Managing International Trade and Investment

Harvard Business School/

Winter 1997

Associate Professor Debora Spar

Morgan 293

495-6035

Course Overview

Despite the ease with which it is often conducted, doing business across borders is not the same as doing it at home. Rather, it entails a whole new set of managerial challenges: re-assessing competitive advantage; evaluating diverse political environments and legal structures; considering the impact of currency fluctuations and trading regimes; and understanding widely disparate cultures and business norms. The purpose of MITI is to build a framework of analysis that enables managers to understand the challenges of international trade and investment and to master the opportunities they represent.

The course consists of four linked modules and one capstone section. It begins at the level of the firm, exploring what makes firms competitive in the global economy and how comparative advantages are established across national borders. It focuses as well on the way in which firms define their products, and how these definitions may change as firms move from one market to the next. The second module moves up to the level of the industry, examining how market structures are also liable to shift across borders, and how firms can assess and respond to a variety of industrial structures.

The third module expands the view even farther. Working at the level of the state, it examines how national policies shape and constrain the climate for international business. Using a series of company-based cases, students will investigate how firms feel the impact of foreign governments' policies and what tools are available for predicting, or avoiding, or even employing the long arm of government policy. The fourth module then extends this analysis to the international system, exploring how international arrangements and institutions -- such as GATT and NAFTA -- can affect industrial structures and change the opportunities for international business. It also considers how more subtle international pressures such as environmental and human rights concerns may shape firm options and strategy.

MITI ends with a capstone module on trade and investment in information-based industries. These industries are amongst the fastest growing segment of international trade. But the trade they entail is new, since the product -- information -- is invisible and relies heavily on systems of property rights and professional licensing that vary widely across national borders. Using both cases and selected articles, students will consider how firms can best manage these uncertainties to gain a comparative and sustainable advantage in the international marketplace for information-based goods and services.

Conceptual Framework

Together, the four primary modules of MITI suggest a framework for analysis that we will use throughout the course. Like MITI, the framework is split into four linked components: product, industry, rules, and institutions. These are the components of business most liable to change across borders, and thus the components that managers must examine most closely when trading or investing abroad. Each time they enter a new market, for instance, managers must reconsider the definition of their product. Is their product a good or a service? Does a good in one market make more sense as a service in another? To what extent is the success of a product in its home market driven by local conditions or idiosyncrasies? Likewise, each time they enter a new market, managers must also re-assess the basic structure of their industry. Who are the competitors in each market? What are their sources of competitive advantage? And who are the relevant suppliers and customers?

In addition to these commercial concerns, managers must also be well aware of changes in the third component of MITI's framework -- the rules of the competitive game. Especially when doing business in new or emerging markets, managers must consider the impact of varying, and often very different, legal and political systems. What are the rules of competition and contracts? Are currencies freely exchangeable? Are there even laws and courts to turn to in case of commercial dispute? Without understanding these rules, and the process by which they are made, managers will be hard-pressed to succeed in foreign markets.

Finally, each time they do business across new borders, managers must also assess the broader institutional environment in which they operate. They must consider the impact of formal institutions such as the GATT and NAFTA, as well as intangible constraints such as their responsibility for environmental or safety issues that cross national borders. In each new market, they must also evaluate, not only what the specific rules of the game are, but also how the game is being played. They must understand the cultural institutions of their target market -- its norms of corruption and competition, and its underlying view towards commercial enterprise.

The framework of MITI is not intended to provide simple answers to tough managerial questions, or to supply managers with specific directions for their international activities. It is, instead, a framework for analysis, a series of components that managers can evaluate and a series of question they can ask when contemplating trade or investment abroad. In MITI, the framework will also be treated, not as the centerpiece of the course, but rather as a launching pad for discussion, debate, and criticism.

Administration

The materials for MITI will consist primarily of cases and outside readings. All materials will be available through Baker 20. Occasionally, the syllabus includes several suggested readings or "great books" selections. These readings are not necessary for class discussion. They are simply included so that interested students can pursue topics in greater depth, at their own leisure.

Because the course covers such a wide breadth of countries, issues, and industries, it will rely even more heavily than usual on active and enthusiastic participation. Accordingly, class participation will count for 50% of the final grade. All students can take one "day off," either to miss class or to be excused from the possibility of a cold call. The remaining 50% of the final grade will be based on a final project, chosen by each student with the prior approval of the instructor. Students can work on these projects individually or in groups, and are encouraged to be creative in their choice of topic and presentation format. The projects should be concerned, broadly, with the issues managers face in doing business abroad. They can be standard research papers, or drafts of potential cases, or analyses of particular situations or issues. They may also be submitted in forms other than pure text. Preliminary descriptions of all projects should be submitted in writing to the instructor by early March.

