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business
introduction global business
Global Business Today 9th Edition Charles Hill - Solutions
2. H&M does not own any of the factories that produce its clothes.Instead, it relies on some 1,900 factories and 900 suppliers to create what its team designed. These factories and suppliers are mostly in Europe and Asia. How can H&M ensure that its customers receive the quality expected in the
1. Does it surprise you that the second largest clothing retailer is only selling in stores in 54 countries plus an additional 10 countries online? Why do you think it is not covering more of the world’s countries?David Beckham, Freja Beha, Beyoncé, Gisele Bündchen, Georgia May Jagger, Miranda
16-7 Describe how globalization is affecting product development.
16-6 Understand the importance of international market research.
16-5 Understand how to configure the marketing mix globally.
16-4 Explain why and how a firm’s pricing strategy might vary among countries.
16-3 Identify why and how advertising and promotional strategies might vary among countries.
16-2 Recognize why and how a firm’s distribution strategy might vary among countries.
16-1 Explain why it might make sense to vary the attributes of a product from country to country.
15-6 Describe what is required to efficiently manage a global supply chain.
15-5 Understand the functions of logistics and purchasing (sourcing) within global supply chains.
15-4 Identify the factors that influence a firm’s decision of whether to source supplies from within the company or from foreign suppliers.
15-3 Recognize how the role of foreign subsidiaries in production can be enhanced over time as they accumulate knowledge.
15-2 Explain how country differences, production technology, and production factors all affect the choice of where to locate production activities.
15-1 Explain why global production and supply chain management decisions are of central importance to many global companies.
5. How might a company make strategic use of countertrade schemes as a marketing weapon to generate export revenues? What are the risks associated with pursuing such a strategy?
4. How do you explain the use of countertrade?Under what scenarios might its use increase further by 2020? Under what scenarios might its use decline?
3. An alternative to using a letter of credit is export credit insurance. What are the advantages and disadvantages of using export credit insurance rather than a letter of credit for exporting (a) a luxury yacht from California to Canada and (b) machine tools from New York to Ukraine?
2. You are the assistant to the CEO of a small textile firm that manufactures quality, premium-priced, stylish clothing. The CEO has decided to see what the opportunities are for exporting and has asked you for advice as to the steps the company should take. What advice would you give the CEO?
1. A firm based in Washington State wants to export a shipload of finished lumber to the Philippines. The would-be importer cannot get sufficient credit from domestic sources to pay for the shipment but insists that the finished lumber can quickly be resold in the Philippines for a profit. Outline
2. You work in the sales department of a company that manufactures and sells medical implants. A Brazilian company contacted your department and expressed interest in purchasing a large quantity of your products. The Brazilian company requested an FOB price quote. One of your colleagues mentioned
1. One way that exporters analyze conditions in emerging markets is through the use of macroeconomic indicators. The Market Potential Index (MPI) is a yearly study conducted by the Michigan State University Center for International Business Education and Research (MSU-CIBER) to compare the market
4. How important has government assistance been to MD International?Do you think helping firms such as MD International represents a good use of taxpayer money?Al Merritt founded MD International in 1987. A former salesman for a medical equipment company, Merritt saw an opportunity to act as an
3. What would it take for MD International to start exporting to other regions, such as Asia or Europe? Given this, would you advise Al Merritt to continue his regional focus going forward or to add other regions?Al Merritt founded MD International in 1987. A former salesman for a medical equipment
2. Why did MD International focus on Latin America? What are the benefits of this regional approach? What are the potential drawbacks?Al Merritt founded MD International in 1987. A former salesman for a medical equipment company, Merritt saw an opportunity to act as an export intermediary for
1. How does an intermediary such as MD International create value for the manufacturers that use it to sell medical equipment in foreign markets? Why do they want to use MD International rather than export directly themselves?Al Merritt founded MD International in 1987. A former salesman for a
15-6 Describe what is required to efficiently manage a global supply chain.
15-5 Understand the functions of logistics and purchasing (sourcing) within global supply chains.
15-4 Identify the factors that influence a firm’s decision of whether to source supplies from within the company or from foreign suppliers.
