Suggested Answer: International business involves any business exchange between get-togethers from several country. It varies from local business for the reason that international business deals cross national edges while domestic ventures do not. More specifically, international business requires foreign currency orders for at least one party, it may require a company to adapt to a international legal system and/or culture, and just how products are produced or the types of products that are produced can vary greatly according to the availability of resources in various countries.
Q2: Exactly why is it important for business students to study international business?
Suggested Answer: There are several reasons to study international business. Most large organizations will have international operations or be influenced by the global market. In addition, a knowledge of international business will allow students to better assess career opportunities, interact better with other managers, and keep tempo with opponents. Furthermore, students may eventually improve an organization headquartered internationally. Finally, smaller businesses have become more involved with international business.
Q3: Will you want to benefit a foreign-owned organization? Why or why not?
Suggested Answer: The answer to this question is, of course, predicated on a student's view and for that reason can make a whole lot of conversation. Some students may already help a foreign-owned firm; some may work for a foreign-owned firm and not realize it. Students who benefit foreign-owned companies can be asked to compare their encounters in the company with positions they could have held anywhere else (or can be asked to simply touch upon their experiences if they have not kept other positions). This can set the stage for a talk of the merits of doing work for or not working for foreign-owned companies.
Tutorial 2 (Topic 1)
Q1: What are the basic types of international business activity?
Suggested Answer: The basic types of international business activity are importing and exporting, international investment funds, licensing, franchising, and management agreements. Exporting involves advertising products manufactured in one's own country for use or resale far away, while importing involves buying products made in other countries for use or resale in one's own country. International purchases include foreign direct investment and profile investments. Foreign direct investments are purchases made for the purpose of actively controlling property, property, or companies situated in foreign coordinator countries, while stock portfolio investment involves the purchase of foreign financial possessions, such as shares, bonds, and certificates of first deposit for purposes apart from control. A licensing contract allows a firm in a single country to make use of all or a few of the intellectual property of a company internationally in trade for a royalty repayment. A franchise agreement authorizes a firm in a single country to work with the brand names, logos, and operating techniques of a firm in a second country in trade for a royalty payment. Management contracts involve an agreement in which a firm in a single country works facilities or provides other management services to a company internationally for a rate.
Q2: What are the basic known reasons for the recent expansion of international business activity?
Suggested Answer: A number of factors have resulted in the recent expansion of international business. The more important factors include market enlargement, source acquisition, competitive causes, scientific change, and interpersonal change. Market extension has led to progress in international business as companies, facing saturated home markets, seek new market opportunities in other countries. In some cases, firms will also develop into other marketplaces as they seek resources such as materials, labor, and/or capital. Such resources may either be scarce or unavailable domestically. The competitive makes that exist in today's current market also encourage the internationalization of business. Whenever a firm's competitors expand into new market segments, that firm must also internationalize. Changes in technology, especially in areas such as marketing communications, transport, and information processing, are so that it is more and more easier for companies to handle international ventures, thus adding to the development of international business. Public change is so that it is possible for businesses to sell their products easier in foreign markets. Consumers today are a lot more aware of the merchandise and services being offered in other marketplaces, and are therefore much more likely to seek out foreign-made products than previously. Finally, looser government trade and investment procedures have managed to get easier for international businesses to capitalize on expansion opportunities in the global software industry.
Q3: Why do some business become global while some continue to be local or regional?
Suggested Answer: There are a variety of factors that are likely involved in identifying which establishments become global, which become regional, and which continue to be local. The airline industry, for example, is known as a global industry. One of the main reasons for this status is the expense of developing and producing large aeroplanes, combined with market size. The industry is "forced" to be global because it must sell aircraft to a marketplace that is big enough to justify the costs of developing and building new jets. No country has a market big enough to justify such costs, thus companies must seek customers around the globe. On the other hand, the bakery industry tends to be regional or local because its products tend to perish very easily. While advancements in travel and delivery have created a larger marketplace, generally, companies in this industry focus on local customers. From this brief dialogue, it is clear that factors such as cost, market size, and product life all are likely involved in identifying which companies will be global and that will not. However, it is important to recognize that many other factors (for example, tool availability, government restrictions, and similarity of customer style) also are likely involved in this willpower.
Q4: What's the impact of the web on international business? Which companies and which countries will gain as Internet utilization increases across the world? That may lose?
Suggested Answer: The Internet has had a significant impact on international business in at least 3 ways. First, the Internet facilitates international trade in services (e. g. , bank, education, and retailing). Second, it has helped level the taking part in field between large and small companies entering a international market, since even small organizations can sell their products internationally on the Web. Third, the Internet can make business-to-business trades (e. g. , bringing together suppliers and potential buyers) much easier and better.
