1. Before investing in a foreign location, a firm must consider three things: the costs, benefits, and...

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1. Before investing in a foreign location, a firm must consider three things: the costs, benefits, and risks (political, economic, or legal) associated with entering into a business venture there.

Imagine you are the manager of a foreign company considering an investment in your home town. What would be some of the expected costs, benefits, or risks of starting a new business where you live? How high would you rate your location on its overall attractiveness to investors?

Note that you need to validate all definitions, and matters not known as facts, by citing from credible sources.

Understanding the culture of a country or region can provide multinational enterprises with a valuable competitive advantage and help them to avoid missteps that could negatively affect their chances at success. Imagine your school is a country of its own. How would you describe its culture to a business considering investing there? What are some values or norms that would be important for an outsider to understand? Which of the six determinants of culture play the most significant role in shaping your school culture?

3. The job market of the 21st century is often referred to as the “gig economy.” Employers such as Uber, Amazon, Airbnb, and others are increasingly relying on short-term freelance employees who work on a piecemeal basis.Proponents of the gig economy suggest it offers workers the freedom to work where and when they want, while employers can reduce labor costs by avoiding health insurance and payroll taxes. Others suggest that businesses are simply taking advantage of a tough economy to cut benefits and offer lower wages to people desperate for work.

If you were the head of a large corporation, would you consider it ethical to profit from the gig economy?

4. Foreign direct investment (FDI) in a developing economy, such as Russia or the countries of sub-Saharan Africa, can be extremely profitable for multinational enterprises. It can also result in substantial losses if economic conditions in the host country deteriorate.

If you were the head of a major manufacturer of household goods seeking entry into the market of a country experiencing strong economic growth due to its oil and gas exports, which entry strategy would you pursue: exporting, licensing, or foreign direct investment? If FDI, would you seek to acquire an existing firm, or build entirely new facilities (a Greenfield investment)?

5. The establishment of the North American Free Trade Agreement (NAFTA) in 1994 was an important, if controversial, moment in the economic histories of Canada, the United States, and Mexico.As the head of a major industrial machinery manufacturer in the United States, would you have welcomed economic integration with Canada and Mexico? What advantages or disadvantages would you expect to experience? How might your business operations be different today if NAFTA had not been passed?

6. Imagine that you are the manager of a foreign subsidiary of a major U.S. apparel company. Consumer tastes in your location require a high degree of local responsiveness, while declining sales in the United States require significant cost reductions.Which of the four main strategic postures (global standardization, localization, transnational, or international) would you adopt to address these pressures? What advantages or disadvantages would that strategy provide?

7. Imagine that you are the owner of a promising, privately owned U.S.-based tech startup with projected sales of $1 billion over the next 10 years. In order to expand your company’s infrastructure, you wish to borrow $5 million, but interest rates in the United States are unfavorable to borrowers. To lower your cost of capital, you turn to the global capital market.Given your current need for capital and your projected future earnings, do you source your funds from the Eurocurrency market, the global bond market, or the global equity market? Explain your reasoning.

8. The Jollibee Foods Corporation was able to withstand competition from McDonald’s in the Philippines and later found success in an already-saturated U.S. fast food market by localizing its menu to Filipino tastes and entering foreign markets with a large number of Filipino expatriates.

What are the risks and potential rewards of such a strategy? If you were the head of a successful apparel company based in a developing nation, would you choose a similar strategy to enter into the U.S. market, or would you pursue a different option, such as licensing or forming a joint venture with an established U.S. brand?