive Advantage – Dairy Sector
Factor Conditions – Endowments
Low-cost land and competitive feed costs
Demand Conditions
Small and complacent demand market
Emphasis on minimum health and quality
Firm Structure and Rivalry
Limited competition, regional monopolies
Farm sector operates on quotas limiting supply but maintaining viability of the farm
Related and Supporting Industries
Allied sector have few innovative customers (farms) to supply to
Government
Strong commitment to managed supply

22
Source: Competitive Advantage of Nations – Michael Porter

National Competitive Advantage – Dairy Sector
Factor Conditions – Endowments
Potential in cold climates and related facility intensive geographies
Demand Conditions
Inabiity to understand the benefits of scale
Struggle with more sophisticated/diverse customer base – ie.) cheeses, etc.
Firm Structure and Rivalry
Again, limited competitiveness
May be able to play in global consolidation plays from strong cash/balance sheet positions
Related and Supporting Industries
Few innovations that can be used to “tag along” globally
Government
Most global governments are not protecting via supply management

2.2 Investment and Going Global
23

Key Concepts – National Level
Foreign Direct Investment- brings in cash to a country/region
Vertical (Upstream, downstream) and Horizontal Investment (adjacent markets – segments or geographies. Typically less attractive.)
Trade Surplus / Deficit (Income Statement)
Investment Surplus / Deficit (Balance Sheet)
Advantages of Investment
Ownership
Location
Internalization
Licensing and Support

2.3 Becoming International – Strategic Assessment and Options
24

How to assess whether and how to go global?
Basics apply to any growth or expansion strategy?
Information is scarce.
Key factors are new to the management team (and you).
Domestic or regional markets are almost always unknown and misunderstood.
This gets us to yes/no and, broadly as to how
(capital exposed or not?)

Source: International Management, Helen Deresky, p. 250

2.3 Becoming International – Entry Modes
25

A Vast Array of Options
Entry can be mind-boggling to mature businesses, let alone start-ups or domestic firms
Each has trade-offs and risks

* BOOT – Build, Own, Operate and Transfer (Can be any combination almost)
*
Offsets and Countertrade

2.3 Becoming International – Entry Modes
26

*
Offsets and Countertrade

Kaodim Interview – Fui Yu-Choong, Founder of Kaodim, Lawyer and Start-Up Ecosystem Enthusiast.

27

https://www.kaodim.com/

https://www.linkedin.com/in/fui-yu-choong/

Global, Regional and Local Market Contexts for Consumer Start-Ups.
Tell us a bit about yourself and your career track?
Tell us about Kaodim. Where did the idea come from? What is the unmet need that you are serving?
Where does the company operate today? Where did you start?
Do you think this is an ubiquitous global offering or regional offering or does it vary by country or by other segmentation?
As you look at growing Kaodim, how do you assess countries or regions or new segments to enter?
What are your observations regarding expansion success factors? Put another way, what would you have done differently if you knew then what you know now?
Tell us about financing start-ups in SE Asia. Do you think this varies differently in SEA or is it largely similar to anywhere globally?

2.4 International Management Topics – Competition and Collusion
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Topics
Marketing Coordination – 5Cs
Competition – unfettered competition
Coordination – loose relationships, cooperate where helpful
Collusion – formal or informal but ongoing understandings
Cartels or Marketing Agencies – Canpotex experience
Communications – use of press, industry forums, intermediaries, banks, etc. to send a message
Dynamics of Competition
Large players vs Small Players
High margin vs Low Margin
Home country advantage vs New-Comer
Marginal Cost Pricing vs Full Cycle Pricing
Insurgency
State Resources and SOEs
Infrastructure
Capital Structures and Financing
Collaboration

Collaboration enables adaptation which is consistent with nature’s models of competition
Tesla (Musk’s open-source mentality)

2.5 Making Alliances Work
29
A Continuum
Relationships typically evolve over time (decades)
Power dynamics (including external factors) often dictate decisions
Transactional vs Relational

Hybrids
Hybrids

2.5 Alliance Evolution – Case Study
30
Canadian Oil Company and Japanese Trading House
Talisman Confirms PNG Strategy Acquiring Rift Oil and Others
Pandora field was “stranded” – sell or grow
Numerous transactions lined up like dominoes

https://www.ft.com/content/936a72b6-5a67-11de-8c14-00144feabdc0,

https://www.ogj.com/home/article/17276512/talisman-farms-into-horizon-papua-new-guinea-permits

Talisman developed a strategic plan (mid-scale export LNG) and required partners to execute plan
Global partnership search short-listed a few players – Mitsubishi selected
3 years and $280 million +++ received

https://www.mitsubishicorp.com/jp/en/pr/archive/2012/html/0000014215.html

Progress made swiftly thereafter

http://country.eiu.com/article.aspx?articleid=1911901175&Country=Papua%20New%20Guinea&topic=Econo_6

MC to market LNG, JV structure over-arching including secondees, working and steering committees and deadlock voting procedures
Ultimately, unsuccessful in exploration to progress and Mitsubishi and Talisman (Repsol) sold

2.6 Strategy in the International Context
How does the strategy process vary from domestic business to international?
What are the different options for strategy to underpin international growth?
What are the advantages and disadvantages of these various options?
What are the organisation structures which are more “naturally” aligned with the strategic internationalisation planning constructs?
31

2.6 Global growth strategy – inherently more complex
32

Degrees of complexity
Sheer numbers of regions and markets to assess
Tendency to simplify is greatest risk – e.g.) GDP per capital, size of market, language, etc.
In most cases, single product/service analyses is insufficient
Intelligence gathering, even with internet, is mammoth

More steps…
…more risks
Source: International Management, Helen Deresky, p. 248. 245

Growth Strategies

33
Home Replication Strategy
Most standard place to start
Exports and / or agents
Hard to unravel
Global Standardization of Products/Services
Works well for ubiquitous ideas and where segments or niches are large enough to justify a global footprint
Lends itself well to centres of excellence or specialities
Consistent with web and social media sales – @tinydogpaintings
Localization – or multi-local
Nothing wrong with this
Brand-driven but tailored for taste, practice, religion, etc.
E.g.) MacDonalds
Transnational Strategy – “best of all worlds”
Ubiquity around processes, functions and economies of scale
Key products are global for technological or proprietary reasons
Localization around customer-centricity and regulatory requirements
Typically achievable among only the largest firms

Considerations – Advantages and Disadvantages

34

2.7 Strategy and Structure Considerations

35
International Division
Separate focus for emerging international activities
Global Product or Service Structure
Supports global segments with limited differentiation locally
Kotter view of the world
Geographic or Regional Structure
Multi-local structure views every region as different
Global Matrix – “best of all worlds”
Matrix structures with attendant complexity

Exploring and Understanding the importance of structure – “The International Division”
36

