Main Objective of the assessment
Task 1. Group Presentation:
This task is designed to enhance your engagement with the module material and develop your ability to search, explain, and critically evaluate relevant theories, and work in teams.
The table below demonstrates how task 1 contributes to the assessment of the modules learning outcomes.
Task 1 Group Presentation (30% of total marks)
Required
Work in groups of max4 to address questions of ONE of the case studies below, prepare PowerPoint slides and present for max 10 minutes in class.
Guidance
This task will help you enhance your engagement with the module material and provide an opportunity to demonstrate your verbal communication skills and your understanding of current issues in global business and investment through a well-structured, rational argument, supported by evidence.
A short Power Point presentation must be used to support your presentation. Marks will be allocated on individual basis based both on student’s performance during the presentation and each individual’s contribution to the group presentation. Please see assessment criteria below.
CASE STUDY 1: Spain’s Telefonica
Established in the 1920s, Spain’s Telefonica was a typical state-owned national telecommunications monopoly until the 1990s. Then the Spanish government privatized the company and deregulated the Spanish telecommunications market. What followed was a sharp reduction in the workforce, rapid adoption of new technology, and focus on driving up profits and shareholder value. In this new era, Telefonica was looking for growth. Its search first took it to Latin America. There, too, a wave of deregulation and privatization was sweeping across the region. For Telefonica, Latin America seemed to be the perfect fit. Much of the region shared a common language and had deep cultural and historical ties to Spain. Also, after decades of slow growth, Latin American markets were growing rapidly, increasing the adoption rate and usage not just of traditional fixed line telecommunications services, but also of mobile phones and Internet connections.
Having already learned to transform itself from a state-owned enterprise into an efficient and effective competitor, Telefonica believed it could do the same for companies it acquired in Latin America, many of which were once part of state-owned telecommunications monopolies. In the late 1990s, Telefonica invested some $11 billion in Latin America, acquiring companies throughout the region. Its largest investments were reserved for Brazil, the biggest market in the region, where it spent some $6 billion to purchase several companies, including the largest fixed line operator in São Paulo, the leading mobile phone operator in Rio de Janeiro, and the principal carrier in the state of Rio Grande do Sul. In Argentina, it acquired 51 percent of the southern region’s monopoly provider, a franchise that included the lucrative financial district of Buenos Aires. In Chile, it became the leading shareholder in the former state-owned monopoly, and so on. Indeed, by the early 2000s Telefonica was the No. 1 or 2 player in almost every Latin American country, had a continent-wide market share of about 40 percent, and was generating 18 percent of its revenues from the region.
Still, for all of its investment, Telefonica has not had it all its own way in Latin America. Other companies could also see the growth opportunities, and several foreign telecommunications enterprises entered Latin America’s newly opened markets. In the fast-growing mobile segment, America Movil, controlled by the Mexican billionaire Carlos Slim, emerged as a strong challenger. By 2008, the Mexican company had 182 million wireless sub-scribers across Latin America, compared to Telefonica’s 123 million, and intense price competition between the two companies was emerging.
With the die already cast in Latin America by the mid-2000s, Telefonica turned its attention to neighboring countries in Europe. For years, there had been a tacit agreement between national telecommunications companies that they would not invade each other’s markets. In 2005 this started to break down when France Telecom entered Spain, purchasing Amena, the country’s second-largest mobile carrier behind Telefonica. Telefonica moved quickly to make its own European acquisition, acquiring Britain’s major mobile phone operator, O2, for $31.4 billion. O2 already had significant operations in Germany as well as the United Kingdom. The acquisition transformed Telefonica into the second-largest mobile phone operator in the world, measured by customers, behind China Mobile.
Case Discussion Questions
- What changes in the political and economic environment allowed Telefonica to start expanding globally?
- Why did Telefonica initially focus on Latin America? Why was it slower to expand in Europe, even though Spain is a member of the European Union?
- Telefonica has used acquisitions, rather than greenfield ventures, as its entry strategy. Why do you think this has been the case? What are the potential risks associated with this entry strategy?
- In your judgment, does inward investment by Telefonica benefit a host nation? Explain your reasoning.
CASE STUDY 2: The emerging Turkish economy
Turkey is strategically located between the two continents of Asia and Europe with control over the entrance to the Black Sea. It shares borders with, among others, Syria, Iraq, and Iran on the Asian side, and Greece and Bulgaria on the European side.
It is a predominantly Muslim (Sunni) country with a population of 77.3 million people. Over 42 per cent are below the age of 24. Most are Turkish, but there is a sizeable, about 18 per cent, Kurdish population in the southeast of the country. There has been a long-running dispute between the Kurds and the Turkish state that, over the years, has cost many lives. A ceasefire was agreed as recently as 2013.
