Please answer the following questions as completely as possible. Some questions ask you to answer several separate questions. If you do not answer each question fully, you will not get full credit for the answer. Do not use more than one paragraph to answer each question. You should be able to answer these questions with short, concise answers. 1. a (24 points) You are the manager of a Small to Medium Enterprise that is interested in trading internationally. You have been asked in class to think of a company (producing a good or service) that you can use as an example. Using the following space, perform a very brief market entry strategy for this company. Be sure to identify the four basic elements of this type of analysis while performing this strategy. Make sure your answer is creative (you can use a real company or one you made up). 2. (12 points) Strategic Alliances You are a small company based in Slovakia that makes guitar pickups (the part that makes an electric guitar change its sound). You have developed a technology that makes your guitars the best sounding guitars ever heard. Gibson Guitar Company (based in the United States) wants to purchase your technology. Without your technology, you have nothing to distinguish you from other companies. You understand that Gibson has the largest and most effective marketing of any guitar company, and they have a global distribution network. Keep in mind, you are very small (only 4 employees) with limited financial resources ! a. Briefly explain what kind of strategy ("how" market entry strategy) you would undertake if you are the small Slovakian company. b. Briefly explain what kind of strategy ("how" market entry strategy) you would undertake if you are Gibson Guitar Company. 3. List 3 traits that you could use to describe an SME. After you have listed these traits, explain what happens to most of these traits when an SME enters a foreign market or trades internationally. (8 points) 4. Based on our reading of chapter 10, what is the biggest challenge for any firm that wants to trade internationally (both MNEs and SMEs)? (6 points). In other words: what is the major question that we have discussed regarding Chapter 10? 5. (14 points) Real Options - Managing Risk in Strategic Alliances O You are a Brazilian bookstore that has floundered in the past few years. Although people are purchasing more books, you don't have the expertise needed to deal with changing market trends. You have identified a South African company that is doing very well creating "kindle cafes" where people browse for downloadable content at their store and enjoy a nice, relaxing reading atmosphere. You would like to partner with this company because they have been very successful in other countries. As a result, you have decided to contract with them to create a new type of bookstore, one that is half "vintage bookstore" and the other part is similar to the South African "kindle cafes." Both of you invest a total of $10 M Real (The Real is Brazil's national currency) (5M each) to create the first chain of stores in Rio and Manaus. You are less ambitious than your South African Partners. They have already changed their plans three times, because the Ipad and other new technologies are changing the downloadable book market dramatically. They think there will be a strong outcome 30% net profits. You predict more modest growth, at 10% net profits. Thus, you have asked your partners for an assured 5% net profits (500,000 Real). During negotiations, you create a real option, where they offered you a 10% option fee (1M Real) to break your agreement in favor of 50/50 profit-sharing. All of these negotiations were based on the total cost of the project (10M Real). a. Calculate the net profits for the Brazilian company and the South African company if the final profits result in 50% net profits (5M Real). Calculate the net profits for both companies if you achieve 10% net profit (1M Real). b. 6. (6 points) One component of a market entry strategy is "how" you will enter the market. Please provide me one example of a low-commitment strategy and one example of a high-commitment strategy 7. (6 points) Describe ONE of the following organizational structures: a) a geographic area structure OR b) a global matrix structure. If you prefer, you may use the following space (or anywhere you can fit a small figure) to create an elementary graph of each structure (A small visual example like those used in the text would be acceptable). 8. (6 points) What kind of reason would a company use a global standardization/global product division strategy/structure? 9. Strategic Alliances Having a great strategy isn't always enough to successfully enter a new market. Like, INCAT, sometimes circumstances (Hurricane Katrina and the Iraq War) gave INCAT a reason to earn their credibility in a more direct way. Without using full sentences, give me an example where a company overcame their foreignness because of a set of external circumstances. 10. Liability of Foreignness (6 points total) A. Give one example of how a business could be "foreignized?" B. Give an example outside of business where we foreignize a person, group of people, or organization? 11. Market Entry Strategy (6 total points) Pretend you are a company that is from a country that has a terrible reputation for making quality goods. You don't have a lot of money to invest in FDI but you want to enter a market that has very sensitive customers. How would you overcome your liability of foreignness with a relatively LOW to MID-level of commitment? Please try to use some of the strategies ("how" market entry) that we used in class