Structure Benefits and Constraints – International Division Structure
Mysterious “rest of world” focus, often leads to out-of-sight, out-of-mind mentality which fosters neglect, maverick behaviours, deals that are hard to get out of, etc.
Kindergarten organisation structure – good for nascent or immaterial international segments
International division managers often rotate through this to “tick-the-box” on career development which can lead to them “playing to HQ” as objectives are often not clear or important
International customers often feel inferior leading to limited success in overseas markets (chicken and egg challenge)
Overseas staff and suppliers/partners feel like second-class citizens

Exploring and Understanding the importance of structure – “Geographic Organisation”
37
Structure Benefits and Constraints – Geographic Organisation Structure
Creates adequate focus on the importance of international markets
Creates internal competition for funds, people, product, etc. and resultant “fiefdoms” and over-reliance on regional chiefs
Allows for regional (and national) differentiation
Assumes heterogeneity among countries and / or segments in each region – major flaw

Exploring and Understanding the importance of structure – “Global Product Structure”
38
Structure Benefits and Constraints – Global Product Structure
Very common in technical companies where there is little/no commonality across divisions
Local or regional cooperation is limited
Customers and Distribution in countries often send confusing messages impacting branding
Margin and market share
Customer friendliness and positioning
Regulatory and other related postures
Ascendant structure even amongst global firms
Importance of understanding the “segment”
Very strong amongst conglomerate or mutli-product businesses like GE and Honeywell

Exploring and Understanding the importance of structure – “The Matrix Structure”
39
Structure Benefits and Constraints – International Division Structure
Matrix structures are inherently complex
Necessity to have strong “ligaments” (processes or principles)to reinforce the “bones” (matrix)
Criticality elements
Transfer pricing
Rules of engagement and behaviours
Common language and alignment around strategy and objectives
Follow the money – capital allocation, profitability/cash flow and bonuses
E.g. ) Schlumberger
Management by Objectives Culture
Material bonuses associated with both dimensions of the matrix

Competitiveness and Structure Assignment
Part 2 In-Class or Take-Home Assignment – Use the Coe’s Mexico Case Study to answer.
Select 1 of the first FOUR of the following questions/areas of enquiry and prepare a commentary using and EMAIL format. And, answer #5.
Assume that your boss has asked you to assess the competitiveness of Coe’s and suggest the corporate organizational structure which may be best. (300 words max.)
Resources vs Capabilities
What are the resources Coe’s may use? • What are their capabilities? • How can they best exploit both?
Value Chain
Sketch out the international value chain for Coe’s. Summarize where the “cash” resides. What can we learn?
VRIO
Do a VRIO table and summary note for Coe’s. What can we learn from there VRIO positioning?
Porter’s Competitive Analysis • Look at Coe’s through a Porter Competitive Strategy lens? Explain.

Corporate/Organisation Structure
Which organisation structure do you think works best for Coe’s as they expand? Why ?
TWU – MBA 662: R. Ian Angell Oct. 2020
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Select One
Must Do

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Module 3
Global Functional Dynamics
2

3.0 International Functional Considerations
Objective: to understand unique or highly variable changes in well understood business activities as firms consider international activities

Module 3 – Global Functional Dynamics. Slides, readings and case studies will help the student understand the specific dynamics and complexities around core business functions in the international marketplace.
Specific effort will be given to:
Marketing;
Operations and Technical
Capital Decisions and Financing;
Human Resources; and
Investor Relations, Governance/Board and Sustainability.
3

3.0 What are the core and functional activities of the corporation? How do they vary with global growth?
IT Infra
Human Resources
Procurement, Logistics & Supply Chain
Finance
Raw Materials
R&D / Design
Manufacturing or Production
Packaging
Market-ing
Functional Activities
Core Activities
Corporations have core activities and support activities (typically called functional or support departments). Both change materially as you grow internationally.
Key questions to be considered – mostly relate to local vs corporate – are:
Marketing – What are the elements which change for local positioning and which are constant for the brand?
HR – How do we treat our people? One team or multiple teams. Who are the elite, if any?
Technical – balance between maintaining a global standard and adhering to (or enabling) local standards
Procurement – where is global sourcing going?
Stakeholder Management

Technical Support – HSE, Eng., Quality
DTC
Logistics
Retail

Canparts – Proxy for Functional Discussion (CPL/TSX)
CanParts is a listed, Canadian cold weather auto accessories company which specializes in aftermarket battery warmers, seat warmers, engine warmers, heated windshield wipers, snow removers, etc.
CanParts has high quality, durable but not inexpensive products. They have trying to break into other “cold climate” markets like Northern China, Russia, the Nordic countries, etc. However, the cost structure of Canadian production is quite high.
To address this, they looked at manufacturing in China. However, they are concerned about intellectual property protection and the lack of local knowledge for suppliers, etc.
A Chinese company that manufactures autoparts has proposed a JV to build a new factory in Northern China for sales into Europe, Russia and China.
The JV and its implications will be a case study across the Functional Considerations module.
TWU – MBA 662: R. Ian Angell Oct. 2020
5

Products may be tangible (goods) or intangible (services, ideas or experiences).
Price is tangible and intangible elements.

Includes perception, exclusivity, etc.
Promotion refers to marketing and communications

Branding and advertising

Positioning and Messaging
How to get the product into the customers hands? Or Mind?
How does the marketing Mix?
3.1 Marketing Mix and Segmentation Considerations
– Marking Mix – Jerome McCarthy, Harvard, Basic Marketing, 1960
Product
Pricing
Promotions
Place (Dist’n)
Source:Weitz, Barton A; Wensley, Robin (October 16, 2002). 
Handbook of Marketing. SAGE. pp. 19, 69.

4Ps

Products may be tangible (goods) or intangible (services, ideas or experiences).
How does the marketing Mix?
3.1 Marketing Mix and Segmentation Considerations
Product
Pricing
Promotions
Place (Dist’n)
Product design – features, quality
Product assortment – product range, product mix, product lines
Branding
Packaging and labeling
Services (complimentary service, after-sales service, service level)
Guarantees and warranties
Returns
Managing products through the life-cycle.
Traditional
Legalities
Culture
Language
Ability to execute – support, service, returns, warranties, etc.
Societal Development – Implicit understanding of how the product is to be used
Product Life Cycle Management – classic view
International Considerations

Price is tangible and sacrificial elements.

