Spring 1998 MW 4:00-5:15 PM

Professor Fred Thompson

Text: Baron's Business and Its Environment.

Course objectives:

Managers do not manage in a vacuum. They operate within organizations. Organizations, in turn, operate in an environment of markets and governments. Successful managers learn to link the strengths and weaknesses of their organizations to the threats and opportunities arising in their environments. International Political Economy I reviewed the fundamentals of economics and markets; International Political Economy II builds on economic theory to understand politics and government, and, given that understanding, ethical behavior.

Whether in the public or the private sectors, managers are never far from political forces and the effects of electoral competition and ballot measures; legislative politics and statutes; bureaucratic conflict and procedures; judicial oversight and rulings; and administrative rulemaking and regulations. These are governmental institutions, mechanisms for resolving conflicts among social forces that play across the larger community within which all organizations operate. These institutions inevitably influence the distribution of income and wealth in a society, primarily through their effects on the competitive positions of individual and firms. Individuals and firms, therfore, inevitably seek to influence public policy and the political authority of governmental organizations.

Governance, then, is part of managerial life. It involves institutions. It involves people. It involves politics. It appears within and between governments and businesses throughout the world.

Your primary objective in this course is to learn how the institutions of government operate. Your goal is to be able to analyze and predict public policies relevant to your responsibilities. You should learn to:
diagnose the impact of government activities on the risks you take as a manager; and

Your secondary objective is to learn to use political skills. Your goal is to understand political behavior and to exercise it productively.You should learn to: set agendas; build coalitions;

Classes consist of case discussions and lectures. Cases include (1) reports of managerial situations in which you play the role of a decision-maker responsible for taking action; and (2) bargaining exercises. These cases simulate real events in order to emphasize particular analytical concepts. Refer to the LINE Management Manual for instructions on preparing cases and bargaining. Prepare for class first by immersing yourself in the case; second by answering questions posed in the text and handouts for each case assigned. In addition to working on your own, you must meet with a small number of your colleagues before class to review the case data, compare analyses, and discuss strategies.

This class puts a high priority on your ability to present ideas clearly and concisely and to convince your peers of the wisdom of your analysis and approach. Contributions in class -- individual and team -- add up to 30 of the points you can earn toward your course grade. The quality of your contribution to the class is more important than quantity -- although you will be expected to contribute as an individual to discussions of at least five cases during the term to receive full participation credit, even if your contributions are of the highest quality (3 points per case is the maximum number of points you can earn as an individual for a case discussion, whether I select you for presentation or you volunteer for discussion). What do I mean by quality? The things I look for, value, and, consequently, reward in an individual contribution include:

1) Do your comments show evidence of analysis, integrating concepts and discussion?

2) Are your points substantive, relevant to the discussion, and linked to the discussion of others?

3) Do you distinguish among different kinds of data (i.e., facts, opinions, beliefs)?

4) Do you advance our understanding and class discussion of a situation by asking a key question, summarizing and recapitulating, citing relevant personal examples, or stating concepts more clearly -- especially if discussion becomes muddled?

5) Do you display a willingness to test new ideas and push the facts of a case by using your "realistic imagination?"

6) Do you play devil's advocate or disagree with the instructor, so that the difference of opinion serves as both counterpoint and a basis for exploring all sides of a concept, issue, or practice?

In group presentations I look for all of the above, plus thorough preparation and understanding of the assigned point of view!

Lectures develop methodological or theoretical issues, often introduced in assigned readings.

Written work

Two case memoranda are required. I will supply specific instructions for each memo. Each team will prepare a brief book for the 21 cases scheduled for discussion during the term. Each case brief should lay out the fundamental issues raised by the case, the salient facts bearing on those issues, and an approach to their resolution. All the questions raised at the end of each case should be briefly addressed and answered. Your entry must be posted to your team web page the day before the case is scheduled in the syllabus for discussion to receive credit for that case. This means, of course, that each team must establish a web site.

There will be a final examination. The exam will be closed book, but I will provide each team member with a hard copy of their team's brief book (as it stands the last regular meeting of the class).

Administrative details

1) Use name placards in class and sit the same place every class. I have to know your names to give you individual participation credit (up to 3 points per case discussion).

2) Use team placards in class. Teams will have from 5 to 7 members. Teams will sit together on one side of the room or the other. I will post team participation scores on my website each month and other team scores following each written assignment. Each team should select a team leader, secretary, and webmaster.

3) If you must miss a class, please notify me in advance ( and I will not select you for case presentation. You are responsible for finding out from your classmates what materials were covered and what additional assignments were made. If I call on you and you are absent, it will cost you 3 points on your individual discussion score, or 20 percent of the total.

4) My office hours will be T 7:30 to 9:30 AM and TH 1:30 to 2:30 pm. Or call for an appointment (370-6228). My e-mail is My website is at: I encourage you to give me feedback on how the course is progressing.


Your grade will be based upon:

Participation: 30 points, 15 points individual participation, 15 points for team participation, 5 points of which are based on the average team score on individual participation (1 team point for 3 individual points averaged over the entire team)

Two memos: 12 points each, 8 points for content and organization and 4 for English usage and presentation.