15-3 Recognize how the role of foreign subsidiaries in production can be enhanced over time as they accumulate knowledge.
15-2 Explain how country differences, production technology, and production factors all affect the choice of where to locate production activities.
15-1 Explain why global production and supply chain management decisions are of central importance to many global companies.
• Enter into an alliance with a large European pharmaceutical firm. The products would be manufactured in Europe by the 50/50 joint venture and marketed by the European firm.
• Manufacture the products at home and set up a wholly owned subsidiary in Europe to handle marketing.
• Manufacture the products at home and let foreign sales agents handle marketing.
4. A small Canadian firm that has developed valuable new medical products using its unique biotechnology knowhow is trying to decide how best to serve the European Union market. Its choices are given on the next page.The cost of investment in manufacturing facilities will be a major one for the
3. Discuss how the need for control over foreign operations varies with firms’ strategies and core competencies. What are the implications for the choice of entry mode?
2. Licensing proprietary technology to foreign competitors is the best way to give up a firm’s competitive advantage. Discuss.
1. Review the Management Focus on Tesco. Then answer the following questions:a. Why did Tesco’s initial international expansion strategy focus on developing nations?b. How does Tesco create value in its international operations?c. In Asia, Tesco has a history of entering into jointventure
2. The U.S. Commercial Service prepares reports known as the “Country Commercial Guide” for countries of interest to U.S. investors. Utilize the Country Commercial Guide for Russia to gather information on this country’s energy and mining industry. Considering that your company has plans to
1. A vital element in a successful international market entry strategy is an appropriate fit of skills and capabilities between partners. As such, the Entrepreneur magazine annually publishes a ranking of the “Top Global Franchises.” Provide a list of the top 10 companies that pursue
5. What are the benefits to JCB of localizing significant production in India? What are the disadvantages? Do the benefits outweigh the disadvantages?JCB, the venerable British manufacturer of construction equipment, has long been a relatively small player in a global market that is dominated by
4. What were the risks associated with the joint venture strategy? How did JCB deal with these risks?JCB, the venerable British manufacturer of construction equipment, has long been a relatively small player in a global market that is dominated by the likes of Caterpillar and Komatsu, but there is
3. In India, JCB decided to enter via a joint venture. What was the articulated rational for this? In what other ways might the joint venture strategy have benefited JCB?JCB, the venerable British manufacturer of construction equipment, has long been a relatively small player in a global market
2. Historically, JCB entered foreign markets through exports. Why do you think JCB generally favored exports?JCB, the venerable British manufacturer of construction equipment, has long been a relatively small player in a global market that is dominated by the likes of Caterpillar and Komatsu, but
1. Why do you think that India was an attractive market for JCB?JCB, the venerable British manufacturer of construction equipment, has long been a relatively small player in a global market that is dominated by the likes of Caterpillar and Komatsu, but there is one exception to this:India. While
13-4 Recognize the pros and cons of acquisitions versus greenfield ventures as an entry strategy.
13-3 Identify the factors that influence a firm’s choice of entry mode.
13-2 Compare and contrast the different modes that firms use to enter foreign markets.
13-1 Explain the three basic decisions that firms contemplating foreign expansion must make: which markets to enter, when to enter those markets, and on what scale.
5. What do you see as the main organizational problems that are likely to be associated with implementation of a transnational strategy?
4. Reread the Management Focus on Procter & Gamble and then answer the following questions:a. What strategy was Procter & Gamble pursuing when it first entered foreign markets in the period up until the 1980s?b. Why do you think this strategy became less viable in the 1990s?c. What strategy does
3. In what kind of industries does a localization strategy make sense? When does a global standardization strategy make most sense?
2. Plot the position of the following firms on Figure 12.8:Procter & Gamble, IBM, Apple, Coca-Cola, Dow Chemical, U.S. Steel, McDonald’s. In each case, justify your answer.
1. In a world of zero transportation costs, no trade barriers, and nontrivial differences between nations with regard to factor conditions, firms must expand internationally if they are to survive. Discuss.