Q5: Which markets are usually more important to international business - the original markets of THE UNITED STATES, europe, and Japan or the appearing markets? Protect your answer.
Suggested Answer: Plainly, the quantity of business in the original markets is a lot greater than the volume in emerging marketplaces. However, as the original market segments become saturated, opportunities for growth will increasingly change toward emerging market segments.
Tutorial 3 (Matter 2)
Q1: Describe the four different types of legal systems with which international businesses must offer.
Suggested Answer: The four types of legal systems with which international businesses must deal are common legislation, civil law, spiritual legislations, and bureaucratic legislations. The common legislation system relies on the cumulative aftereffect of judicial decisions on specific cases. On the other hand, the civil legislations system is based on a detailed listing of what is which is not permissible. Spiritual law has its bottom part in the official guidelines that govern the faith and practice of a specific religion. Finally, bureaucratic legislation is no matter what country's bureaucrats say it is.
Q2: How can an MNC impact its coordinator country?
Suggested Answer: An MNC make a difference its number country in numerous ways, some positive, others negative. Over the positive area, local jobs may be created because of this of investment funds in crops and factories; duty obligations may improve a country's infrastructure; and technology may be transferred to the sponsor country. In the negative side, local careers and profits may be lost because of this of increased competition, and the local economy may become dependent on the success of the MNC. An MNC will typically likewise have a significant politics impact.
Q3: Why do countries impose limitations on foreign possession of domestic firms?
Suggested Answer: Countries may impose limitations on foreign ownership of domestic companies to avoid control of their economies by foreigners, because they dread that foreign companies could undermine their professional procedures, and because they believe that local people should have the great things about certain companies.
Q4: Just how do constraints on repatriation of revenue affect MNCs?
Suggested Answer: In order to encourage local reinvestment of income, countries may limit the repatriation of income by MNCs. In some cases, the threat of restrictions on the repatriation of profits will discourage MNCs from investing in the first place. Limitations are sometimes designed so that export functions are encouraged. The written text provides an example of how Poland induces firms to extend their exports using their Polish functions by allowing companies to repatriate all their profits attained from exports.
Q5: What's politics risk? What forms did it take?
Suggested Answer: Politics risks are defined as any changes in the politics environment which may adversely affect the value of the firm's business activities. Most political hazards can be divided into three categories: possession risk (the threat of confiscation or expropriation), working risk (politics changes will put employees and or gains in danger), and transfer risk (the risk that the government will interfere with the firm's capability to shift cash in and out of the country).
Tutorial 4 (Subject matter 3)
Q1: What's culture?
Suggested Answer: Culture involves the interrelated prices, beliefs, behaviors, customs, and behaviour that separate a society. It is a learned patterns that is distributed between members of the modern culture and it changes to adjust to external causes that affect a society.
Q2: What are the primary characteristics of culture?
Suggested Answer: The principal characteristics of culture are sociable structure, terms, communication, faith, and prices and attitudes. How these elements interact affects the neighborhood environment in which international businesses operate.
Q3: What are individualism and collectivism? Just how do they are different?
Suggested Answer: Individualism is the cultural belief that the individual comes first and collectivism is the fact that the group comes first. Individuals from individualistic ethnicities typically possess a higher degree of self-respect and freedom, while those from collectivistic ethnicities tend to put the nice of the group ahead of their own private interests.
Q4: What is electric power orientation?
Suggested Answer: Power orientation, the second of Hofstede's sizes, refers to the beliefs that people in a culture keep about the appropriateness of power and authority variations in hierarchies such as business organizations. In cultures characterized by electricity respect, people have a tendency to accept the energy and authority of the superior simply on the basis of the superior's position in the hierarchy and to respect the superior's right to that power. In contrast, in civilizations that are characterized by power tolerance, much less significance is attached to a person's position in the hierarchy.
Q5: What's doubt orientation?
Suggested Answer: Uncertainty orientation, the 3rd of Hofstede's dimensions, is the feeling people have regarding uncertain and ambiguous situations. Those individuals characterized by uncertainty approval are activated by change and new opportunities, while those individuals seen as a uncertainty avoidance dislike and steer clear of ambiguity.
Tutorial 5 (Theme 4)
Q1: What is ethics? What's sociable responsibility?
Suggested Answer: According to the chapter, ethics can be an individual's personal beliefs about whether a decision, behavior, or action is right or incorrect. Social responsibility, as defined in the written text, is the group of obligations a business undertakes to protect and enhance the society where it functions.
