20219 - ACCOUNTING AND CONTROL IN MNCS

Students are expected to have basic knowledge of Financial accounting and Management control systems.

The control process takes on added complexity in an international environment. The existence of multiple currencies in the financial aspects of business and the emergence of sophisticated international transfer pricing policies complicate financial control mechanisms. The geographic and cultural distance that separates operations contributes to an increase in the complexity of controlling multinational operations. Furthermore, the balancing of local responsiveness, needed to meet the country's social, cultural, and economic requirements, and global integration, needed to gain efficiency from both economies of scale and scope, requires to structure flexible control systems. This balance is relevant also for sustainability, which has become a key value driver for any international company. The course aims to analyze how administrative mechanisms can support global management. More specifically, which tools are better suited to manage the different international strategies and organizational structures proactively.

The programme is subdivided in three parts:

1. Sustainable Company Value Generation and Multinational Reporting Systems.
   • Company Value Drivers: efficiency, innovation, risk management and sustainability.
   • Information flows, different national accounting standards and reporting uniformity.
   • Multinational Group Financial Reporting: problems and practices.
   • Exchange Risks and international transfer pricing policies: management, legal and fiscal aspects.
   • Multinational Performance Evaluation: local operating units vs local managers.
   • Performance Evaluation and Strategic Alignment in international companies.
2. The role of administrative mechanisms in MNC management.
   • The role of administrative mechanisms in the management of diversified multinational corporations.
   • Strategy and structure in an international environment: multinational strategies, global competitive advantages and worldwide organizational structures.
   • Corporate role and coordination of multinational enterprise: global strategic coordination, multinational integration of operations, local responsiveness.
3. Planning and Control Systems in Diversified Multinational Corporations.
   • Planning and control systems and internationalization process: a life-cycle perspective.
   • Connecting subsidiary role to the set of control mechanisms: toward a contingency approach.
   • Multinational network and strategic roles of subsidiaries.
   • Controlling the subsidiary: the different coordination and control mechanisms.
   • The role of multinational management accounting mechanisms.
   • Multinational Corporate Planning and Budgeting: the different approaches.

• Understand the key company value drivers, and how to measure them
• Recognize the key elements of an international strategy and organizational structure.
• Identify the relations between international strategy, structure and measurement of local vs global performance.
• Interpret the interactions and trade-offs between international strategy, role of local subsidiary and performance measurement and control systems.
• Discuss the key up-to-date topics in multinational controlling: sustainability, compensation policies, role of local subsidiaries.

• Analyze a multinational financial reporting.
• Design a management control system able to control company value
• Identify how to measure sustainability in an international setting
• Evaluate local and global performance in diversified multinational corporations.
• Discuss the evaluation of managerial performances in presence of inflation, exchange rate risks, transfer prices, uncontrollable factors.
• Design multinational planning and control systems according to the different international strategy, structure and subsidiary role.

• Face-to-face lectures
• Online lectures
• Guest speaker's talks (in class or in distance)
• Company visits
• Exercises (exercises, database, software etc.)
• Case studies /Incidents (traditional, online)
• Individual assignments
• Group assignments
• Interactive class activities on campus/online (role playing, business game, simulation, online forum, instant polls)

The learning experience of this course includes, in addition to face-to-face lectures, case discussions, group and individual works, real examples, company visits  and interactions with managers.

• As we use case studies students deal with the identification and analysis of complex, open-ended issues.
• Optional individual assignment is used for applying methodologies to real cases, so gaining real-life information to be discussed together in class.
• Group assignment asks to study, analyze and present some research papers dedicated to a specific relevant topic. This is expected to enhance the ability to analyze complex materials, to identify the salient issues of a relevant topic and to elaborate an effective presentation to a well-educated audience. Further, it is usefull for gaining an understanding of how a research article is structured and which methodology is best for a peculiar topic/question (very useful also for the final thesis).
• Company visits (last year 2: Campari and Maserati) are dedicated to know the international strategy, structure and business model of a complex multinational (typical made-in-italy) corporation and to have a structured discussion with managers about the issues in designing and using management control systems in the internatonal setting.
• Guest speakers and company examples and cases are also a way for finding interesting internships.

With the purpose of evaluating knowledge and ability, the student assessment is based on three main components:

1. Group assignment (group grade, 30% of the final grade) designed for the purpose of verifying the student ability to:
   • Recognize the key elements of an international strategy and organizational structure.
   • Identify the relations between international strategy, structure and measurement of local vs global performance.
   • Interpret the interactions and trade-offs between international strategy, role of local subsidiary and performance measurement and control systems.
2. Final written exam (individual grade, 60% of the final grade), based on a mix of open questions and cases, which aims to assess the student’s learning level of the theoretical models, the main concepts and the ability to analyze and evaluate local and global performance in diversified multinational corporations and to design multinational planning and control systems according to the different international strategy, structure and subsidiary role.
3. Optional individual assignment and class participation (individual grade, 10% of the final grade) which aims to assess the ability to apply methodologies and to discuss relevant issues of planning and control in multinational corporations.

With the purpose of evaluating knowledge and ability, the student assessment is based on one final written exam (individual grade, 100% of the final grade), based on a mix of open questions and cases.

The course content refers to the diverse teaching materials (slides, articles, cases, etc..) that are made available through the website of the course (Bboard).

The course content refers to the diverse teaching materials (slides, articles, cases, etc..) that are made available through the website of the course (Bboard). Further non-attending student must choose one of the following optional textbooks:

• D. CHOI, C.K. MEEK, International Accounting, Pearson, 2011.
• V. GOVINDARAJAN, A.K. GUPTA, The quest for global dominance, San Francisco, Jossey-Bass, 2001.

One of the questions of the written final examination refers , for non attending students, to the book chosen. The choice is emailed to instructor at least two weeks before the date of the exam.