Any administrative questions should be directed either to the instructor, or to Devery Doleman at 495-6365. Students should also see Devery to schedule individual meetings.

Managing International Trade and Investment

Course Syllabus

January 22 - Approaching Global Markets: Introduction and Overview

Reading: "Global Gamble," Business Week, February 12, 1996, pp. 63-72

In 1996, Morgan Stanley has embarked upon an ambitious program of globalization. Under the leadership of president John J. Mack, the prestigious investment bank is opening offices around the world, betting that the capitalist revolution sweeping across Asia, eastern Europe, and Latin America will generate much of the world's growth --and Morgan Stanley's profits -- in the coming decades. In describing the firm's plans and success to date, this brief article touches upon many of the central themes of MITI. What is entailed in a shift from domestic markets to international ones? How must a firm change its product offerings and competitive strategy as it crosses national borders? How is its business affected by the political and economic environments of foreign states? And what, if anything, differentiates the international prospects for information-based firms (such as Morgan Stanley) from more traditional manufacturing enterprises?

After a discussion of the Business Week article, the remainder of the class time will be devoted to administrative issues and an overview of MITI's conceptual framework.

Study Questions:

1. What is Morgan Stanley's "global gamble"?

2. Is it a wise bet? What issues does John Mack need to consider before proceeding with his ambitious plans in markets such as India, China, and Mexico?

II. INDUSTRY ANALYSIS: THE FUNDAMENTALS OF TRADE AND INVESTMENT

January 24 - Product Definition and Market Entry

Reading: Honeywell's Tushino Project (HBS N9-794-064)

Background Reading: Michael E. Porter, "How competitive forces shape strategy," Harvard Business Review, March-April 1979

With this case, we begin to examine how the structure of an industry can vary from market to market, and how these variations are liable to affect the competitiveness of firms as they transact across international borders. The case looks at Honeywell, a major U.S. manufacturing firm that has recently entered the Russian market for industrial and residential-building controls. The centerpiece of Honeywell's Russian presence is the Tushino project, a pilot program with the city of Moscow to modernize thermal controls for an entire central heating district. It is an intriguing project for Honeywell but also one that raises fundamental questions about what the company wants to sell, and to accomplish, in the emerging Russian market.

Study Questions:

1. Is the central district heating market a worthwhile strategic target for Honeywell?

2. What is an acceptable rate of return for this project?

3. What should Mike Bonsignore do next in Russia?

January 29 - Inputs and Supply Chains

Reading: Lenzing AG: Expanding in Indonesia (HBS N9-796-099)

Visitor: Mikel Dodd, President, Lenzing Fibers Corporation

This case explores in detail two key aspects of industry structure -- upstream suppliers and downstream customers -- and examines how firms may need to re-evaluate their position within these chains of production as they venture to new markets. The case describes the situation facing Lenzing AG, the world's largest manufacturer of rayon fiber, as it contemplates a substantial expansion at South Pacific Viscose (SPV), its Indonesian subsidiary. While Indonesia is a booming and attractive market for Lenzing, SPV has no direct access to wood pulp, its key input. Lenzing's management also has no way of knowing whether their downstream customers -- the highly mobile textile and garment manufacturers -- will ultimately choose to locate, and stay, in Indonesia. How can Lenzing balance its internal considerations against any potential shifts in the global textile market? And, if it has to choose, is it better to locate closer to its suppliers or its customers?

Study Questions:

1. What are the costs and benefits of expansion at South Pacific Viscose?

2. How attractive is Indonesia as a site for rayon production? As a domestic consumer of rayon? As a leading exporter of rayon?