Q2: Distinguish between moral and unethical action.
Suggested Answer: Moral behavior identifies tendencies that conforms or is constant with generally accepted sociable norms. Unethical patterns, on the other side, is tendencies that violates generally accepted social norms.
Q3: Just how do organizations try to manage ethical behavior across borders?
Suggested Answer: The section focuses on three main methods to managing ethical patterns across borders. The three solutions include (1) the use of formal rules and rules of ethics to identify ethical action and hold employees accountable for unethical action; (2) ethics training to permit employees to make moral decisions - even in cases not clearly covered by a formal ethics code; and (3) corporate and business culture and routines which set requirements of tendencies throughout the organization.
Q4: Identify the major areas of sociable responsibility for international business.
Suggested Answer: The first area is behaving responsibly toward organizational stakeholders (customers, employees, investors, and also other groups afflicted by the organization). The next area includes behaving responsibly in conserving and guarding the natural environment. The final area recognized in the written text is the firm's responsibility in promoting general communal welfare (protecting human rights, minimizing poverty and disease, etc).
Q5: Exactly what is a whistle-blower?
Suggested Answer: A whistle-blower is an employee who discloses illegitimate or unethical do on the part of others in the organization.
Tutorial 6 (Subject 5)
Q1: What's international trade? How come it take place?
Suggested Answer: International trade is trade between the residents (individuals, businesses, nonprofit organizations, or other forms of organizations) of two countries. Trade consists of the voluntary exchange of goods, services, or money. International trade occurs because the parties to the transaction believe they take advantage of the voluntary exchange.
Q2: How do the ideas of absolute benefit and comparative benefit differ?
Suggested Answer: The difference between total benefits and comparative advantages would be that the former looks at absolute dissimilarities in productivity, as the latter talks about relative productivity distinctions. The difference between the theories prevails because comparative benefits incorporates the idea of opportunity costs in determining which good should be produced.
Q3: How do interindustry and intraindustry trade differ?
Suggested Answer: The difference between interindustry trade and intraindustry trade would be that the former entails two countries exchanging goods produced in several companies (for example, the exchange of British isles raincoats for American beer), while the latter includes two countries exchanging goods stated in the same industry (for example, Ford exports American-made autos to Japan, while Mazda exports Japanese-made automobiles to the U. S. ).
Q4: What exactly are the primary sources of the competitive advantages used by firms to contend in international market segments?
Suggested Answer: The principal sources of suffered competitive advantage utilized by firms to compete in international market segments include (a) using intellectual property rights such as trademarks or brands to get advantages over competitors; (b) taking advantage of first-mover advantages gained by spending large sums on research and development; (c) obtaining economies of range or opportunity, and the causing lower average cost bottom to gain an edge over the competition; and (d) exploiting the training curve.
Q5: What exactly are the four elements of Porter's diamonds of countrywide competitive advantages?
Suggested Answer: The four elements of Porter's diamond of countrywide competitive advantage are factor conditions (a nation's endowment of factors of production); demand conditions (the existence of a big, sophisticated home consumer foundation); related and encouraging companies (local suppliers that are wanting to meet the industry's creation, marketing, and syndication needs); and company strategy, structure, and rivalry (the local environment where firms be competitive).
Tutorial 7 (Subject 6)
Case Study : The Subprime Meltdown (Textbook: pg, 261)
The closing case examines the happenings leading to the financial crisis currently impacting the global financial services industry and its impact on the world economy.
This crises impacts people from all over the world.
The problems in the subprime mortgage loan market were based on poor lending tactics, low interest, a boom in the U. S. housing market and an unusual level of risky taking on the part of lenders and traders.
Over the past 10 years, almost $2 trillion well worth of securities were sold worldwide. Traders were driven to get on the belief that the real estate prices would continue to increase, and homeowners would continue making repayments against these outstanding loans.
The problem was made worse when the U. S. Federal government Reserve cut rates of interest so that they can stimulate the overall economy. The lowering rates of interest then created the boom in the U. S. housing marketplace.
As enclosure prices increased, the lenders lowered the down payment requirement, and started offering "no money down" home loans, interest only and adjustable rate home loans, which came with some uncharacteristically low preliminary rates.
People with woeful credit histories then became engaged because of the new non-traditional mortgage programs.
Eventually, rates of interest increased and several borrowers started defaulting because these were struggling to make the payment. Along with the weakening housing marketplace, lenders were then still left with property that was worthy of less than the worthiness of the loan.
This became a worldwide crisis because several mortgage loans were sold in to the secondary market. Many of these home loans were bundled mutually and sold to shareholders as "Collateralized DEBT BURDEN" (CDO's).