Includes perception, exclusivity, etc.
How does the marketing Mix?
3.1 Marketing Mix and Segmentation Considerations
Product
Pricing
Promotions
Place (Dist’n)
Price strategy
Price tactics
Price-setting
Allowances – e.g. rebates for distributors
Discounts – for customers
Payment terms – credit, payment methods
Traditional
Value in the market
Competition in the market
Grey market pricing
Willingness to pay
International Considerations

Promotion refers to marketing and communications

Branding and advertising

Positioning and Messaging
How does the marketing Mix?
3.1 Marketing Mix and Segmentation Considerations
Product
Pricing
Promotions
Place (Dist’n)
Promotional mix – appropriate balance of advertising, PR, direct marketing and sales promotion
Message strategy – what is to be communicated
Channel/ media strategy – how to reach the target audience
Message Frequency – how often to communicate
Traditional
Are the same channels available? Are they used differently in the local market?
Can the messaging be articulated in the same way? Is it implicitly understood?
Cost and ability to execute
International Considerations

Global Marketing Trends – 2022 Deloitte*
Purpose—a beacon for growth
Can you define the greater reason for being?
Authentically inclusive marketing
DEI and ESG objectives cannot be a whitewash
Building the intelligent creative engine
Find the right mix of creative, algorithms and analytics
Meeting customers in a cookieless world
Do you have the customer “inside the tent”?
Designing a human-first data experience
Help customers without being “creepy”
Elevating the hybrid experience
Personalize AI (bots and processes) vs human support
Supercharging customer service with AI
Having the tools is now “table stakes”

* https://www2.deloitte.com/us/en/insights/topics/marketing-and-sales-operations/global-marketing-trends.html

3.1 Pitfalls and Risks of Global Marketing
HBR Articles
Most HQs see that standardization and control are key to global roll-outs
Yes…but to a point.
Key pitfalls in global marketing were identified which illustrate a more nuanced approach.
Insufficient research
Don’t rely on external data only – test before roll-out
Don’t assume extendability from home or other markets
Covers both product and ,marketing strategies
Overstandardization / Adaptation
Standardization offers speed to market, HQ oversight and cost advantages
Present a menu of options allowing localization without eroding core of program
Target specific countries (not regions) and specific segments (as you would at home)
Poor Follow-Up
Iniital HQ driven campaigns and systems are often left to languish
Provide ongoing impetus and support (train, support, train)
Let local teams inform iterative process at HQ (roll-out, listen, adapt, roll-out)
Narrow Vision
New or Tried and true methodologies need to be balanced with multiple perspectives
Standardization of product may meet various local “benefits” or “pain points”
Rigid Implementation
Listen to local concerns and take them onboard
Do not force compliance – blowback and resistance will usually prevail
Consider deployment of various channels depending on level of maturity and “touch” in culture
TWU – MBA 662: R. Ian Angell Oct. 2020
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* Pitfalls of Global Marketing – Kamran Kashani, HBR Sept. 1989 and The Most Common Mistakes Companies Make with Global Marketing – Nataly Kelly, HBR Sept. 2015

Canparts Marketing Exercise
You are the newly appointed Marketing Manager for the JV.
You went to Canada for your MBA so the Canadian company and the Chinese JV partner are excited about having you on the team.
The JV has decided to begin marketing from the factory in China before expanding to the other Nordic or North Asian regions.
What are the 3P considerations for building this line of products into a strong position in China?
What are the social and digital considerations as well?
TWU – MBA 662: R. Ian Angell Oct. 2020
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3.1B Distribution
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Distribution historically meant delivery from firm to customer
Goal of “production” was to drive down the cost of supply while hitting quality objectives
Goal of distribution was to deliver end product to the customer(s)
International was only any extension of that with additional costs of freight, storage, etc.

3.1B Distribution to Supply Chain
Variations

Multiple variations occur every day
This happens in all types of goods…
… and in services
Benefits

Risks
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Supplier
Production
Distribution
Customer
Supplier
Distribution
Customer

We have to talk about Covid-19
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How to rethink Supply Chain and Risk?
Supply chain disruptions are now an understood risk
Costs of JIT and related thin supply lines are costing billions and creating shortages, crises and inflation
So, what do we do to re-think Supply Chain risk post-COVID
Rethink offshoring
Reduce single point failure and diversify lines (fully separated)
Sharpen perspective on supply and demand – maintain back-up supplies
Consider in-house control over areas where, previously, outsource was standard business practice
TWU – MBA 662: R. Ian Angell Oct. 2020
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3.1B Hendrik Snyman – CPO Beach Energy
Role of the Chief Procurement Officer
Old style was head of procurement – often buried in finance
Orientation was price reduction and “squeezing suppliers”
Now – a C-suite role
From purchaser to influencer
From risk avoidance to risk balancing
From constraint identifier to gap opener
From squeezer to partner
From ST thinking to sustainability
Negotiation Principles (not just for supply chain)
Credibility externally – mandate, knowledge, ability to create value for the parties across the table
Extracting value – you can give and take in terms of value; and find new ways of creating value for both
Business Understanding – you MUST deeply understand the business, the project, the objectives
Trusted advisor (internally) – the executive and project delivery team must trust you.
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Hendrik Snyman, Chief Procurement Offices, Beach Energy. Commercial and procurement executive, entrepreneur and Engineering executive in South Africa, Holland, Malaysia and Australia.

https://www.linkedin.com/in/hendrik-snyman-3748333/

Commercial Negotiations and Global Variability
Tell us a bit about yourself and your career track?
Where have you worked in and where have you lived?
Tell us about the difference between running your own business and working for one of the biggest companies in the world, like Shell.
What is your approach to commercial negotiations?
How has the Chief Procurement role changed over time? Is this a global trend?
How have you had to adjust this approach depending on the different countries and cultures you are working in? Please give us some examples.
As a businessperson, how do we plan for negotiations in a different setting?
To be successful in business globally, what is the one tip you would offer?
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Canparts Distribution Exercise
There are two challenges facing Joseph Wang, the newly appointed head of BOTH supply chain and distribution for the JV.
For the JV, certain components which are proprietary and / or sophisticated, will be produced in Canada and sent to the factory in China.
The JV does not have its own warehouse system in China and does not yet have global distribution. It has distribution in the Northern US and Alaska. The local partner of Canparts has a fully fledged distribution structure in China.
What are the options available to Joseph?
As key members of Joe’s team, he has asked you to sketch out the options for ensuring constant supply of the Canadian components and to lay out options for the global distribution for the JV including getting product to customers across China.
TWU – MBA 662: R. Ian Angell Oct. 2020
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3.2 Operations and Technical
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Overview

Technical, Engineering and Operations – often viewed as most “objective” as “one global standard” is simple. Reality less clear.
Typically involves:
Design, engineering and development of assets
Operations and maintenance including Operations Management Systems
Technology and standards management and technical integrity; and
Health, Safety and Environmental compliance (HSE)
Local regulations, labour supply and environment, supplier and technology access may limit standardization