Modern Turkey was founded in 1923 under the leadership of Mustafa Kemal, who later became President Ataturk (leader of the Turks). He died in 1938 and since then Turkey has become a democracy, but the army has always been a powerful presence and has used its powers to oust governments, in 1960, 1971, and 1980. In 2002, the Justice and Development Party (AKR),under the leadership of Tayyip Erdogan, came to power. It was the first time that a single party had won sufficient votes to form a government. He has been prime minister ever since, winning two more general elections. In 2014, he was elected as president of Turkey.
Under Erdogan’s rule, millions have been lifted out of poverty, which some say accounts for the popularity of somebody who has become increasingly autocratic. Turkey, the ‘T’ in CIVETS, has undergone an economic transformation since 2002 with average per capita incomes almost trebling from SUS3,500 in 2002 to SUS9,920 (SUS15,767 PPP) in 2014. In this time, the economy has averaged growth of 6 per cent per annum; although growth dipped in the global recession, it bounced back in 2010-11 to around 9 per cent. It has a GDP of SUS767 billion, making it the seventeenth largest economy in the word. The World Bank classes Turkey as middle income with a large and growing middle class. Turkey has climbed the rankings in the WEF competitiveness index from fifty-ninth in 2006 to forty-fourth place in 2014. It could climb further if it was able to address weaknesses in the labour market such as restrictive labour regulations, an inadequately trained workforce as well as a low attraction to foreign talent, and a very low ration of women to men in the labour force, where it ranks one hundred and thirty-fourth.
Turkey has undergone a privatization programme that has reduced state involvement in the economy considerably and created a new wave of export-oriented entrepreneurs, known as the ‘Anatolian tigers’. Agriculture is an important element of the Turkish economy and still employs 25 per cent of the workforce, although it accounts for only 9 per cent of output. Corresponding figures for industry are 26 per cent and 27 per cent, and for services, 48 per cent and 64 per cent. It is a world leader in the production of dried figs, hazelnuts, sultanas/raisins, and apricots. Tobacco, cotton, grain, and olives are other important crops. The top industries are textiles, food processing, automobiles, electronics, mining, and steel and these have now overtaken textiles in Turkey’s export mix. Encouraged by Turkey’s growth, FDI into the country has boomed from just over SUS1 billion in 2002 to, at its peak in 2007, SUS22 billion. By this date there were over 32,000 foreign firms operating in the Turkish economy.
Turkey has been a part of the EU customs union since 1995 and a candidate to join the EU since 1999, but its membership has been hotly contested. One of the major obstacles is the disputed territory of Northern Cyprus that the EU sees as occupied territory (by Turkey) of one of its member states. Another factor is the threat to democracy many see from an increasingly authoritarian prime minister whose suppression of the freedom of speech has drawn criticism from allies in the US and Europe.
In 2013, protests were put down violently by the authorities. The government has also faced corruption charges, has censored the Internet, jailed many journalists, and banned Twitter and YouTube. The economy is now not nearly as healthy as it was. Economic growth slowed to 2.2 per cent in 2012 and predictions by the IMF for the next few years are around 3 per cent. Inflation is above 7 per cent and unemployment above 10 per cent. The current account deficit is financed by bonds and loans and growth is fuelled mainly by domestic demand based on credit growth. It is open to question how sustainable is Turkey’s economic progress.
Case Discussion Questions
- Explain the attraction of the Turkish economy as an investment location
- What risks would be faced in setting up business in Turkey?
- Undertake a country assessment of Turkey for firms in ONE of the following sectors:
- Management training
- ICT
- Renewable energy
- Defence technology
Task 1: Group presentation
Group presentation’ slides must be submitted electronically via the University’s Blackboard Learn system. The required file format for task 1 is any of the recent versions of Microsoft PowerPoint with your name on the slides you have prepared. All group members should submit.
Assessment and feedback criteria for Task 1
| ASSESSMENT OF Task 1 Group number: | ||||||||
| MG5606 Global Business and Investments
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Module Leader:
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DATE OF Task 1:
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| Assessment criteria | ||||||||
| Presentation skills (5% )
Speed, eye contact, audibility, tone, confident with material, etc |
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| Structure of presentation (5%)
Easy to follow, provides headings, each section relates to overall purpose, accurate, relevant content/argument |
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| Breadth of reading beyond recommended readings (10%)
Excellent and well used relevant research and data (not enough just to have a good list of references, must use them) |
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| Quality of application of taught concepts (10%)
Coverage of a range of relevant theories. Analysis of the question demonstrating independence of thought with well-argued points. Conclusions flow logically from the analysis |
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