1. (TCO 8) What are the three staffing policies available to a multinational corporation? (Points : 10)
2. (TCO 8) What are the three aspect of strategic pricing? (Points : 10)
3. (TCO 3) When McDonald’s initially entered China, it was confident that its success in other parts of the world would facilitate its success in China, but they quickly found out that the relationships and connections implied by guanxi are an essential to business success in China. McDonald’s lost an attractive store location near Tiananmen Square to a Hong Kong developer who, thanks to relationships and connections developed over the years, was able to persuade city officials to overlook the lease McDonald’s held for the property.
Explain the concept of guanxi. Why is it so important to businesses operating in China? How did McDonald’s lack of guanxi raise its costs of doing business in China? (Points : 20)
4. (TCO 3) The Metai factory in China supplies computer parts directly to U.S. computer maker Dell and indirectly to Hewlett-Packard and Lenovo. Workers at the factory work long hours doing monotonous tasks and have just two days per month off. Wages are very low, and employees are forbidden to converse, listen to music, or even take bathroom breaks while on the job. When alerted to the conditions at the factory, all three companies expressed dismay and promised prompt investigations and appropriate action.
Should Dell, as a direct receiver of goods made in the Metai factory, be held responsible for its working conditions? Does your answer differ when considering Lenovo or Hewlett-Packard? Why or why not? (Points : 20)
5. (TCO 3) Exports are largely responsible for China’s recent rapid economic growth. The country, capitalizing on its cheap labor force, has focused on converting raw materials into products that are exported to developed countries such as the United States. In 2008, China’s trade surplus was a record $280 billion, and its holdings of foreign exchange reserves were over $1.95 trillion. Some critics have suggested that China is following a neomercantilist policy.
Are the claims that China is following a neomercantilist policy valid? Why or why not? (Points : 20)
6. (TCO 4) For years, Japan has been relatively closed to significant foreign direct investment, but more recently the government has changed its policy and actually now encourages inward investment. Wal-Mart, taking advantage of this shift in policy, acquired a large Japanese retailer in 2002. Wal-Mart’s initial venture into Japan has been challenging and has forced the company to change its approach to better compete with local retailers and meet the needs of Japanese consumers.
Why did Japan change its position on inward foreign direct investment? How will Wal-Mart’s investment benefit Japan? (Points : 20)
1. (TCO 5) Under the North American Free Trade Agreement (NAFTA), Mexican truckers were to have been allowed to drive their trucks directly into the United States and avoid the costly and time-consuming border unloading and loading that took place prior to the agreement. However, fearing job losses in the industry, the U.S. Teamsters Union rigorously opposed the legislation. Although the group ultimately lost its fight, the United States still did not give Mexican truckers freedom to deliver their goods, prompting Mexico to institute retaliatory measures affecting $2.4 billion of goods exported from the United States.
Why did the United States respond to the concerns of the Teamsters? Why are those affected by Mexico’s retaliatory tariffs not lobbying congress for relief? Should the United States protect the Teamsters at the expense of agricultural exporters in California and Washington? (Points : 20)
2. (TCO 6) In the 1980s, Caterpillar was negatively affected by a strong dollar and lost significant market share to Japanese competitor Komatsu. The situation prompted Caterpillar to revise its global strategy and by the 2000s, the company was in a much better position to deal with volatile currency values. More recently, a strong dollar has actually helped boost Caterpillar’s bottom line.
In the 1980s, a stronger dollar hurt Caterpillar’s competitive position, but in 2008 a stronger dollar did not seem to have the same effect. What had changed? (Points : 20)
3. (TCO 7) In 2008, oil prices reached new highs as a result of higher than expected demand, tight supplies, and perceived geopolitical risks. Because oil is priced in dollars, oil producers have seen their dollar reserves increase significantly. Now, speculation abounds as to what will happen to the petrodollars. Some believe that the dollars will go toward public infrastructure projects, others think that it is more likely that investments will be made in dollar denominated assets like U.S. bonds, stocks, and real estate, or in nondollar denominated assets such as European or Japanese bonds and stocks.
With oil prices at record highs, there is significant speculation as to what oil producing states will do with the dollars they are earning. Discuss how a decision to invest in non-dollar denominated assets could affect the value of the U.S. dollar. (Points : 30)
4. (TCO 8) Vellus Products is a small company that produces personal care products for dogs. Vellus Products initially began exporting when a Taiwanese business placed an order for its dog shampoo. Since then, Vellus Products has expanded its export business and today, international sales account for about half its total sales. Vellus Products now sells in 28 countries around the world.
Why did Vellus Products choose Taiwan for its first export sales? How important do you think the assistance provided by the Department of Commerce has been for Vellus Products’ future export sales? (Points : 30)
5. (TCO 8) By 2012, India is expected to export half a million vehicles a year. South Korea’s Hyundai is leading the charge, exporting over one third of its Indian production. Suzuki and Nissan have both entered the Indian market more recently. Both companies see the Indian market as an important component in their future production and marketing strategies.
Why did Hyundai and other global automakers choose India as a production location? What makes India attractive to auto producers? (Points : 30)
6. (TCO 8) Microsoft is meeting the challenges of expanding into the potentially lucrative Indian market, a market where currently most people cannot afford a computer nor the Microsoft programs to run it. Microsoft has changed its highly standardized approach to markets to develop products specifically designed to meet the needs of the Indian market. In addition, the company has established local R & D operations that it hopes will generate new products for the market.
Why does Microsoft’s traditional strategy of one-size-fits-all not work well in emerging markets such as India? What is different about these markets? How do customers differ both in their characteristics and in the way they use technology? (Points : 30)