3. What should Mikel Dodd advise Lenzing's Board of Directors to do?

Suggested Reading: Hal Hill, ed., Indonesia's New Order (University of Hawaii Press, 1994); Michael R. J. Vatikiotis, Indonesian Politics Under Suharto (Routledges 1993); David B. Yoffie, Power and Protectionism (Columbia University Press, 1983); Samuel P. Huntington, Political Order in Changing Societies (Yale University Press, 1968)

January 30 - Customers and Competitors

Reading: Microsoft in the People's Republic of China, 1993 (HBS N9-795-115)

This case continues our discussion of industry structure, looking in particular at how customers and competitors for a given product are liable to vary across national borders. In 1993, Microsoft is thinking of expanding its phenomenally successful software product into the booming Chinese market. As Microsoft's managers quickly realize, however, expanding into China entails a particularly difficult set of challenges. Indeed, before plunging into the Chinese market, Microsoft needs to reconsider the very definition of its product. What does it mean to sell software in China? And what does the structure of the Chinese market imply for Microsoft's entry strategy, as well as for its long term prospects for success?

Study Questions:

1. What does Microsoft sell? How attractive is this product in the Chinese market?

2. How attractive is the Chinese market to Microsoft?

3. What is the best way for Microsoft to enter China?

January 31 - External Shocks and Competitive Shifts

Reading: Japan's Automakers Face Endaka (HBS N9-796-030)

Background Reading: Note on Operating Exposure to Exchange Rate Changes (HBS 9-288-018)

In June 1995, the Japanese yen hit a post-World War II high against the U.S. dollar. The yen's relentless ascent affected firms on both sides of the Pacific, but fell particularly hard on Japan's Big Four automakers. The case explores how endaka changed the competitive environment for the automakers and how they responded to this change. Together with the Note on exchange rate changes, it examines how macroeconomic and political shifts can dramatically affect the competitive position of firms operating in a global economy. It also describes how firms can re-shape their strategies to compete even in starkly different external environments.

Study Questions:

1. What happened to Japan's Big Four automakers in 1985, and then again in 1994-1995? Why did these changes occur?

2. How well did the Japanese firms respond to the changes of 1985? What will they have to do differently in 1995?

3. What lessons, if any, can other firms take from the response of Japan's automakers to endaka?

III. THE RULES OF THE GAME: NATIONAL POLICY AND FIRM RESPONSE

February 5 - The Politics of Trade

Reading: Layton Canada (HBS N9-796-108)

Background Reading: Note on Export Controls (HBS 9-384-008)

Visitors: "Veronica Bronson," President, Layton Mexico; former President and CEO, Layton Canada; David Pameter, Partner, Gowling, Strathy & Henderson, Toronto

With this case, we begin to explore the political dimensions of trade. As all the cases in this module suggest, trade is often as much about politics as it is about strategic or comparative advantage. And when trade is about politics, it presents firms with a whole new range of challenges. The Layton case examines both the source of these political challenges and the ways in which firms can respond effectively to them. Layton Canada, a leading manufacturer of electrical components, is a Canadian subsidiary of a Dutch parent corporation. Yet, for reasons entirely beyond its control, it is now caught by the provisions of a U.S. export embargo on Cuba. If Layton sells its product as promised to a Cuban customer, it risks violating U.S. law. If it cancels the sale, it will violate Canadian law.

Study Questions:

1. How do export controls work? Do they ever make sense from a political standpoint? From an economic standpoint?

2. How can firms respond to export controls or embargoes? What responsibilities do they have? To whom?

3. What should Veronica Bronson do?

Suggested Reading: Albert O. Hirschman, National Power and the Structure of Foreign Trade (Berkeley: University of California Press, 1980); Hans J. Morgenthau, Scientific Man vs. Power Politics (University of Chicago Press, 1974); George F. Kennan, American Diplomacy (University of Chicago Press, 1984); Gary Clyde Hufbauer and Jeffrey J. Schott, Economic Sanctions Reconsidered (Institute for International Economics, 1985)

February 6 - The Politics of Protection

Reading: Chiquita Brands International (A) (HBS N9-797-015)

Chiquita Brands is one of the United States' oldest and most colorful companies. It is also a company with intensely political roots, dating from its long-standing involvement in the banana plantations that dominated the developing economies of many Latin American nations. This case provides a brief description of Chiquita's early history and then focuses on a new, and very powerful, political situation facing the firm in 1993. As part of its movement towards regional integration, the European Union imposed strict limits on banana imports into the EU, one of Chiquita's core markets. Now Keith Linder, Chiquita's president and chief operating officer, must decide how best to deal with this threat. And policymakers in the United States and Europe must consider whether to intervene on Chiquita's behalf.

