MMM095 – Multinational Enterprise Strategy and Performance (Postgraduate level)
Individual Assignment

Write a piece of an individual coursework of maximum 1,400 words in total. The word limit includes
the introduction, the main body, conclusion, tables and figures, citation, appendices, notes and end notes
in the text, but excludes the front cover sheet, and references. Your materials in the appendices will be
counted towards the word limit. So, please do not exceed the maximum word limit. Any paper
exceeding the word limit will be penalized and marked down.
You are expected to use the appropriate materials from the module MMM095 and your research. You
should consult various sources of information and data (lecture materials, core textbook, reading lists,
books, websites, full accounts/ annual reports, documents, and filings with Companies House, academic
journal articles, business and financial press, such as BBC Business, the Financial Times, the Economist,
the Forbes, Reuters, Associated Press (AP), Bloomberg, the Guardian, the New York Times, the Washing
Post, Der Spiegel, Nikkei Asian Review, Yahoo Finance, etc.
You are assigned the UK subsidiary of a multinational enterprise (MNE). Analyze the international
business strategy and financial management of this foreign subsidiary. Support your answers with
specific, relevant, well-explained, well-analyzed and real hard facts, data and examples of this
subsidiary.
You should refer to the detailed guidance in the Appendix 1, which explains
clearly what is expected in your answer for each question.
Visit the UK Companies House website, search for the assigned subsidiary. You will find the
subsidiary’s “full accounts” (annual reports) for the period of 2016-2018 under the “filing history”
tab by following the below link (All you need to do is to cut and paste the link into Google to search
for the UK Companies House website. When you are in the website, you will be able to find the
assigned subsidiary)

This is your assignment:
1. Make plausible arguments whether your subsidiary builds its strategy based upon Porter’s
single diamond (Porter, 1990), or whether it uses Rugman & D’Cruz’s/ Rugman & Verbeke’s
double diamond (Rugman & D’Cruz, 1993; Rugman & Verbeke, 1993)/ generalized double
diamond approach (Moon, Rugman & Verbeke, 1998). Critically analyze all attributes of the
location advantages of the host country (also known as host country-specific advantages – host
CSAs) which your subsidiary has accessed and exploited. Discuss various dimensions of
distance (Ghemawat, 2001) between the home country and the host country, and analyze
whether or not distance is really a challenge? How has your subsidiary overcome the distance (if
any)?
 Make plausible arguments whether your subsidiary builds its strategy based upon Porter’s
single diamond (Porter, 1990), or whether it uses Rugman & D’Cruz’s/ Rugman & Verbeke’s
double diamond (Rugman & D’Cruz, 1993; Rugman & Verbeke, 1993)/ generalized double
diamond approach (Moon, Rugman & Verbeke, 1998).
 Use the theoretical framework which you have just identified in bullet point 1 to critically
analyze the location advantages of the host country which your subsidiary has accessed and
exploited. Provide evidence, e.g. examples, facts, data, etc. to support your answer.
 Use Ghemawat’s CAGE framework to discuss the various dimensions of distance between
the home country and the host country. Analyze whether or not distance really matters.
 Discuss how the subsidiary has overcome the distance (if any). Provide evidence, e.g.
examples, facts, data to support your answer.
2. Use the framework of 10 patterns of FSAs development/ resource recombination to discuss
clearly to what extent your subsidiary has firm-specific advantages (FSAs) developed by itself,
or those FSAs developed by the parent firm? Does your subsidiary develop any new FSAs? If
yes, describe your new FSAs and support your answer with two examples. If no, explain why it
is sufficient for your subsidiary to use only the FSAs transferred from your parent firm and
provide two examples. Alternatively, does your subsidiary develop new FSAs and also use FSAs
transferred from the parent firm? Then, provide one example for FSA developed by the
subsidiary and one example transferred from the parent firm.
 Use the 10 patterns of FSAs development/ resource recombination to discuss the extent to
which the subsidiary has firm-specific advantages (FSAs) developed by the subsidiary, or
those FSAs developed by the parent firm.
 Does the subsidiary develop any new FSAs?
 If yes, describe the new FSAs and support your answer with two examples of FSAs
developed by the subsidiary.