3.2 Technical Management Example – HSE Safety Risk Analysis
Lifeboat Readiness
Management Dilemna
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Offshore Lifeboat
Standard Risk Matrix
Challenge: How to resolve a situation where a risk may be acceptable in one country and not in another?
Background:
Risk determined by probability/frequency and consequences of an event. Plotted on a color-coded RISK MATRIX.
Frequency can be thought of as terminology like ‘happens every week’, ‘happens every year’, ‘has happened in the industry’, etc.
Consequences may relate to the seriousness of the injury, fatality, or multiple fatalities.
Accountability. The greater the risk, the more senior the sign-off of a risk.
Test
Norway. Drop test of free-fall lifeboat using 25 kg sandbags to simulate the weight of people on board. The lifeboat roof caved in. Also, examples of multi-fatality failures elsewhere for a variety of reasons.
Implications
Industry-wide project to investigate the safety and reliability of all lifeboats on offshore installations in Norway.
One international company participated and found risks to their lifeboats in Upper Right / HIGH zone requiring sign-off from HQ.
But, if HQ got involved, they may need to review all GLOBAL lifeboats and appropriateness of Norwegian findings. Many countries do not have the same standards for lowering lifeboats as Norway. 
Would accepting the risk create an obligation to review and potentially upgrade lifeboats in other locations? 
Once you know about a risk in one area then you are obliged to consider this risk in other relevant areas. There may be good reasons for a different decision and if the reasons are good then there should be no problem in documenting them. 
What is not acceptable is to ignore the risk and sweep it under the carpet.
Source : Mike Pollard, Reflektion, Oct. 2020

3.2 Technical Management Example – HSE Safety Risk Analysis
Lifeboat Readiness
Management Dilemna
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Offshore Lifeboat
Standard Risk Matrix
Challenge: One dilemma that is faced by companies with activities in different countries is how to resolve a situation where a risk may be acceptable in one country and not in another. This is particularly challenging with technical risk where the company may aspire to common standards in all countries.
Background: The assessment and acceptance of risks associated with any operation is a key process in decision making. The risks are often determined by considering the probability of any event and the consequences of this event. The risks are then plotted on a risk matrix that typically uses different colours to distinguish risks. For frequency, some organizations use terminology like ‘happens every week’, ‘happens every year’, ‘has happened in the industry’, etc. Consequences may be related to serious injury, fatality, or multiple fatalities. Normally the greater the risk, the higher up in the organization the person accepting (or not) the risk needs to be. The person accepting (or not) the risk, also takes on the responsibility of ensuring the risk is assessed in other areas he/she has responsibility for.
Test: In 2005 a drop test was carried out on a free-fall lifeboat on a platform in the Norwegian sector of the North Sea. For the test, 25 kg sandbags were placed in the lifeboat seats to simulate the weight of people on board. The lifeboat roof caved in. The incident led to an industry-wide project to investigate the safety and reliability of all lifeboats on offshore installations in Norway. This included both freefall and conventional lowering lifeboats. 
Implications: One international company with conventional lifeboats on their installations assessed the risk. The consequence used was 50 fatalities (the lifeboat capacity). The frequency was assessed as ‘has happened before in the industry’. There are several examples of failure of conventional lifeboats in the petroleum industry including the evacuation from the Enchova platform in Brazil in August 1984. 36 people lost their life when the lowering mechanism failed. The company identified modifications to improve the safety and reliability of the lowering mechanism.
The subsequent risk level was higher than what could be accepted by the management locally and should have been transferred to head office for approval. There was resistance to involving head office. One of the concerns was that having been informed of the risk in Norway, head office would be obliged to consider the risk on installations not in Norway and whether the proposed modifications were appropriate for these areas. There are many countries that do not have the same standards for conventional lowering lifeboats as Norway. Would accepting the risk create an obligation to review and potentially upgrade lifeboats in other locations? 
Once you know about a risk in one area then you are obliged to consider this risk in other relevant areas. This does not mean that a risk accepted in one area is acceptable in another area. There may be good reasons for a different decision and if the reasons are good then there should be no problem in documenting them. What is not acceptable is to ignore the risk and sweep it under the carpet.
Source : Mike Pollard, Reflektion, Oct. 2020

Jim Tarlton, President of the Malaysia Canadian Chamber of Commerce, Co-Founder of Well Experts, International Energy Executive, Engineer
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https://www.linkedin.com/in/jim-tarlton-274a8417/?originalSubdomain=my

Managing Operations Globally
Tell us a bit about yourself and your career track?
Where have you worked?
What are the major differences between managing operations in Canada vs UK vs SE Asia?
Why do these differences exist? Is it a difference in education, regulation, vision/perspective?
As you look at running assets and keeping people safe around the world? How do you think companies should approach this?
We hear a lot about local regulations vs a global set of corporate regulations that companies ought to adhere to. Where do you think that balance is?
What are the biggest impediments you have seen to being able to execute operations locally as well as you would like to? Suppliers, employees, regulations, other?
Finally, as Chairman of the MCBC, where do you see the opportunities in Malaysia?

3.2 Canparts Technical Exercise
Set-up a JV factory in China
Building standards in Canada have higher standards for both building and operations than Chinese standards
Chinese JV partner is resisting the need to spend the extra money for Canadian standard.
Chinese JV partner shows numerous factories which work well, are safe and look good to – saving 25% of cost.
The cost of the factory is est. $100MM
TWU – MBA 662: R. Ian Angell Oct. 2020
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Exercise
You are the Project Manager
You are told that CanParts wants to make sure the factory “makes the company proud and show the Chinese partner how good a Canadian business is.
You understand the desire of the JV partner to reduce costs.
However, some of the standards in China do give you some concern?
What do you say to the Canadian bosses?
How do you suggest they resolve this with the Chinese JV partner?

Capital Structure and Repatriation
Capital budgeting must include currency, tax and country risk
Incentives, bonuses and pay structures need to reflect local realities

3.3 Financing and Capital Investments
Traditional Finance
Cost Control
Operating Budgets
Internal Auditing
Planning

International Finance
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Best Practice
Internal Capital Market
Tax
Borrowing costs and Creditors Rights
Exploit local challenges and immature financing structures (SPVs)
Watch aggregate debt
Risk Management
Natural currency hedges so manage currency globally (debate)
Balance initiative with risk of rogue activity
Global Capital Budgeting
Vary investment by market risk but watch disincentives
(See next page)

Source: The Finance Function in a Global Business, HBR July-August 2008

3.3 Financing and Capital Investments
WACC
WACC
% of Debt and Cost of Debt
Corporate paper rating
% of Equity and Cost of Equity
Rf + Risk Premium
Hybrid Instruments
Equity-like returns for debt
Fixed, senior stability for equity
Royalties, etc.
Special-purpose Vehicles
Capture inherently lower costs of financing for a given project
Off-Balance-Sheet Financing
Real-Estate, Leases, etc.