As people started defaulting on their loans, these traders were left with properties that sustained to reduce value.
In an effort to maintain liquidity, many central bankers (like the U. S. National Reserve) released funds.
Additionally, several "Sovereign Prosperity Funds" (see Chapter 2), like the Singapore Investment Authority, China Investment Corporation, and the Abu Dhabi Investment Expert purchased collateral positions in many of these finance institutions.
Q1: This case refers to the "classic capture of borrowing brief and lending long. " Explain what this means. What are the benefits of borrowing short and loaning long? What exactly are the drawbacks?
Suggested Answer: Finance institutions tend to borrow money from depositors for brief terms and lend money out to clients for long terms. (For example: A depositor trips a bank or investment company and acquires a 6-month Qualification of Deposit that pays mortgage loan of, say, 2. 5%. The bank might then take that deposit and incorporate it with other short-term deposits to provide a prospective home owner a 30-season mortgage with an interest rate of 5. 5%. ) The situation discusses "Specialized Investment Vehicles" (SIV's). These SIV's were financed by issuing short-term records with low interest rates. These corporations would then take these money and commit them in high yielding "Collateralized Debt Obligations" (CDO's) which were guaranteed by these subprime mortgage loans (long-term investment). The financial institution profits are made from the spread between the two interest levels.
The potential risk and downsides occur when the bank borrows money agreeing to repay it when term is due, without the data of where or when they'll obtain funds to repay the depositor. The potential risks related to the rests with the lender, and under normal conditions, they would be able to secure funds from other resources. However, they do not have a "crystal ball" to see what the near future will hold.
Economic conditions could change considerably, of course, if the conditions deteriorate, the financial institution may need to pay a much higher interest rate to the financing that they might need, minimizing and potentially eradicating their earnings.
Q2: Why do the Sovereign Prosperity Money of Singapore, Abu Dhabi, and China choose to invest in UBS, CITIGROUP, and Morgan Stanley at the same time they were carrying out "poorly"? Do these investments create any general public coverage issues? If so, what exactly are they?
Suggested Answer: Sovereign Prosperity Funds are a new and controversial source of capital for the world current economic climate (see Venturing Abroad - Chapter 2 / p. 44). They have decided to invest in these overseas banking companies because of what they view as their long-term expansion prospects. It might be argued that at the moment the cash investment differed from a standard practice, but the current financial system is exclusive. The SWF could be observed as contributing to global financial stability because of their focus on diversification and long-term earnings.
Q3: The change in the home loan lending standards in america created a worldwide financial crisis. Do you think a global financial regulatory company should be created to reduce the probability that such crises will happen in the foreseeable future? Why or why not?
Suggested Answer: Students will probably take different perspectives in responding to these questions. The clear answer is the fact some governmental oversight might be necessary, but realistically a global regulatory agency (overseeing all countries) would be almost impossible. In short, the only path to perhaps avoid future occurrences of such situations will be a simple regressing back to traditional sound bank methods. Monies should be loaned and then credit-worthy individuals.
Tutorial 8 (Matter 7)
Q1: What is the infant industry discussion?
Suggested Answer: The infant industry argument suggests that the infant making sector in a newly independent country be given protection from foreign competition until it has already reached a level of maturity that allows it to effectively compete in the marketplace. The text has an example of how Japan used the argument to protect certain industries through the period after World Conflict II.
Q2: What exactly are different types of tariffs?
Suggested Answer: A tariff is a tax placed over a good involved with international trade. An export tariff is levied on goods as they leave a country, while a transit tariff is levied on goods as they go through a country destined for a different country. An import tariff is levied on imported goods either by using an advertising valorem basis (assessed as a share of the market value of the brought in good) or as a particular tariff (evaluated as a particular buck amount per device of weight or various other standard strategy). Compound tariffs include both advertisement valorem and specific tariffs.
Q3: What are the major varieties of NTBs?
Suggested Answer: The major forms of nontariff obstacles include quotas, numerical export adjustments, and other nontariff obstacles. Quotas are numerical limits on the quantity of a good which may be imported into a country during a specific period of time. Numerical export controls limit the amount of a good that is exported. For example embargoes that absolutely ban a particular export, and voluntary export restraints. Other nontariff obstacles include product and tests standards; restrictions on access to distribution systems; general population sector procurement procedures that provide preferential treatment to home organizations; local purchase requirements; and regulatory, currency, and investment control buttons.
Q4: Explain Free Trade Zones (FTZ).