An additional 4 cooperation points can be earned on each case -- two team points and two class points -- for a total of 16 points per case. Team points will be based on the average score of the team: 2 for 11 or more, 1 for 9 - 11, 0 for less than 9; class points on the average grade in the class: 2 for 11 plus, 1 for 9 - 11, 0 for less than 9.

Brief book: 21 team points.

Final: 15 individual points

Team administration: 2 points

Course Schedule

January 19


January 21 The Significance of Political Economy

Reading: Ch. 1 & pp. 353-354

Case 1: The Nonmarket Environment of McDonalds

Effective Meetings

January 26 Issue Life Cycles

Reading: pp. 70-76, esp. 73

Case 2: General Motors: Like a Rock? (A)

January 28 The Media's Role in Decision-making

Reading: Ch. 2 & the rest of 3

Case 3: Global Warming 46-48

February 2 Conditions for Private Collective Action

Reading: Ch. 4

Case 4 : Monsanto and the Synthetic Milk Hormone

February 4 Integrative Case

Case 5: Calgene, Inc. and Infrastructure Marketing, see also pp. 365-372.

February 9 Institutions and Incentives

Reading: Ch. 5

Case 6: The Politics of the Extension of Daylight Savings Time (pp. 138-142)

February 11 continued

Case 7: Boeing in a Pickle (p. 159)

February 16 Political Analysis, Political Impact, and Competitive Position: The Distributive Politics Spreadsheet

Reading: Ch. 6, pp. 347-351.

Case 8: Scrubbers and environmental policy

February 18 continued

Case 9: Drexel Burnham Lambert and Junk Bond Politics [p. 218]

February 23 Formulating Political Strategies

Reading: Ch. 7

Cases 10: Cafe Standards 1990 [p. 221],

February 25 Implementing Political Strategies

Reading: Ch. 8

March 2 Case Memo due

Manufacturing Politics (A) [p. 229]

What political strategy should USWest adopt with respect to S.173 and how should it be implemented? Your memo should explain the nature of the political competition on this bill and the likely outcomes given alternative strategies on the part of USWest.

March 4 Antitrust Law

Reading: Ch. 9

March 9 Regulation

Case 11: Apple Computer and mail-order sales

Reading: Ch. 10.

March 11

Guest Lecturer: Ruth Crowley, Senior Administrative Law Judge, Oregon Public Utilities Commission

March 16 Product Safety

Reading: Baron, Ch. 11

Case 12: Chain Saw Safety (p. 315)

March 18 Product Safety continued

Guest Lecturer: Grace Crunican, Director, Oregon Department of Transportation, "Where Business and Government Meet--What a Manager Needs to Know." Ms. Crunican will be our executive in residence at that time.


March 30 Environmental Law

Reading; Ch. 12

April 1 International Trade Policy


Case 13: Calgene, Inc.: The FLAVR SAVR Tomato and the Regulatory Approval Process

Reading: Ch. 16

April 6 continued (INTERNATIONAL COMPETITIVENESS by Mike Dothan)

Guest Lecturer: Professor Fred Truitt, Strategic Trade Theory and Practice

Case 14: Boeing v. Airbus (Handout)

April 8 U.S. Trade Policy and Negotiations

Reading: Ch. 15

Case 15: The European Auto Industry (p. 454)

April 13 The Political Economy of Japan

Reading: Chs. 13, 14

April 15 continued

Reading: Ch. 17.

Case 16: Toys 'R Us in Japan (p. 417), Toys 'R Us and Globalization (p. 509), Toys 'R Us in Germany (p. 454)

Case 17: Fujitsu and Buying In (p. 397), please read, but do not brief.

April 20 Ethics, Management, the Third World and the Global Economy

Reading: Ch. 18


Case 18: Headquarters Relocation: Kimberly-Clark and the State of Wisconsin

Write a memo to an identified member of either Kimberly-Clark's Public Interest Committee or Governor Earl's Working Group. Propose a strategy that would satisfy that individual's preferences. Show that your proposed strategy is equal to or better than alternative strategies on all relevant decision-critical attributes (criteria). If necessary, use your political skills to explain how your proposed strategy would be implemented: setting agendas, building coalitions, applying political resources effectively; and working within the jurisdiction, authority, and procedures of government agencies.

Assume that you work for and report directly to the individual to whom your memo is addressed. Use all of the information in the case (or anything else you can document), but your memo MUST be dated prior to any final decision on this issue.

Each member of your team MUST address their memos to a different individual. One member of your team MUST address their memo to Anthony Earl, Governor.

Your team will do better if you can find opportunities and procedures for Kimberly-Clark (business) and the State of Wisconsin (government) to cooperate in solving the problems raised in this case. Be realistic though and don't invent facts

April 27 continued

Reading: Ch. 19 & 20

Case 19: Beards (p. 650), , please read, but do not brief.

April 29 continued

Reading: Ch. 21 (Class cancelled)

May 4 continued

Guest Lecturer: Askar Kusainov, visiting professor, international management, University of Washington

Just how does one do business in Kazakstan? Are there restrictions on what one can produce and sell? Are there restrictions on prices charged or paid? Can one freely import or export? How does one deal with the government?

Reading: Ch. 22

May 6 continued

Reading: Ch. 23

Case 21: Cigarette Promotion in India , please read, but do not brief.

Intra-team evaluations.