International Variations
Currency and Capital Risk
Delta of revenue and costs exposure to foreign currency – What are you selling in and what are your costs in?
Funding, repatriation of cash and dividends and related risks
Carry trade arbitrage – opportunity and risk.
E,g,) SGD and Canada Housing
Degree of Separation
Culture, Legal, Economic, Political, etc.
Mitigation – ability to lay off the risk
Investment Insurance from governments and Multi-Lateral Agencies
Local partners and local financing
Sequestered funds or direct-to-loan payment structures
Hedging, even if expensive
Higher levels of equity

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3.3 Financing and Capital Investments
Additional International Financing and Investment Considerations
Tax
Rates and Clarity of Rules
Certainty
Enforcement
Regulatory constraints on capital
Repatriation of cash and dividends
Other investment constraints
Execution and Projection Risk – Risks which are NOT present in domestic markets
Ability to capitalize on core capabilities
Technical expertise is not importable into country
Patent positions are not protected (previous generation tech.)
Enforced JV or Minority Structures
Family or Government-Linked Partners

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3.3 Creating A Global Finance Function
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Global Finance Functions
Important for controls, insight, surveillance and innovation
Understand and calibrate global finance capabilities
CPA is a CPA?
Build a globally, rotating finance staff – not just at senior levels
Codify which elements are global and which are localizable
Be strategic – make sure that senior leadership in region has time and has the role bandwidth to be involved in the business unit strategy
Source: The Finance Function in a Global Business, HBR July-August 2008

Canparts HR Exercise
Background – CanParts
CanParts – Canadian auto accessories – TSX listed
Set-up a JV factory in China
Cost of Debt in Canada – 6%
Cost of Equity – 12% (50%)
Debt available for factory at Cost of Debt = 4% for 75% of project plus government guarantee of 2% added to loan.
The Chinese JV will be seen as risky by Canadian investors and bank.
Exercise
Calculate the cost of capital for the Canadian entity.
Calculate the blended cost of capital for the new factory – Canadian company perspective.
Look at the impact of the Chinese project on WACC
What should the company do? Finance 100% equity into JV or take the Chinese loan?
TWU – MBA 662: R. Ian Angell Oct. 2020
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3.4 Human Resources – People Management
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Expatriate – Parent Country National (Global Professional)

“standard bearers” of corporate culture, policies and norms
Career oriented
Additional Benefits
Tax equalization
Risk
Cost of living
Spousal support
Education
Travel/Home Leave
Increasingly rare (viewed as colonial)
Third-country national – expat but not from HQ
Highest cost
Global firms – mix of cultures
International firms – ethnocentric (HQ Culture)
Host-Country National – Local Hire
Majority of roles in ANY country
Increasing emphasis on development of nationals to reduce expats
Second-class citizen challenges
Career track
Secondments
Postings for exposure
Special projects to represent local matters
Often, better than similar job with local entity
Lowest cost
Hybrids
Third-country national – expat but not from HQ
Expat-”lite” – experiential roles
Accounting firm secondments, etc.
Extended expat roles
Local family and living arrangements
Contract positions
Money without security
Tax and repatriation risk
Immigration risk
Bridge costing

Canparts HR Exercise
Background – CanParts
Need to send five executives to China for, at least, three years to build and launch factory.
3 of the executives have family in school 2 are older and only have spouse but one has a very sickly spouse.
Local Chinese GM is also being hired as are up to five local managers at a second-tier level – designed to take over from Canadian executives later.
Canadian executives want/expect premium for going to work on this project.
Exercise
You are the HR manager and team in Canada.
What do you recommend to the company in terms of how you pay and reward the Canadian management team?
How do justify the difference between this and what we pay the Chinese managers?
TWU – MBA 662: R. Ian Angell Oct. 2020
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3.5 Investor Relations, Governance/Board and Sustainability
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Context – Primary differences from North American standard models
Investor Relations – how do investors behave and how are investors treated?
Activity of shareholders and varying local matters and Board accountabilities
Governance – where does control vest?
Chair vs CEO
Control, byzantine structures and negative control and role or families/state
Sustainability – To what degree are soft issues top-of-agenda?
Health, Safety, Environment
Carbon, Labor Standards, Corruption
Emerging (and Periodic) Global Issues

Michael Arnett, Chairman of NRW Holdings (ASX100 company), Board member, Corporate advisor and former top-tier law firm partner. Experience across Australia, New Zealand and SE Asia in resources and corporate matters.
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THE BOARD

How do corporate governance and investor/shareholder relations vary in the international environment?
Tell us a bit about yourself and your career track?
What type of companies have you advised and participated in? What are the differences between these types of companies from a governance perspective? Public vs. Private, Jurisdiction, sector (mining vs non-mining), etc.
Tell us a bit about your Board roles including NRW Holdings? How do you look at venturing internationally? What are the risks as you have seen them?
Have you had any disappointing experiences in international JVs or other related deals? Could you share some examples and why you think they turned out this way?
Let’s discuss shareholder and institutional management. Do you think that trends regarding diversity, climate change and similar special interests are going to become commonplace?
What are the next trends that need to be considered when looking at global issues?
For young business people today, what would be your “top tip” that they ought to consider?

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MNEs and HOST GOVERMENTS
Economic and Developmental Policies
• MNEs should consult with governmental authorities and national employers’ and workers’ organizations to ensure that their investments conform to the economic and social development policies of the host country.
• MNEs should not adversely disturb the balance-of-payments or currency exchange rates of the countries in which they operate. They should try, in consultation with the government, to resolve balance-of-payments and exchange rate difficulties when possible.
• MNEs should cooperate with governmental policies regarding local equity participation.
• MNEs should not dominate the capital markets of the countries in which they operate.
• MNEs should provide the information necessary for correctly assessing taxes to be paid to host government authorities.
• MNEs should not engage in transfer pricing policies that modify the tax base on which their entities are assessed.
• MNEs should give preference to local sources for components and raw materials if prices and quality are competitive.
• MNEs should reinvest some profits in the countries in which they operate.
Laws and Regulations
• MNEs are subject to the laws, regulations, and jurisdiction of the countries in which they operate.
• MNEs should respect the right of every country to exercise control over its natural resources, and to regulate the activities of entities operating within its territory.
• MNEs should use appropriate international dispute settlement mechanisms, including arbitration, to resolve conflicts with the governments of the countries in which they operate.
• MNEs should resolve disputes arising from expropriation by host governments under the domestic law of the host country.
Political Involvement
• MNEs should refrain from improper or illegal involvement in local political activities.
• MNEs should not pay bribes or render improper benefits to any public servant.
• MNEs should not interfere in intergovernmental relations.
Source: Various UN Organisations c/o International Management, Helen Deresky, p. 73-74
Checklist for reasonableness