2. The top management of your company, a manufacturer and marketer of smartphones, has decided to pursue international expansion opportunities in eastern Europe. To ensure success, management’s goal is to enter into countries with a high level of global connectedness. Identify the top three
1. Several classifications and rankings of the world’s largest companies are prepared by a variety of sources.Find one such composite ranking system and identify the criteria that are used to rank the top global companies.Extract the list of the top 20 ranked companies, paying particular
3. Does the One Ford initiative imply that Ford will now ignore national and regional differences in demand?When Ford CEO Alan Mulally arrived at the company in 2006 after a long career at Boeing, he was shocked to learn that the company produced one Ford Focus for Europe and a totally different
2. What strategy is Mulally trying to get Ford to pursue with his One Ford initiative? What are the benefits of this strategy? Can you see any drawbacks?When Ford CEO Alan Mulally arrived at the company in 2006 after a long career at Boeing, he was shocked to learn that the company produced one
1. How would you characterize the strategy for competing internationally that Ford was pursuing prior to the arrival of Alan Mulally in 2006?What were the benefits of this strategy? What were the costs? Why was Ford pursuing this strategy?When Ford CEO Alan Mulally arrived at the company in 2006
13-4 Recognize the pros and cons of acquisitions versus greenfield ventures as an entry strategy.
13-3 Identify the factors that influence a firm’s choice of entry mode.
13-2 Compare and contrast the different modes that firms use to enter foreign markets.
13-1 Explain the three basic decisions that firms contemplating foreign expansion must make: which markets to enter, when to enter those markets, and on what scale.
5. Imagine that Canada, the United States, and Mexico decide to adopt a fixed exchange rate system. What would be the likely consequences of such a system for(a) international businesses and (b) the flow of trade and investment among the three countries?6. Reread the Country Focus on the U.S.
4. Debate the relative merits of fixed and floating exchange rate regimes. From the perspective of an international business, what are the most important criteria in a choice between the systems? Which system is the more desirable for an international business?
3. Do you think the standard IMF policy prescriptions of tight monetary policy and reduced government spending are always appropriate for developing nations experiencing a currency crisis? How might the IMF change its approach? What would the implications be for international businesses?
2. What opportunities might current IMF lending policies to developing nations create for international businesses? What threats might they create?
1. Why did the gold standard collapse? Is there a case for returning to some type of gold standard? What is it?
2. An important element to understanding the international monetary system is keeping updated on current growth trends worldwide. A German colleague told you yesterday that Deutsche Bank Research provides an effective way to stay informed on important topics in international finance from a European
1. The Global Financial Stability Report is a semiannual report published by the International Capital Markets division of the International Monetary Fund (IMF).The report includes an assessment of the risks facing the global financial markets. Locate and download the latest report to get an
3. Now that Malawi’s currency has been devalued, what do you think the economic consequences will be? Is this good for the economy?When the former World Bank economist Bingu wa Mutharika became president of the East African nation of Malawi in 2004, it seemed to be the beginning of a new age for
2. Why did Mutharika resist IMF calls for currency devaluation? If he had lived and remained in power, what do you think would have happened to the economy of Malawi assuming that he did not change his position?When the former World Bank economist Bingu wa Mutharika became president of the East
1. What were the causes of Malawi’s currency troubles?When the former World Bank economist Bingu wa Mutharika became president of the East African nation of Malawi in 2004, it seemed to be the beginning of a new age for one of the world’s poorest countries. In landlocked Malawi, most of the
5. You are the CFO of a U.S. firm whose wholly owned subsidiary in Mexico manufactures component parts for your U.S. assembly operations. The subsidiary has been financed by bank borrowings in the United States. One of your analysts told you that the Mexican peso is expected to depreciate by 30
4. You manufacture wine goblets. In mid-June, you receive an order for 10,000 goblets from Japan.Payment of ¥400,000 is due in mid-December.You expect the yen to rise from its present rate of$1 5 ¥130 to $1 5 ¥100 by December. You can borrow yen at 6 percent a year. What should you do?
