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In June 1999, Spain's former state-owned oil giant Repsol, acquired 97% of YPF, despite opposition from YPF management. The case describes the status of the two companies at the time of the acquisition and highlights concerns expressed by industry analysts on the deal.

Describes the development of the Japanese financial system, from extensive regulation and fund allocation through administrative guidance in the 1950s to the banking crisis and legal and structural reorganization in the 1990s. Special emphasis is on the processes of regulation, the inherent logic of the early postwar system, and the forces that triggered change in the 1980s. Extensive data materials are provided.

Supplements Shock Therapy in Eastern Europe: The Polish and Czechoslovakia Economic Reforms. Designed as an in-class handout.

Supplements the case.

Taiwan has enjoyed remarkable growth since 1950. This case presents differing views of the role and contribution of the state in this process. Then it explores recent industrial policy in semiconductors.

"Caselets" present several examples of decisions involving bribery or take other actions that could be considered as corrupt.

Supplements Mexico in Debt.

Updates the case. Designed as an in-class handout. A rewritten version of an earlier supplement.

During the 1990s, CEMEX went from being a purely domestic producer of cement and ready mix in Mexico to the third largest firm in the rapidly globalizing cement industry, with operations in North and South America, Western Europe, and Southeast Asia, as well as a large trading operation. CEMEX's first moves to internationalize itself, by exporting to the United States, fell afoul of an antidumping ruling. It then began a series of acquisitions, first in Spain and then in Central and South America. This case describes the acquisitions and the process of post-merger acquisition. It raises the issue of whether the economic crisis in Southeast Asia presents opportunities for further expansion. Can be used to examine the logic and process of internationalization in a commodity business and the selection of markets to enter. Can also be used to examine the basis for globalization of what many would think of as a very local business. Finally, it presents an opportunity to examine the logic of global competitive moves, as CEMEX's entry into Spain, which was intended explicitly to counter a European rival's aggressive expansion in Mexico.

Explores the development of the Chinese auto industry and of Shanghai Volkswagen (SVW), a successful joint venture in China. Established in 1984, SVW is a joint venture between Volkswagen of Germany and the Shanghai Automobile Industry Corp. (SAIC). One key element of SVW's strategy to date has been to work closely with local suppliers, many of which are controlled by SAIC. SVW is the leading auto producer in China, but the competitive landscape is changing rapidly, and SVW's traditional strengths could prove to be impediments in the future.

Local firms can compete with transnational firms if their actions are firmly based in the local culture, and if they move from local strengths while being equipped with an in-depth understanding of global production and consumption dynamics. Three domains where local firms can offer alternatives to standard global products are products grounded in local culture, information goods, and products for similar local conditions and the poor worldwide. Local firms must develop an innovative perspective, a global and local vision, self-crafted rather than transferred and imitated marketing skills and practices, partnerships and alliances, and a supportive political environment. Such firms can successfully travel on their alternative road within the global arena.

Financial experts in the West suggest that diversified business groups--or affiliated companies under one parent--in emerging markets should break up. Dismantling these mammoth conglomerates could reduce the debt and inefficiencies that some of them incur; that logic is based on the success that companies in advanced economies had when they unbundled their assets in the 1980s. But the authors argue that breaking up business groups such as the Korean chaebol and India's Tata Group is premature. Emerging economies lack a soft infrastructure--the banks, business schools, corporate governance processes, and so on that are the foundation of economic growth. And building such an infrastructure takes time. Many business groups in emerging markets make up for the absence or weakness of market intermediaries by filling in themselves. For instance, they're venture capitalists when they use funds from one business group affiliate to fund a new one. They're labor market substitutes when business-group headquarters creates management training programs based on the knowledge and experience of managers across several business affiliates. Instead of breaking up the conglomerates now, governments should start the long-term development of market institutions for finance, labor, and goods and services. In the meantime, business groups should strive to improve the way they substitute for those market institutions. The authors suggest several Western business tools and models that business groups can use to boost their role as market intermediaries and to prepare for the eventual development of those institutions.