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MNEs and the Public
Technology Transfer
• MNEs should cooperate with governmental authorities in assessing the impact of transfers of technology to developing countries and should enhance the technological capacities of developing countries.
• MNEs should develop and adapt technologies to the needs and characteristics of the countries in which they operate.
• MNEs should conduct research and development activities in developing countries, using local resources and personnel to the greatest extent possible.
Environmental Protection
• MNEs should respect the laws and regulations concerning environmental protection of the countries in which they operate.
• MNEs should cooperate with host governments and with international organizations in the development of national and international environmental protection standards.
• MNEs should supply to appropriate host governmental authority’s information concerning the environmental impact of the products and processes of their entities. (ICC; UN/CTC) MNEs and Persons
Consumer Protection
• MNEs should respect the laws and regulations of the countries in which they operate with regard to consumer protection.
• MNEs should preserve the safety and health of consumers by disclosure of appropriate information, proper labeling, and accurate advertising.
Employment Practices
• MNEs should cooperate with host governments’ efforts to create employment opportunities in particular localities.
• MNEs should try to increase employment opportunities and standards in the countries in which they operate.
• MNEs should give advance notice of plant closures and mitigate the resultant adverse effects.
• MNEs should provide standards of employment equal to or better than those of comparable employers in the countries in which they operate.
• MNEs should pay, at minimum, basic living wages.
• MNEs should maintain the highest standards of safety and health and should provide adequate information about work-related health hazards.
Human Rights
• MNEs should respect human rights and fundamental freedoms in the countries in which they operate.
• MNEs should not discriminate on the basis of race, color, sex, religion, language, social, national and ethnic origin, or political or other opinion.
• MNEs should respect the social and cultural objectives, values, and traditions of the countries in which they operate.
Source: Various UN Organisations c/o International Management, Helen Deresky, p. 73-74
Checklist for reasonableness

Rio Tinto and Bougainville Copper
1) Bougainville Copper – A War on behalf of a Mining Company

2) Australian Aboriginal Sites Destroyed Rio Tinto did not seem to learn…

Rio Tinto says sorry for blasting 46,000-year-old Aboriginal site | 7.30 – YouTube

…costing the CEO and Senior Team their jobs.

Heads roll at Rio Tinto after miner’s decision to destroy ancient Aboriginal sites | ABC News – YouTube

Rio Tinto CEO quits after Aboriginal caves destroyed in mine expansion – YouTube (up to 3:21)

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Canparts IR Exercise
Background – CanParts
Chinese partners want to recycle waste materials – including hazardous – from the plant in Chinese style – 25% to the landfill.
Landfill is “commercial” part of the City near the plant but legality is unclear
CanParts Canada wants a transparent waste disposal process.
Exercise
Your team has been brought in to advise the JV on setting up its sustainability program.
You understand that recycling and circularity are important to global customers.
What are the gaps in the China plant approach?
What do you recommend the JV do about it?
What do you advise the Canadian partners regarding a “minimum” standard they should accept?
TWU – MBA 662: R. Ian Angell Oct. 2020
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Board Memo
Scenario – One of the Board Members of Canparts has asked for a briefing. Each team will be asked to prepare a concise two page document or UP TO 3 slides with notes for the Board member to read on the airplane to China.
Provide a sense of the issues and challenges Canparts is facing in relation to your area of concern (Situation and Complication)
Provide the Board member with your considerations or options you are proposing.
Make a recommendation regarding a path for Canparts to take in relation to this area and to help negotiate with the China partner.
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Optional Slides – Mark Peach Experience

TWU – MBA 662: R. Ian Angell Oct. 2020
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Mark Peach, Multi-Disciplinary Executive with Shell
Mark started his career working in a London office but after six months left to gain field experience.
He started working on oil exploration seismic crews in Libya before moving to Yemen, Kenya, Zambia and Oman.
In Oman he left the field to support the client’s office where he managed contracts for seismic camp moves and well borehole seismic acquisition before moving into a Health Safety and Environment (HSE) role for the clients exploration department.
After a short period as the HSE Manager for one of the seismic contractors, he joined Shell in 2006 as a senior operations geophysicist in charge of a seismic crew in Libya.
On completion of the assignment in Libya he moved to Chengdu as the Exploration Operations HSE Lead for the shale and tight gas project, before taking on the role of Exploration HSE Manager for the Yinggehai offshore drilling campaign.
From 2016 to 2020 he was promoted to the role of Exploration Regional HSE Manager for APAC based in Kuala Lumpur.
He and his wife Judith moved back to the UK in December 2020.

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Who am I
Geologist, geophysicist, and Health Safety and Environmental protection professional. I have worked in both field and management roles. Including venture startups in both Libya and China.

The regions I have worked in are Europe (well the UK) Africa, Asia and the Gulf but not the Americas. My last role was Shell Explorations Regional HSE Manager for APAC based in Malaysia.

I have lived outside my home country for over 34 years. I have been fortunate to have had the opportunity to gain some insights into different cultures thanks mainly to local friends who have guided my path, corrected my errors and put up with my embarrassingly bad pronunciations of their languages.
My wife has shared my travels.

Question
You are the manager of a company conducting drilling projects in China.

You are looking to expand your business into the African, Gulf or European Markets.

You are tendering for projects which will start in 8 months. In your country it would take 3 months to complete the on site work. The client expects completion in 12 months from contract signing.

What are some of the business challenges you need to consider before deciding whether to tender for the projects?

Expansion
As companies expand they look for new markets, either in the form of new products within the same catchment, entering into new lines of business or moving from a local to an international business.

We will look at some of the challenges faced with moving from a local to international business as well as the impacts understanding or lack of understanding can have.

Country Selection
Operational standard local / international
Operational Timings
Importation timings
Importation costs
Equipment availability
Local staff availability
Effects of weather on schedule
Equipment selection
Manpower legislation
Visa process
Environmental legislation
Currency – local / international
Currency – How to pay staff
Tax Regime – local / internation
Currency – money transfer
Currency – local funds/tracking
Impacts of culture
Impact of time zones
In country communication
International communication
Emergency response management
Country exit strategy
Environmental / Social / archaeological impacts
Local permits
Some Elements to Consider
Market competitiveness
Unforeseen Influence
Reputational Impact
Language barrier

These are only a few of the aspects a company will need to consider before moving to an international market.

All will have an impact to a greater or lesser extent depending on both the country you are moving into and the operation or products you are providing.

We will look at a few case studies which provide examples and how elements can have a dramatic impact on your schedules, your costs, and your reputation.

Q: Do you go ahead with the operation and if so what do you need to do to manage the risk?
Case Study – Equipment Standards
Background

Drilling operations planned in Jinqui region of China (Sichuan). Construction of rig pad required excavation and levelling of the site.

Roll over protection was (ROP) requested on all earth moving vehicles & seat belts. However none available as ROP not required under Chinese law or company standards, (although seen as good practice).