3. Reread the Management Focus on Volkswagen; then answer the following questions:a. Why do you think management at Volkswagen decided to hedge only 30 percent of the automaker’s foreign currency exposure in 2003? What would have happened if it had hedged 70 percent of exposure?b. Why do you
2. Two countries, Great Britain and the United States, produce just one good: beef. Suppose the price of beef in the United States is $2.80 per pound and in Britain it is £3.70 per pound.a. According to PPP theory, what should the dollar/pound spot exchange rate be?b. Suppose the price of beef is
1. The interest rate on South Korean government securities with one-year maturity is 4 percent, and the expected inflation rate for the coming year is 2 percent. The interest rate on U.S. government securities with one-year maturity is 7 percent, and the expected rate of inflation is 5 percent. The
2. Sometimes, analysts use the price of specific products in different locations to compare currency valuation and purchasing power. For example, the Big Mac Index compares the purchasing-power parity of many countries based on the price of a Big Mac. Locate the latest edition of this index that is
1. One of your company’s essential suppliers is located in Japan. Your company needs to make a 1 million Japanese yen payment in six months. Considering that your company primarily operates in U.S. dollars, you are assigned the task of deciding on a strategy to minimize your transaction exposure.
6. What does this case teach you about the way foreign exchange markets work?During the first half of the 2000s, the Japanese yen was relatively weak against the U.S. dollar. This was a boon for Japan’s export-led economy.On January 1, 2008, it took 122 yen to buy one U.S. dollar. For the next
5. Who in Japan benefits from devaluation of the yen? Who does this hurt in Japan?During the first half of the 2000s, the Japanese yen was relatively weak against the U.S. dollar. This was a boon for Japan’s export-led economy.On January 1, 2008, it took 122 yen to buy one U.S. dollar. For the
4. Do you think the Japanese government is engaging in currency manipulation? If so, what should other nations do about this?During the first half of the 2000s, the Japanese yen was relatively weak against the U.S. dollar. This was a boon for Japan’s export-led economy.On January 1, 2008, it took
3. Why did the policy of the Abe government to purchase government securities help to drive down the value of the yen? What was the mechanism at work here?During the first half of the 2000s, the Japanese yen was relatively weak against the U.S. dollar. This was a boon for Japan’s export-led
2. What drove an increase in the value of the yen between 2008 and 2011?During the first half of the 2000s, the Japanese yen was relatively weak against the U.S. dollar. This was a boon for Japan’s export-led economy.On January 1, 2008, it took 122 yen to buy one U.S. dollar. For the next four
1. Why did the yen carry trade work during the early 2000s? Why did it stop working after 2008?During the first half of the 2000s, the Japanese yen was relatively weak against the U.S. dollar. This was a boon for Japan’s export-led economy.On January 1, 2008, it took 122 yen to buy one U.S.
11-6 Explain the implications of the global monetary system for currency management and business strategy.
11-5 Understand the debate surrounding the role of the IMF in the management of financial crises.
11-4 Identify exchange rate regimes used in the world today and why countries adopt different exchange rate regimes.
11-3 Compare and contrast the differences between a fixed and a floating exchange rate system.
11-2 Explain the role played by the World Bank and the IMF in the international monetary system.
11-1 Describe the historical development of the modern global monetary system.
9. Would establishment of a Free Trade Area of the Americas (FTAA) be good for the two most advanced economies in the hemisphere, the United States and Canada? How might the establishment of the FTAA affect the strategy of North American firms?
8. After a promising start, Mercosur, the major Latin American trade agreement, has faltered and made little progress since 2000. What problems are hurting Mercosur? What can be done to solve these problems?
7. How should a firm with self-sufficient production facilities in several ASEAN countries respond to the creation of a single market? What are the constraints on its ability to respond in a manner that minimizes production costs?
6. How should a U.S. firm that currently exports only to ASEAN countries respond to the creation of a single market in this regional grouping?
5. What were the causes of the 2010–2012 sovereign debt crisis in the EU? What does this crisis tell us about the weaknesses of the euro? Do you think the euro will survive the sovereign debt crisis?
4. Do you think it is correct for the European Commission to restrict mergers between American companies that do business in Europe? (For example, the European Commission vetoed the proposed merger between WorldCom and Sprint, both U.S.companies, and it carefully reviewed the merger between AOL and
3. What in general was the effect of the creation of a single market and a single currency within the EU on competition within the EU? Why?
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