Study Questions:

1. What role has politics played in the history of Chiquita Brands, and its predecessor, the United Fruit Company?

2. What role has protectionism played in the global banana market? Is this role defensible?

3. What should Linder do about the EU's banana policy? How should Bob Dole respond to Linder's request?

Suggested Reading: Paul R. Krugman, Rethinking International Trade (MIT Press, 1990); Laura D'Andrea Tyson, Who's Bashing Whom? (Institute for International Economics, 1992)

February 7 - The Politics of Investment

Reading: Toys 'R Us Japan (HBS N9-796-077)

Background Reading: Note on Foreign Direct Investment (HBS N9-795-031)

With the Toys 'R Us case, we look at the specific political issues surrounding foreign direct investment. Because investment inherently entails a direct and tangible involvement in a foreign state, it is shaped even more immediately than trade by the external forces of politics, culture, and macroeconomic shifts. The case describes how Toys 'R Us deals with all of these forces in launching an investment into one of the world's most lucrative, but challenging, markets: the Japanese retail sector.

Study Questions:

1. Is Japan a good market for Toys 'R Us?

2. Is Toys 'R Us good for Japan?

3. Has Toys 'R Us chosen the best entry strategy for the Japanese market? Has it chosen the right partner?

Suggested Reading: James Fallows, More Like Us (Houghton Mifflin, 1989); Dennis J. Encarnation, Rivals Beyond Trade (Cornell University Press, 1992)

February 12 - Exchange Rates and Currency Controls

Reading: China(B): Polaroid of Shanghai, Ltd. (HBS 9-794-089)

In the case on endaka, we saw how exchange rate shifts can dramatically affect the global competitiveness of an industry. Here, we examine how national exchange rate policy can also affect the competitiveness of any firm that chooses to invest in a foreign country. The case describes the situation facing executives from the Polaroid Corporation in 1991, just as the company is reviewing its operations in China and considering options for expansion. The Chinese market is booming and the company's joint venture in Shanghai is doing well, but Polaroid is increasingly concerned about its ability to earn and repatriate sufficient foreign exchange.

Study Questions:

1. What are the biggest risks for an investor in China in 1991? How might a company like Polaroid hedge its Chinese operations against these risks?

2. Should Polaroid expand its operations in Shanghai? How? What problems do you foresee?

Suggested Reading: John King Fairbank, The Great Chinese Revolution (Harper & Row, 1986); Nicholas R. Lardy, China in the World Economy (Institute for International Economics, 1994); Harrison E. Salisbury, The New Emperors (Little, Brown, 1992)

February 13 - Contracting Under Uncertainty

Reading: White Nights and Polar Lights: Investing in the Russian Oil Industry (HBS N9-795-022)

Throughout this section, we have been examining the ways in which national laws and policies affect the environment in which firms compete. But how do firms compete when the legal and political environment is in a constant state of flux? How can managers make deals and sign contracts when the entire commercial infrastructure of a nation is highly uncertain and perpetually changing? In the White Nights case, we see three firms grappling with these issues. All want to invest in Russia's vast and potentially lucrative oil sector. But all are also well aware of the tremendous risks that any investment in this sector will entail. How can they structure their investment to best protect themselves against the legal, political, and commercial risks of Russia?

Study Questions:

1. How important is the acquisition of Russian oil to a western oil firm? How would you value the worth of this acquisition?

2. Evaluate the strategies undertaken by Phibro, Mobil, and Conoco. Which one is wisest? Why?

3. How might western companies protect or hedge their investments in the Russian oil sector?

Suggested Reading: Daniel Yergin, The Prize (Simon & Schuster, 1991); Anthony Sampson, The Seven Sisters (Coronet, 1988); Adam B. Ulam, The Bolsheviks (Collier Books, 1965); Debora L. Spar, The Cooperative Edge (Cornell University Press, 1994); Thomas C. Schelling, The Strategy of Conflict (Harvard University Press, 1980)

IV. VALUES , NORMS AND INSTITUTIONS

February 20 - The Institutions of Trade and Investment

Readings: Banca Bucuresti (HBS N9-)

Douglass C. North, "Institutions, Transaction Costs and Economic Growth," Economic Inquiry," Vol. XXV, July 1987, pp. 419-428

With this case, we begin MITI's fourth module, and our examination of how institutions affect the environment of international business. The reading by Douglass North, a pioneer of institutional economics, provides the intellectual underpinnings for this module, as it examines the ways in which institutions facilitate economic development. The Banca Bucuresti case then considers a recent and concrete case of institutional formation. The case follows Alpha Credit Bank, a successful Greek bank, as it contemplates an expansion into Rumania. Rumania is an attractive market in many ways for Alpha Bank, but also a market lacking even the most rudimentary institutions of capitalism. To be successful in Rumania, Alpha Bank will itself have to create these institutions, and make them work.