Approach Taken
– Risk assessment: Most rollovers occur on slopes or due to speed
– Mitigations :
– Pads built on level farmlands therefore no slopes
– Speed limits defined for all sites
– Driver training and awareness
– Banksmen to supervise vehicle movements
– Developed standards for earthmoving equipment
Q: Do these controls manage the risks? What could impact them?
Bulldozer used in Oman desert operations with ROPs cab

Jinqui farmlands
Conclusion : Standards may not be fully sufficient to manage risk, understand their limitations and what impacts them

The use of rollover protection on earthmoving equipment was seen as good practice based on experience in Oman where they were fitted to bulldozers and graders. A rollover in dunes resulted in minor damage to the dozer and no injury to the driver.

In China ROP cabs were not available for most of the earth moving equipment. Whilst good practice, the cab were not required under Chinese law or in the company standards for this type of equipment.

The rollover risk was still a concern. A risk assessment was carried out. Historical evidence indicates most rollovers result from speeding or from operating on slopes. In this case the earth moving equipment speeds were restricted and the rig pads were being constructed on farm land in the valleys as such the risk of a rollover was deemed low.

Do these manage the risks. What could impact these controls?

Case Study – Standards & Reputation
Background

Evidence supports Libya being one of the early routes for mankind from Africa. It was a major centre for both the Roman and Greek empires with archaeological sites of major importance. Most archaeological studies were along the coastal area. However much of the oil and gas exploration is carried out in the more remote interior desert.

The initial archaeological assessment approved by the government showed little of interest and no special precautions were required. However during early surveys some sites were identified.

Q: You are complying with local & company requirements, do you need to do more and if so why?

Approach Taken
– Concern over potential impact. Company wanted to be and be seen as a reputable operator
– Developed, with a specialist, a new way of archaeological sensitivity assessment
– Engaged with the regulator on the approach seeking their support
– Applied methodology to all seismic operations, assessments updated as information became available
– Identified over 1000 sites providing new information for archaeological researchers.
– Approach impacted costs but demonstrated company commitment
– Method promoted by the regulator to other IOC’s

Conclusion : Going beyond minimum requirements can help minimise impacts &improve your company reputation. But maybe at a cost

Following a couple of sites being identified, the team felt that insufficient information was available to demonstrate we minimised impact.

Support provided by the management to develop a new approach to assessment using hi resolution satellite imagery, palaeogeomorphological data and current finds to predict areas of higher sensitivity. These were bended and controls defined for each band. Site surveys were carried out to ground truth the data. As surveys progressed, all the maps were updated and finds logged with photos etc.

As a result over 1000 sites were identified ranging from hearths to burial sites and potentially the remains of mud towers (Probably built by a now extinct group called the Nasamones). This data has been used by researchers.

Engagement with the Dept of Antiquities (DOA) was held throughout. They provided local archaeologists. Following the first survey results the approach was recommended to all IOC’s by the dept.

All data was presented to the DOA.

The company reputation with the DOA was very good

How can understanding the local culture help or hinder your operation?
Question

This is a wide topic and can include operational challenges as well as more complex issues such as company ethics.

In some countries, to get equipment imported on time would usually require that payments are made to facilitators. Your company’s approach to this is important. if you are seeking international business where bribery or corruption cases can result in heavy fines.

Whilst direct payments may not be involved, can you arrange a visit to your HQ for a client and their partner including a weekend away nearby?

Understanding the culture of a country can help you manage an operation. Below are a couple of examples where cultural differences impacted operations

Case Study – Cultural Clash
Background

In Oman a Chinese seismic contractor, new to the country, won a contract for seismic acquisition. All the senior staff were Chinese. However under Oman labour law all the labourers moved from an old crew to this crew. Most of the Chinese staff were new to desert operations whilst many of the local staff had worked for over 20 years in the Oman seismic business.

Q: How do you see the Arabic culture clashing with the Chinese way of working?
Q: How would you manage this?

Considerations
– Chinese staff desert experience compared to local staff
– Chinese staff international experience
– Language barriers
– Arabic culture shows respect to elders through “Majilis”. Chinese management unfamiliar with this
– Arabic culture has a focus on family above work, work hours fixed
– Client culture was Western, good understanding of Arabic but not understanding of Chinese culture
Conclusion : When moving into a new country understanding the culture will help you operate and raise awareness to potential clashes

In this example the local Chinese staff were more familiar with a system where the boss is in charge, gives orders and the teams carry out the work.

While the managements role is to manage the crew, in an Arabic environment respect is shown by sharing coffee with the senior labourers and drivers an discussing major issues impacting the crew.

The new senior staff, hampered by the inability to communicate, in a new working environment and in a new culture reverted to issuing orders/demands. The local staff who had experience, disliked the tone the senior staff were taking and felt they were not being shown respect. Their work suffered.

Tensions arose between the senior staff and the crew labour.

To resolve the problem the party Chief started attending meetings with the senior crew members. Issues raised were followed up. The senior staff had to adapt to the local culture and listen to advice from the labour.

An increase in the number of interpreters was also sought to reduce the communication issues.

Case Study – Contractor Management Culture
Background

Seismic acquisition in the Libyan desert. The operation was near a massive WWII mine field. A passage had been cleared through the minefield marked by white posts. Access only allowed during daylight. Safe passage included in all route planning meetings. Crew gained approval for each truck movement through the field. However on one occasion they didn’t report departure delay instead reporting the vehicle through the minefield before dusk when in fact it hadn’t arrived at the minefield, putting staff at risk.

Approach Taken
As part of this incident investigation (classed as a “near miss”)
We engaged with both the crew management and the office management
Sought ways to improve communication between the two parties.
Promoted open honest dialogue between crew, management and the client
Learnt that other clients not interested in engagements, just results
Q: How would you manage this cultural issue?
The crew management wanted to give a good impression to their office management
Contractor office management were confrontational when the crew raised problems.
Site visits & Rep reports gave us an awareness of the poor company “culture”.

Conclusion : Its important to visit the sites of your operations. Reports can only provide so much information and have a bias

Site visits and visits to the management office indicated that whilst there were issues on the crew, these weren’t always communicated to the office management. In turn the office management did not provide sufficient support to the crew and their response to problems was negative and confrontational.

The presence of a major WWII minefield in the area of operation presented a major risk. Some of these mines were still live. A corridor through one section was cleared and posts set up to indicate safe passage.

The crew requested approval to move a personnel carrier to the local town. This was given as long as the minefield was cleared before sunset. The vehicles were late leaving camp. This was not communicated to the office.

Due to our concerns we had one of the mine disposal teams reps confirm the vehicle was through the minefield. The crew informed their office they were through whereas in fact our rep confirmed they hadnt arrived 30 mins before sunset.

The culture on the crew was such that regardless the vehicle would have been sent through the minefield.