The Melbourne City Link, a $2 billion privately-funded highway project, was one of the first fully electronic toll roads in the world. While the government of the State of Victoria specified this innovative tolling system in the tender for the project, it left the implementation and administration to the consortium that was selected to finance, design, build, and operate the highway. This case allows students to focus on the financing of a large-scale privately financed infrastructure project through the capital markets. It is designed to teach students about the allocation of risks that are customary in project financing arrangements where lenders have limited or no recourse to the project sponsors. By analyzing the deal structure, students can assess how specific risks were allocated to the project sponsors, construction contractors, equity investors, the banking syndicate, and the government. HKS Case Number 1539.0

In 1996, the government of Brazil attempted to sell the large, federally-owned power distribution company in Rio de Janeiro to private investors. The competitive auction for Rio Light was being heralded as a test of the entire Brazilian privatization program, which had been under criticism in the domestic and international press for its slow pace and lack of results. As the auction date draws near, the Director of Electricity Privatization at the Brazilian federal development bank is worried that the minimum-asking price for Rio Light was too high. The case presents pro-forma financial information and can be used to discuss the relevant factors for the valuation of a state-owned enterprise and the measures of success for the auction. HKS Case Number 1540.0

On January 1, 1999, 11 European countries unified their currencies--48 years after their first integrative efforts. This marks a huge development in the structure of Europe and the world's economy. This case examines the integrative process, the Single Europe Act and its impact on market structure during the past 13 years, and monetary union. Provides data as of 1998 on European macroeconomics integration and data in the mid-1990s on integration of product markets, capital markets, and labor markets.

Supplements the case.

After decades of poor economic performance, the Irish government adopted major changes in economic policy in 1987. By the end of the 1990s, Ireland's real GDP growth rate of almost 10% per year exceeds that of all member nations of the European Union (EU). A key component of Ireland's growth strategy has been the encouragement of foreign direct investment through low tax rates and financial and logistical support provided by the Irish Industrial Development Agency (IDA). In 1999, Ireland confronts the issue of sustainability of the "Irish miracle" in the face of diminishing access to EU subsidies, increasingly strained physical infrastructure, and questions of equity in the distribution of economic gains across the population. The case includes substantial material relating to the Irish political, social, and historical context in addition to traditional economic statistics.

Surveys the French pension system, its particular institutional characteristics, and some of the critical challenges and opportunities facing French reformers. Like almost every other industrialized country, France has a large pay-as-you-go public pension system that is beginning to run into serious financial trouble. Ever-increasing longevity, the impending retirement of the baby boomers, and intense public pressure for a lower retirement age are all placing great strain on the existing system. The case emphasizes that in contemplating proposals for reform, the French are being required to weigh two different social objectives that appear to be in conflict--economic growth and economic security. Their choices will end up exerting an enormous impact not only on their welfare state but also on the structure of French labor and capital markets.

Follows one company's path through the uncharted terrain of government regulation and the Internet. In March 1998, Network Associates announced it would begin selling powerful encryption software from its Dutch subsidiary. Such a move looked to the U.S. government like a violation of export regulations, but the company was confident it had operated within the bounds of law. Indeed, Network Associates appeared to have deftly exploited the uncertain nature of government regulation in a time of rapidly changing technology. Encryption export regulations had become highly controversial in the mid-1990s, and were the subject of ongoing legislative debate in 1998. While the regulations had been slowly evolving toward permissiveness, the pace of change did not meet the expectations of many companies in Silicon Valley. Network Associates was the first company to boldly challenge the export regulations and assert its commercial rights to sell its encryption products to foreign users. While such a move gave the company distinct first-mover advantages, it was also a strategy that contained significant political risks.

Chevron Corp., headquartered in San Francisco, manages a worldwide, vertically integrated value chain from the oil well to the gasoline station. Mishandling of oil at any stage of production can damage the natural environment, human health, corporate profitability, or all three. But at the same time Chevron needs to be prudent about the amount of money it spends on measures to manage these risks, and environmental programs within the firm can conflict with a long-standing tradition of decentralized management. To manage risks more efficiently, Chevron executives are contemplating the use of quantitative decision tools that enable operating managers to compute rough benefit-cost ratios for various alternative risk management projects. The case focuses on the pros and cons of using such tools within the context of Chevron's overall system for environmental risk management.