Suggested Answer: A foreign trade area is a geographic area where imported or exported goods obtain preferential tariff treatment. An FTZ may be as small as a warehouse or a manufacturing plant site or as large as the whole city. Businesses using overseas trade zones can reduce and even eliminate traditions duties. Typically, foreign trade zones are used to stimulate monetary development. Through utilization of an FTZ, a firm typically can reduce, postpone, or sometimes totally eliminate traditions duties. Generally, a company can import a component into an FTZ, process it further, and then export the refined good abroad and avoid paying customs duties on the value of the brought in component.
Q5: Should we get worried if foreigners sell us goods cheaply?
Suggested Answer: Probably not. If the international exporter is engaging in predatory pricing with the hope of eventually driving domestic competition out of business, stress might be justified. However, if the foreigner has a comparative gain in the good being exported, cheap imported goods benefit the exporting nation and the importing land as well. Individuals are paying less for goods that are being produced more successfully (in an absolute or relative sense) elsewhere.
Tutorial 9 (Matter 8)
Q1: Exactly what does most favored region (MFN) indicate?
Suggested Answer: MFN is a trading position that grants or loans the receiver the same tariff rates as the importing country provides its preferred trading lovers. All participants of the WTO are anticipated to grant MFN status to other WTO member countries.
Q2: How does the WTO change from GATT?
Suggested Answer: THE GLOBE Trade Group has been costed with the implementation of the Uruguay circular. While GATT concentrated mostly on trade in goods, the WTO's opportunity is a lot broader; it'll become the world's advocate and monitor of more available and free trade in goods, services, and technology. Additionally, unlike its predecessor, the WTO gets the capacity to enforce its procedures.
Q3: Just how do the various types of financial integration differ?
Suggested Answer: There are five forms of regional monetary integration. A free trade area removes all barriers to trade among member countries, but allows each member to establish its own trade insurance policies against nonmembers. A customs union consists of free trade among member countries, and practices a common external trade plan toward nonmembers. A market eliminates tariffs among member countries, follows a common exterior trade coverage, and eliminates obstacles that inhibit the movements of factors of development. In an financial union, barriers to trade among member countries are taken away, a common external trade policy is made, factors of production move freely between countries, and economical insurance policies are coordinated. Finally, a politics union further combines countries by encompassing complete politics integration.
Q4: Should international businesses promote or fight the creation of local trading blocs?
Suggested Answer: The answer to this question depends on whether a company is on the inside searching, or externally looking in. For companies that operate in an associate country, local trading blocs offer significant opportunities associated with much larger markets. However, the marketplace will probably become more competitive. Regional trading blocs are usually regarded as adversely by nonmember businesses because they could end up completely shut out of a specific market. In fact, the risk of a "Fortress European countries" prompted many outside firms to establish businesses within the EU in the overdue 1980s.
Q5: Clarify the initiatives of Asia-Pacific Economic Co-operation.
Suggested Answer: Asia-Pacific Economic Assistance (APEC) includes 21 countries from both edges of the Pacific Sea. It had been founded in 1989 in response to the growing interdependence of the Asia-Pacific economies. A 1994 APEC assembly in Indonesia resulted in a declaration committing users to attain free trade in goods, services, and investment among people by 2010 for developed economies and by 2020 for developing economies. This goal was furthered at APEC's 1996 meeting in Manila, where many countries made explicit pledges to reduce obstacles to Asia-Pacific trade.
Tutorial 10 (Topic 9)
Case Review: The New Conquistador (Textbook, pg: 351)
The closing case explores the actions of Telefonica de Espana, discussing the deregulation of the Spanish telecommunications market and focusing on Telefonica's aggressive growth into Southern American marketplaces.
Telefonica de Espana was a state-owned mobile company in Spain for most of its living.
With the EU's abolishment of state-sponsored phone monopolies in 1998, Telefonica privatized, modernized, and re-analyzed its strategy.
Telefonica's management decided to concentrate on Latin America for expansion, sensing its linguistic and historical ties gave it a competitive edge.
Having been a state-owned monopoly itself, Telefonica committed to several mobile companies being privatized in Latin America and effectively converted them around. However, the truth also details a few of the troubles Telefonica has already established in competing successfully in South America.
Q1: Go back in time to 1986. Execute a SWOT examination for Telefonica de Espana. Will your analysis business lead to the same conclusions as Telefonica's managers?
Suggested Answer: Not entirely. In 1986, Latin America was quite a distance from its move toward privatization in the 1990s. Thus, the opportunity to move aggressively into Latin America cannot be foreseen. The threat of increased competition from other European competitors, however, could be likely as Spain signed up with the EU and obstacles to trade and investment across Europe began to fall. One of Telefonica's strengths would have been its government possession in 1986 (no longer a durability today), and its greatest inside weakness could have been inefficiency - a weakness resolved in the later 1990s.