Case Study – Impact of Local Culture
Background

In Sichuan the company sought open engagement with staff seeking solutions to problems. Local knowledge can provide local answers. Site visits helped but wanted more consistent approach between companies. However.

– During group sessions staff would not present ideas

– At contractor workshops only the contractor management spoke.

– We were new and wanted to learn but didn’t have access to a wealth of local knowledge

Q: Understanding the Chinese business culture, why did this occur and how could you improve engagement ?

Approach Taken
Continued with workshops but
– Set separate challenges for each table
– Put all managers on one table
– Expatriates facilitate workshop – removed expectations of answers
Conclusion : Its good to bring fresh ideas and approach to a project but also critical to harness all your staff experience

One of the common challenges we found was that the company management often did not conduct site visits to their operations

When seeking solutions to local site issues, often the contractor management were not really aware of the problems faced by their teams. We needed to get a better understanding from the people involved whilst at the same time showing respect for the management and gaining their support without which the operations would stall

Considerations
Importation/Local
Towing vessels
Staff visas
Weather Window
Emergency Response

Case Study – Impact of unforeseen influences
Background

Planning an offshore well in the South China Sea. A jackup rig was selected from an international contractor was. Their rig underwent maintenance work in Malaysia before being towed along the Vietnamese coast to the waters off Hainan.
Conclusion : Unforeseen events can occur. Your schedules and costs need to allow some flexibility

The decisions you make are based on the information available at the time. However unforeseen factors also have an effect. Where these are identified their impacts can to some degree be predicted.

This was the first offshore well for the team in the country for a number of years. The team selected an external contractor as they had experience in drilling this type of well, when local contractors didn’t and the rig was available at the best operational window. Outside typhoon season.

The rig was moved from Malaysia, towing vessels were changed to Chinese flag vessels to expedite entry into Chinese territorial waters.

Based on historical weather, a period transitioning between typhoon season and low monsoon currents was selected for the rig move. Daily tracking with the week ahead weather forecasts were used for planning.

Plans were in place to divert in the event of a typhoon. Safe havens were identified for emergency and helicopter support identified along route.

However. The monsoon currents hadn’t subsided. Travel was very slow along the Vietnamese coast. Two typhoons were experienced. Plans were followed and the rig was turned southward to avoid it, a second followed and turned towards the rig. Towing in high currents had resulted in some damage to the rig, the identified “safe port“ in Vietnam was selected. However local tensions with China meant that they refused to let the Chinese towing vessel stay in port. This vessel had to leave. The end result was increased cost and a delay in the project.

Considerations
Effective Environmental Management
Understanding Potential Environmental impacts
Environmental legislation compliance
Environmental permitting
Environmental emergency response
Case Study – Environmental Legislation Compliance (Permitting)
Background

Planning an exploration well offshore New Zealand. Area was remote but within helicopter range. Operation was promoted by the government. Whilst some public groups were in support of the drilling, others were not.

Environment included engagement with the local indigenous people as well as others potentially impacted by the operation.

Conclusion : An understanding of the local legislation as it applies to you business and its impact on costs and timing is key

New Zealand has some very strict environmental laws. There is also interest from the public and pressure groups on anything that could adversely impact the environment. The “Green” lobby has significant influence in the government.

This is both a refreshing and challenging environment to work in for the oil and gas industry. Refreshing because the work on environmental protection is respected in many areas and given the attention that it should have, challenging because some groups will regardless try and stop you and any errors will be dealt with harshly either by the government or by pressure groups through the media.

In the example above environmental management was on the “critical path” for the operation ie it had the most impact on timing. Environmental permitting is a complex process requiring demonstration of effective environmental management and environmental assessments which look at the operational impacts, how sensitive is the environment and how impacts can be prevented or minimised. In addition site sampling studies before and after are required to confirm impacts if any.

The greater environment includes impacts on people, for example local communities who may hold the site as important, or fisherman who may worry about the impacts of your operation on their livelihood. Environmental groups also have understandable concerns on potential impacts on whales, IUCN red listed species etc.

Legislative compliance in this case was an issue. A piece of legislation aimed at permanent facilities also applied to a drilling rig. This would require modifications to the rig.

A key aspect of any operation is effective incident management. A company needs to demonstrate any risk to the environment can be managed.

The upshot of this is that to gain the environmental permit can take 18 months with various public consultations. In addition the costs of the studies would be a significant part of the well costs

Case Study – Cultural Clash
Background

In Oman a Chinese seismic contractor new to the country won a contract for seismic acquisition. All the senior staff were Chinese. However under Oman labour law all the labourers moved from an old crew to this crew. Most of the Chinese staff were new to desert operations whilst many of the local staff had worked for over 20 years in the Oman seismic business.

Q: How do you see the Arabic culture clashing with the Chinese way of working?
Q: How would you manage this?

Considerations
– Chinese staff desert experience compared to local staff
– Chinese staff international experience
– Language barriers
– Arabic culture shows respect to elders during “Majilis”. Chinese management unfamiliar with this
– Arabic culture has a focus on family above work, work hours fixed
Conclusion : When moving into a new country understanding the culture will help you operate and raise awareness to potential clashes

In this example the local Chinese staff were more familiar with a system where the boss is in charge, gives orders and the teams carry out the work.

While the managements role is to manage the crew, in an Arabic environment respect is shown by sharing coffee with the senior labourers and drivers an discussing major issues impacting the crew.

The new senior staff, hampered by the inability to communicate, in a new working environment and in a new culture reverted to issuing orders/demands. The local staff who had experience, disliked the tone the senior staff were taking and felt they were not being shown respect. Their work suffered.

Tensions arose between the senior staff and the crew labour.

To resolve the problem the party Chief started attending meetings with the senior crew members. Issues raised were followed up. The senior staff had to adapt to the local culture and listen to advice from the labour.

An increase in the number of interpreters was also sought to reduce the communication issues.

Case Study – Impact of Local Culture
Background

In Sichuan the company sought open engagement with staff seeking solutions to problems. Local knowledge can provide local answers. Site visits helped but wanted more consistent approach between companies. However.

– During group sessions staff would not present ideas

– At contractor workshops only the contractor management spoke.

– We were new and wanted to learn but didn’t have access to a wealth of local knowledge

Q: Understanding the Chinese business culture, why did this occur and how could you improve engagement ?

Approach Taken
Continued with workshops but
– Set separate challenges for each table
– Put all managers on one table
– Expatriates facilitate workshop – removed expectations of answers
Conclusion : Its good to bring fresh ideas and approach to a project but also critical to harness all your staff experience

One of the common challenges we found was that the company management often did not conduct site visits to their operations

When seeking solutions to local site issues, often the contractor management were not really aware of the problems faced by their teams. We needed to get a better understanding from the people involved whilst at the same time showing respect for the management and gaining their support without which the operations would stall

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