This case describes the bribery accusations and subsequent investigation at the Chinese subsidiary of a U.S. public-listed Fortune 500 company, disguised as "Voles System"(hereafter, Voles). The primary purpose of the case is to illustrate the internal corporate governance challenges of developed-market multinational companies (MNCs) operating in emerging markets where the institutional context is significantly different and where under-developed institutions increase the uncertainty and risk of doing business in these markets. This case stands out in the management education field, as it fills a gap where there are very few teaching cases discussing the dark side of international business in an emerging market.
After a brief introduction of the company's background (its history, strategy, organizational structure, culture, and corporate governance structure), the case describes a series of two anonymous internal "whistleblower" allegations that the Mainland China business unit (BU) had been bribing Chinese officials to win contracts. In response to these internal reports, the Legal Department conducted two investigations in late 2015 and 2016, respectively, but neither found concrete evidence of bribery, and the allegations could not be substantiated.
A third report was subsequently made to the U.S. Department of Justice (DOJ) in April 2017. The DOJ placed Voles under formal investigation. While the investigation found that there was no concrete evidence of bribery of Chinese officials, several managers and staff of Voles's Mainland China BU had established a slush fund and related business entities to "entertain" senior managers of its key customers in China. The DOJ’s investigation came at a great financial cost and hurt the company's reputation in the oil and gas industry. This case ends with multiple questions facing Voles and many MNCs operating in emerging markets: how did Voles fail to prevent such management malfeasance even after implementing industry best practices for corporate governance? What are some short-term measures to address the situation in the Mainland China BU as revealed by DOJ's investigation? What are the long-term measures to implement to prevent such corporate governance failures from happening again in fast-growing emerging markets?
This case compares two global giants, Samsung and Huawei, which operate business in the information and communications technology (ICT) field. Both of them have faced similar situations as targets of trade wars between their home country and another developed country. However, they both remained robust despite external hardships. In addition, they grew quickly from latecomers from less developed countries to key players in the global market.
The case began by looking back on the story of Samsung overtaking Sony. The external economic shock to the Japanese economy brought by the Plaza Accord radically shifted Sony’s focus from hardware to software and entertainment content, which in turn brought great opportunities to Samsung. Samsung fortunately survived the Asian Financial Crisis and expanded its international business. To catch the new technological wave, Samsung chose to be a fast-follower, while Sony attempted to be a rule-maker in the digital age.
Huawei, rising to become a global giant from China, took a path that was similar to the one taken by Samsung. Huawei benefited profoundly from China’s economic boom. It survived by serving the spiking demand in rural areas. Then, Huawei began to learn from Western incumbents and imitate their practices. Meanwhile, Huawei invested heavily in R&D activities and took the lead in 5G through open innovation. The fourth-generation industrial revolution—encompassing the Internet of Things (IoT), AI, and Big Data—created a great window of opportunity for upheaval. Accordingly, some questions naturally follow from the comparison: Is Huawei going to overtake Samsung? Or is Huawei still going to lag behind Samsung for the foreseeable future? What will determine their relative positions in the global market?
This case describes the process of entering the Chinese market by Capillary Technologies, an Indian software company that provides cloud-based omnichannel customer engagement and related services for retailers and brands. Capillary represents a high level of ambition: in a country that was well known for software service companies (based primarily on labor cost advantages), it was founded as a business-to-business (B2B) software product company (thus one developing intellectual property). After entering several Western markets, which was consistent with the venture's lofty aspirations, the venture's leadership came to the view that the firm was better placed to pursue Asian markets. The new venture relocated its headquarters from India to Singapore, and made strong efforts to gain revenue in the Asia region — including the large but intensely competitive Chinese market. The case describes how, under the leadership of its China General Manager based in Shanghai, Capillary Technologies started off by working with Western multinationals that were its customers in other markets, then began attracting local customers as it established a Chinese technology team to cater to the unique technological ecosystems prevalent in China. Over a three-year period, Capillary achieved 200% growth per annum. The case concludes by noting the opening of a new office in Guangzhou as Capillary seeks to further deepen its presence in the Chinese market.
Keyword
Chinese market
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Customer Relationship Management System
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indian startup
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learning orientation
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Localization
United Airlines Inc. (UAL) is a major American airline headquartered in Chicago with nine domestic and international hubs. It serves 342 destinations, more than any other airline does, and ranks second in the world by the number of passenger-kilometers flown by an airline.
United Airlines Flight 3411 made headline news on April 9, 2017 after an involuntarily denied boarding (IDB) selection process resulted in passenger David Dao being forcibly removed from the aircraft by airport police. United management had demanded that Dao give up his seat on the overbooked flight for United employees making a connecting flight, but Dao refused and the situation escalated into violence with airport police.
Airlines routinely sell more tickets than available seats to compensate for cancellations and no-shows. Overbooking helps airlines maximize revenues and is perfectly legal. However, the practice also comes with risks, as evidenced by the United Airlines incident that publicly exposed flaws of the airline overbooking profit model. Why do airlines overbook? How do they use the model to maximize revenues? What are the appropriate booking limits? In this case, students will address these questions after learning how to model cancellation and no-show uncertainty using the simulation-based overbooking model and hence improve their decision-making ability in a complex and uncertain environment.
Keyword
booking limits
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data analytics
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decision-making
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Monte Carlo Simulation
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optimization model formulation
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profit model
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revenue management
Founded in October 2017 by Jenny QIAN Zhiya, Luckin Coffee quickly expanded its stores from one trial store in Beijing to 2,370 stores across 28 cities in China by the end of March 2019. More importantly, less than two years after its establishment, Luckin Coffee listed on the NASDAQ on May 17, 2019, a key milestone in its short history.
Despite impressive numbers of customers acquired and products sold, Luckin continuously incurred large losses due to heavy expenditure on marketing and promotional activities. By the end of 2018, Luckin achieved an annual revenue of RMB840.7 million with a total loss of RMB1.6 billion. Therefore, the management team needed to decide whether the current business model was healthy or not. If it was healthy, all that was needed was to achieve further scale to turn the losses into profits. If, on the other hand, there were fundamental problems with the business model, then growth would need to be put on hold while these problems were corrected.
Keyword
Business Model
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entrepreneurship
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growth strategy
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sustainability
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unit economics