Q2: How can you characterize the corporate strategy adopted by Telefonica?
Suggested Answer: Related diversification through acquisition. They widened in industries traditionally related to calling industry (cellular service, Internet).
Q3: Minority buyers in Telefonica's South American subsidiaries are unsatisfied with the parent or guardian corporation. Suppose you are a older administrator at the father or mother corporation. How would you handle the condition with the minority traders? What would you recommend to the CEO should be achieved about the minority shareholders?
Suggested Answer: This question permits a great deal of latitude for students, as well as creative thinking. There is absolutely no "right" answer and students should be urged to consider a wide range of alternatives. The problem with minority stockholders is not yet severe. The management fees it charges its South North american subsidiaries erodes their profitability while enhancing the success of the key office. In today's global equity market, investors can choose to invest other companies related to Telefonica. Telefonica may decide to reexamine the charges of its spin-offs and inside sales. The stagnation of show values in South America may hurt the business in the long run.
Q4: The Latin American telecommunications market is growing considerably faster (12. 6 percent in 2007) than that of Spain or Europe, both which grew at a 4. 9 percent rate in 2007. Should Telefonica have sustained to focus on the Latin American market, somewhat than acquire O2 and Cseky? What about its purchase of a minority position in China Netcom?
Suggested Answer: Telefonica has made a decision to operate in several different yet fundamentally related markets at the same time. This process allows Telefonica the capability to take benefit of what they do best in one market in order to fortify its competitiveness in others. The advantage of diversifying into the various areas makes them less reliant and susceptible to competitive or monetary threats. It can even be mentioned that Telefonica is at a unique position because of the technologies and competence they possess, providing them with certain advantages as they decide to get into these emerging and growing market segments within European countries and Asia.
Tutorial 11 (Issue 10)
Q1: What exactly are the steps in performing a international market analysis?
Suggested Answer: Market research usually is comprised of three steps: (1) examining alternative marketplaces; (2) evaluating particular costs, benefits, and risks of getting into each; and (3) selecting the ones that contain the most potential for entry or extension.
Q2: What are the primary advantages and disadvantages of exporting?
Suggested Answer: One of the primary advantages of exporting is its relatively low level of financial exposure. A second good thing about exporting is related to speed of admittance. Exporting allows a firm to develop into a foreign market gradually, and therefore allows a firm to assess the local environment and adapt its products to local consumers. The disadvantages of exporting include a lack of presence in the local market, vulnerability to operate barriers, and potential problems with trade intermediaries.
Q3: What's international licensing? What are its advantages and disadvantages?
Suggested Answer: International licensing occurs when a firm, the licensor, offers the right to use its intellectual property to some other company, the licensee. The principal benefits of international licensing are its relatively low financial risk and the opportunity it provides the licensor to find out about sales probable in foreign marketplaces. Licensees like the preparations because they are in a position to make and sell products with proven success tracks, yet incur low R&D costs. However, the agreements limit market opportunities for both licensor and the licensee, and there is mutual dependency between the two people. Further, there may be potential for problems and misunderstandings. Finally, licensors must be careful to avoid creating another competitor.
Q4: What is international franchising? What exactly are its benefits and drawbacks?
Suggested Answer: International franchising includes an agreement whereby the franchisee works a small business under the name of the franchisor in substitution for a payment. International franchising agreements are attractive because they allow franchisees to enter in a small business that is established and has a proven track record. Franchisors benefit from the agreements because they can increase internationally at relatively low cost and risk. Furthermore, they can buy critical information about the local industry from franchisees. However, an international franchising arrangement requires both parties to share earnings and may be more complicated than home franchisee contracts.
Q5: What is FDI? What are its three basic forms? What exactly are the relative benefits and drawbacks of every?
Suggested Answer: FDI is foreign immediate investment. The three basic types of FDI are greenfield opportunities, acquisitions, and joint endeavors. Greenfield investments involve the building of new facilities. It is attractive because its allows a firm to select the best option site for structure, the firm starts off with a clean slate, and the firm can adjust to its new surroundings at its tempo. However, greenfield ventures take time and fortitude, may be costly, require the firm to comply with local laws and recruit a labor force, and may cause a firm being regarded as a foreigner. Acquisitions, on the other hand, allow a firm to generate profits even while it integrates the new company into its overall strategy. However, acquisition takes a firm to assume all of the attained firm's liabilities, and spend considerable money in advance. Joint ventures entail the creation of a new firm by two or more companies working together for mutual profit.