Study Questions:

1. What is the basic logic of North's argument? Do you find it persuasive? Why or why not?

2. Evaluate the progress to date of the Banca Bucuresti? How well has Alpha Bank done with its Rumanian expansion? What has it done right? What mistakes has it made?

3. What lessons about economic development and international business can you take from the story of the Banca Bucuresti?

Suggested Reading: Douglass North, Structure and Change in Economic History (W.W. Norton, 1981); North and Robert P. Thomas, The Rise of the Western World (Cambridge University Press, 1973); Oliver E. Williamson, The Economic Institutions of Capitalism (Free Press, 1985); Seymour J. Rubin and Gary Clyde Hufbauer, Emerging Standards of International Trade and Investment (Rowman & Allanheld, 1983)

February 21 - The Impact of Regions and Trading Regimes

Readings: Regarding NAFTA (HBS N9-797-013)

With the Banca Bucuresti case, we examined the role of domestic institutions in facilitating commerce and economic development. Today, we explore a second tier of institutions: the international institutions that formally govern international trade and investment. We look in particular at NAFTA, one in a recent series of regional trading agreements. The case provides a brief background of NAFTA and the other regional agreements on which it was based. In three separate caselets, it then describes the specific circumstances of three firms (a U.S. meat producer; a Canadian auto parts manufacturer; and a Mexican subsidiary of a Japanese electronics company) and considers how the advent of NAFTA is likely to affect each of their strategies and competitive positions.

Study Questions:

1. What is the rationale behind NAFTA? Does it make sense? Is it a good idea?

2. To what extent do the goals of NAFTA depend on the creation of a formal international institution?

3. How would you advise each of the case protagonists to shift their businesses strategies as NAFTA approaches?

February 26 - Responsibility

Reading: Freeport Indonesia (HBS N9-796-124)

Institutions are of two sorts. There are the formal institutions described by our previous two days' cases, but also a series of more ambiguous, but equally important, informal ones. The Freeport case allows us to consider what these informal institutions are, and how they can influence firms' business options and decisions. In the spring of 1996, Jim Bob Moffet, chairman of Freeport-McMoran Copper and Gold, is trying to decide whether to double the capacity of his company copper and gold mine in Irian Jaya, Indonesia. This mine, first developed in the early 1970s, poses significant environmental problems of acidic overburden and tailings disposal. Environmental groups in Indonesia and elsewhere have adamantly criticized the company, which is now spending significant sums to mitigate the problem.

Study Questions:

1. Does Freeport have a problem at its Irian Jaya mine? What has caused these problems, and whose problems are they?

2. How would you evaluate Freeport's environmental planning to date? What further responsibilities might the company have?

February 27 - Overview and Lecture

Reading: The Political Environment of Trade and Investment: A Framework for Contextual Analysis

V. MANAGING TRADE AND INVESTMENT IN INFORMATION

March 12 - Intellectual Property

Reading: Pfizer: Global Protection of Intellectual Property (HBS 9-392-073)

With this case, we begin the fifth and final module of MITI, examining trade and investment in the information sector, and exploring how information-based trade is different from its more traditional, physical, counterparts. One key difference concerns the establishment and enforcement of property rights. If firms are ever to sell their information-based products in a global market, they must know that they will be able to recoup the costs of their innovation and investment. That is, they must own the information that they sell. But how can ownership of an intangible be enforced? One possibility is for governments to create property rights through laws such as patents, intellectual property, and copyright. This is what the United States and many other industrial countries have customarily done. Yet, as the Pfizer case demonstrates, these national laws offer little protection to firms operating in other parts of the world. What else, then, can managers do to protect their intellectual property in a global market?

Study Questions:

1. What does Pfizer sell? What is an appropriate pricing strategy for it to adopt?

2. What is the logic behind the existing U.S. system for protecting intellectual property? Will this system work in an increasingly global economy? Should it?