 If no, explain why it is sufficient for the subsidiary to use only the FSAs transferred from the
parent firm and provide two examples of FSAs developed by the parent firm and transferred
to the subsidiary.
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 Alternatively, explain whether the subsidiary develops new FSAs and also uses FSAs
transferred from the parent firm. Then, provide one example for FSA developed by the
subsidiary and one example transferred from the parent firm.
3. Use Rugman, Verbeke and Yuan (2011) diagram of re-conceptualization of national subsidiary
roles along the value chains to discuss clearly what role(s) your subsidiary has? Explain and
illustrate your answer with a diagram.
 Use Rugman, Verbeke and Yuan (2011) diagram of re-conceptualization of national
subsidiary roles along the value chains, not Bartlett and Ghoshal (1998) model to discuss the
role(s) of the subsidiary that you think they have.
 Explain why the subsidiary role(s) are placed in particular cell(s)
 Illustrate your answer with an appropriate diagram.
4. Show detailed calculations, analyze, compare and comment the financial performance trend of
your subsidiary for each year of the three-year period of 2016-2018 (sales and profit growth/
decline; profitability ratios of gross margin ratio, EBIT ratio, net profit ratio, ROA; gearing
ratios of debt-to-total assets, debt-to-equity, times interest earned; liquidity ratios of current
ratio, quick ratio, working capital; operating efficiency ratios of inventory turnover in days,
account receivable turnover in days). In case your subsidiary exports, analyze their sales in
domestic market and international markets. You should present the financial statements of your
subsidiary in the appendix.
 Refer to the accounting coach website www.accountingcoach.com for reference and for help if
necessary.
 Show detailed calculations (i.e. formulas, figures in the numerators and denominators, NOT just
the final results) of the full set of financial ratios of the firm for the three-year period 2016-2018.
This part must be presented in the text of the body, NOT in the appendix.
 Analyze, compare and comment financial ratios: the analysis should be concise, clear, straight-tothe point, insightful, and useful in terms of causal relationship of strategy and performance. It is
NOT sufficient to describe the data changes (e.g. increase/ decrease over time) or provide general
comments of the meaning of the ratios.
 In case your subsidiary exports, analyze their sales in domestic market and international markets.
 Present a full set of financial statements of the firm (income statements and balance sheets), not
just the extraction, in the appendix in the form of image.
 The financial statements must come from the subsidiary’s full accounts filed with the UK
Companies House, NOT from any database. Any paper which is not in compliance with this
particular instruction will be penalized and marked down.
 Only the materials on the calculation of financial ratios and the financial statements can be
presented in the form of image, so that they will not be counted towards the word limit.
 The analysis of financial ratios must be presented in word.
5. What are all the major financing sources of your subsidiary for the period 2016-2018? Discuss
whether or not your subsidiary has any role in foreign exchange risk management. How are
foreign exchange risks managed in your subsidiary? Critically analyze whether or not your
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parent firm has used various mechanisms to shift profits in your subsidiary. Support your
answer with specific well-explained data, facts, and examples.
 Read the UK subsidiary’s balance sheets/ the statements of financial position and disclosure notes
of the full accounts/ annual reports (2016-2018).
 Use data as reported by the subsidiary.
 Critically analyze and explain clearly all the major financing sources of your subsidiary in
absolute value and ratios (each type of financing sources over total assets in percentage, and the
absolute value of each type of financing sources).
 Discuss whether or not your subsidiary has a role in foreign exchange risk (FX) management or
whether FX is centrally managed by the parent firm’s specialized shared services, e.g. central
treasury/ finance company.
 Examine whether the subsidiary/the group has taken any hedging techniques/ measures for
foreign exchange risk management (if any) and describe them (if applicable). Support your
answer with data (2016-2018), facts and/or examples.
 Read the subsidiary’s annual reports, especially disclosure notes.
 Examine in detail all potential profit shifting mechanisms. The availability of these types of
information depends on the way the subsidiary discloses in the accounting notes.
 Support your answer with data (2016-2018), facts and/or examples.
 Examine the role of local legitimacy, relationships with host country government, and corporate
reputation of the subsidiary and the risks/ consequences of profit manipulation.
 Draw a conclusion whether or not profit manipulation is a prime motive for the parent firm in the
relationship with your subsidiary