Tutorial 12 (Issue 11)
Q1: What exactly are the basic dissimilarities between joint ventures and other styles of tactical alliances?
Suggested Answer: A tactical alliance is a business arrangement where two or more firms consent to cooperate for his or her mutual benefit. A jv, a special kind of strategic alliance, involves the creation of a fresh business entity that is in addition to the mother or father companies. This independent entity can then be broader in goal, scope, and duration than other styles of tactical alliances. Joint ventures typically have formal management systems, while other styles of proper alliances may become more informally managed. Proper alliances are usually considered less secure than joint projects because they lack formal organizational buildings and have small missions.
Q2: Why have tactical alliances cultivated in popularity lately?
Suggested Answer: Tactical alliances have become in popularity lately because they're an effective means of competing in the global industry. They make it easier for companies to enter in new market segments, they distribute the chance among other companies, they allow companies to generate on each other's skills, and share knowledge and know-how.
Q3: What are the basic benefits partners are likely to gain using their company strategic alliance? Quickly explain each.
Suggested Answer: The essential benefits partners will probably gain using their company strategic alliances are simple market entry, distributed risk, shared knowledge and expertise, and synergy and competitive advantage. Proper alliances can alleviate market accessibility because they allow businesses to overcome obstacles such as entrenched competition and hostile federal legislation and/or reduce the cost of entry. Tactical alliances can also allow firms to lessen or control exposure to risk. Companies can gain knowledge and experience via tactical alliances, as well as synergy and competitive advantages. In theory, proper alliances should help companies to accomplish more and be competitive better than if they acted independently.
Q4: What exactly are the four common types of practical alliances? Briefly describe each.
Suggested Answer: The four common types of practical alliances are production alliances, marketing alliances, financial alliances, and R&D alliances. Creation alliances involve cooperation in product developing and may involve a shared or common service. Marketing alliances typically require a situation whereby one organization with a occurrence in a specific market assists a new firm in stepping into that market. Financial alliances are being used by firms to lessen the financial dangers associated with a task. Finally, R&D alliances involve collaboration to develop services or services and help members stay abreast of the rapid scientific change that happens to be affecting high-technology companies.
Q5: What are the potential pitfalls of strategic alliances?
Suggested Answer: The pitfalls of tactical alliances include conflict among companions (one of the primary causes of failing), usage of information (organizations may prefer to keep certain information magic formula), distribution of cash flow (gains must be shared among companions), potential lack of autonomy (control must be distributed among companions), and changing circumstances (as circumstances change, the explanation behind the formation of an alliance may no more are present).
Tutorial 13 (Topic 12)
Case Study: A Call for Improvement (Textbook, pg: 506)
The closing circumstance describes the cellular phone market and marketing strategies utilized by companies in growing countries. The truth talks about Millicom International Cellular, Nokia, and Ericsson, and referrals procedures in India, China, and Bangladesh.
Changes in communications technology and the cellphone experienced a dramatic impact on business and economic improvement throughout the expanding world.
While the marketplace for mobile phones has leveled off in markets like Western European countries and the United States, it's been booming in rising markets such as India, China, and Bangladesh.
As companies enter these new markets, a decision needs to be made regarding the marketing blend strategies. They need to opt to what extent they have to standardize or customize (adapt) their product, price, campaign, and syndication strategies when marketing internationally.
The case identified provides background and types of the marketing strategies utilized by Millicom International Cellular in conducting business in these rising markets.
Q1: Identify and express the tasks of product insurance plan, pricing, campaign, and circulation in the cell phone market in developed countries.
Suggested Answer: All Ps of the marketing combine are likely involved in marketing mobile phones in the developed countries. Organizations develop the merchandise, price, promotion, and distribution approaches for the market. With reference to the developed world, perhaps a greater emphasis would be put on market segmentation, which involves identifying communities within groups. The firms would make an effort to identify groups of customers within an over-all market who've different desires and needs, and then identify how best to satisfy the needs of these segments.
Q2: Identify and explain the tasks of product policy, pricing, promotion, and distribution in emerging market segments.
Suggested Answer: All Ps of the marketing mix play a role in these marketplaces. The merchandise is designed to meet the preferences of the local market (but the case does talk about that ordinary no-frills phones are not always the decision), prices are established low because of the low per capita income of these markets and distribution channels, including how individuals could purchase or add usage time needing to be personalized for these market segments. The case does indeed not address alternative promotion strategies; however, it would be safe to presume that they would have to be modified.