3. What recourse, or alternate means of protection, are available to companies such as Pfizer?

March 13 - Trade and Investment in Entertainment

Reading: Being There: Sony Corporation and Columbia Pictures (HBS N9-795-025)

One of the largest and most important information-based industries in the world is the entertainment industry. It is also an industry undergoing rapid change, as firms rush to take advantage of new digital technologies and scramble to establish themselves along increasingly complex vertical chains. In 1989, Sony, a leading manufacturer of consumer electronics, joined the fray, purchasing Columbia Pictures for a record-breaking $3.4 billion. With this acquisition, Sony hoped to position itself as a fully integrated entertainment company, merging its own expertise in hardware with Columbia's embedded library of information-based "software." We will examine whether this strategy makes sense, and how value is created and sustained in the entertainment industry.

Study Questions:

1. Was Columbia Pictures a good acquisition for Sony? Why or why not?

2. Where else might Sony have invested? Where else in the entertainment industry would you want to invest today?

3. What is the value of Dallas? Where in the industry is that value captured? Where is it likely to be captured ten years from now?

Suggested Reading: Edward M. Graham and Paul R, Krugman, Foreign Direct Investment in the United States (Institute for International Economics, 1991)

March 19 - Electronic Trade in Information

Reading: Debora Spar and Jeffrey J. Bussgang, "Ruling the Net," Harvard Business Review Reprint No. 96309

Visitors: Reed Hundt, Chairman, Federal Communications Commission; Jeffrey Bussgang, Open Market Inc.; Allegra Young, USA Today Online

In just the past few years, the advent of the Internet has promised to transform the very nature of commerce. By reducing commerce to its most basic component -- the transaction -- the Internet potentially allows providers of information to sell their product directly and immediately to their customers. It is a dramatic possibility and a tempting opportunity. But as today's reading suggests, the technological promise of the Internet does not necessarily solve the commercial issues surrounding the sale of information. Indeed, so long as cyberspace remains a lawless realm, any move to the Internet may be premature, since firms have no way of controlling the dissemination of their own information. In today's class we will discuss how the evolution of electronic commerce is likely to affect information-based firms. What are the risks and rewards of selling information in cyberspace? How can firms protect their on-line information, and recoup the value of their investments? And how can firms shape the rules of cyberspace to maximize their own commercial opportunities?

Study Questions:

1. Evaluate the authors' argument. Can commerce flourish in cyberspace without well-established rules? What kinds of firms will do best in this kind of environment?

2. Will the Internet provide information-based firms with new and profitable ways of doing business? Which kinds of firms will do best, and what do they need to prosper?

3. What kinds of rules and institutions will best suit the interests of firms doing business in cyberspace? What kinds of rules will best suit the interests of consumers? Of traditional Internet users? Of governments?

Suggested Reading: Anne Wells Branscomb, Who Owns Information? (Basic Books, 1994); Martin Ernst et al., Mastering the Changing Information World, (Ablex Publishing , 1993)

March 20 - Trade in Capital and Financial Services

Reading: The Advent of Venture Capital in Latin America (HBS N9-797-077)

In 1996, Advent International, a leading international private equity firm, is considering the launch of a new Latin American fund. Advent's management is convinced of the appeal of the Latin market, but needs to consider how best to establish and manage their new fund. In particular, they need to decide whether to establish a single-country fund, or to diversify their risks with a multi-pronged approach. They also must decide whether to control the new fund (and thus their own expertise) tightly, or to get closer to the local markets and local information through a series of Latin American partnerships and joint ventures.

Study Questions:

1. How important is the Latin American market to Advent? Should the firm approach this market through a diversified fund, or instead concentrate its energies on a single country?

2. Should Advent launch its new fund by itself, or instead rely on local partners? What relationship should these partners have to Advent's Boston office?

3. What, if anything, can Advent learn from the activities of its competitors in the Latin American region?

March 26 Investing in the Information Sector

Reading: Singapore's Trade in Services (HBS N9-796-135)

We conclude our discussion on trade in information by examining the efforts of Singapore's Economic Development Board to grow their tiny island nation almost wholly through an extension of its service economy. Over the past ten years, many developed nations have declared themselves to be "service economies." Only Singapore, though, has crafted a national strategy based explicitly on information-based services. In examining Singapore's recent policies, we will also have an opportunity to revisit the broader questions of what creates value in any information-based industry, how this value is packaged and sold, and how it can be sustained in a rapidly-evolving global marketplace.

Study Questions:

1. What are the Singaporeans selling in Indonesia, India, and China? How will they make money from these ventures?

2. Can firms from other countries copy the Singaporeans' strategy? Why or why not?

March 27 - Course Overview and Wrap-up