Q3: What are the relative opportunities for standardization and customization in the mobile phone industry?
Suggested Answer: Standardization would reduce marketing costs, promote efficiencies in research and development, and the company would benefit from economies of range in production functions. On the other hand, customization would account for differences in the buyer and their tendencies, echo different conditions in the way the product might be used, and promote local marketing initiatives that could lead to increased sales.
Q4: What are the roles of legal makes and cultural affects in the mobile phone industry?
Suggested Answer: Businesses in the mobile phone industry (cell phone manufacturers or service providers) would be assuming large risks if they did not realize that many legal makes will have an effect on them and if indeed they were not alert to identify them and prepared to get expert help to cope with them. This would include issues such as licensing requirements, taxation, product responsibility, price/income control, labor laws and regulations, currency exchange controls, etc.
The study of culture is also essential for any international business professionals who must operate in ethnicities different from their own. Working in various international marketplaces requires firms to work with different marketing mixes in several market segments. A changing methodology is necessary as a consequence to unique attitudes and values in several cultures.
Tutorial 14 (Matter 13)
Case Study: "You Us citizens Work Too Hard"
The closing circumstance examines the dissimilarities in work ethic between a German section store worker and an American division store employee.
Andreas Drauschke and Angie Clark keep positions at similar levels in shops, and get similar pay. However, Drauschke, who works in Germany, works way fewer hours than Clark, who works in the U. S.
In fact, Drauschke works just 37 time a week and receives six weeks' getaway every year, while Clark works at least 44 time a week and takes off only weekly at the same time. Clark records that Germans see leisure time as being more important than work time.
The difference between your German work style and the American work style extends into other areas. For instance, turnover at the German store is all but nonexistent, while at the North american store it is 40 percent yearly. Furthermore, German employees acquire considerable training, while personnel at the North american store receive little instruction.
Many employees at the American store also have another job; however, Drauschke values his free time, and works no more than essential. His point of view is distributed by other Germans, who fiercely protested the recent mandate that shops would stay open up one evening each week. Germany also prohibits working second careers during getaway time.
Q1: How can HRM in america change from HRM in Germany?
Suggested Answer: HRM refers to the activities directed at attracting, expanding, and maintaining an efficient workforce to achieve an organization's goals. Students will probably conclude that, at least in the retailing industry, American HR professionals spend less time both in recruiting and selecting managers and planning them for his or her jobs than their German counterparts. As a result, turnover is very high in the U. S. when compared with Germany. While the case will not provide information regarding how employees in either country are evaluated, the total reimbursement deal received by Germans seems to be preferable to whatever American workers receive.
Q2: What do you observe as the basic benefits and drawbacks of every system?
Suggested Answer: Most students will most likely suggest that the extensive work that seems to go into selecting and training German workers is a definite advantage of the German system. Students taking this point of view will probably support their contention by directing to the high turnover rate in the U. S. when compared with Germany. Many students may see the restriction experienced by German workers regarding second careers to be an intrusion within an individual's private life, and for that reason view it as a drawback. Finally, most students will most likely concur that the compensation package deal received by German staff is a lot more likely to improve employee morale than the package received by American employees.
Q3: In the event that you were the very best HRM executive for an international department store chain with stores in both Germany and america, what basic issues would you need to address regarding commercial HR plans?
Suggested Answer: Female issue that could have to be tackled is the difference in payment packages between the U. S. and Germany. German employees have shorter work weeks and a lot more vacation time than their American counterparts, yet receive similar pay. Another issue that could need to be attended to is the difference in worker training and development. German department stores may spend several years preparing employees, while North american stores might spend just two or three times. Furthermore, recruiting and selection issues would have to be dealt with, not only because German employees frequently complete an apprentice program prior to becoming full-time employees, and so require very careful selection, but also because turnover is a lot higher in the U. S. than in Germany.
Q4: Will be the issues more or less severe in the retailing industry versus other companies?
Suggested Answer: Most students will most likely suggest that the problems outlined involved 3 above are probably important in every companies. One area that might be different is the issue of turnover. While turnover is high in U. S. retailing, chances are to be less of any problem in companies where workers get comprehensive training and/or participate in unions.
Q5: Under which system would you'd like to work?
Suggested Answer: Most students will most likely suggest that the German work system surpasses the American work system. Students taking this point of view will probably explain that American workers frequently seem to be stressed out face to face, , nor have sufficient time with family. Other students, however, might subject for some of the constraints of the German system, including the prohibition of second jobs during vacation time. Students taking this perspective will probably suggest that there must be no limitations to working as hard as you possibly can in order to get forward.
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