1.

It's a belief in some political system or tendency such as capitalism, communism,

socialism, conservative, liberal, right or left wing.
International company managers know they cannot own factors of production in
communist countries, but they may be able to do substantial business with those
countries. They know they may not be able to own factors of production in socialist
countries because among so-called socialist countries or governments, there is
great latitude in application of socialist doctrine. In so-called capitalist countries,
company managers know they must study carefully the laws and regulations
regulating business.
2. What are the advantages of government-owned companies when competing with
private owned companies?
Government-owned companies can cut prices unfairly because they do not have to
make profit, (2) they get cheaper financing, (3) they get government contracts, (4)
they get export assistance, (5) they can hold down wages with government
assistance, (6) direct subsidies: payments by the government to those companies.
3. Why does business fear sudden changes in government policies?
Governmental policies often shape the way in which businesses obtain resources,
manufacture goods, and sell products or services to consumers. Because of this,
changes in governmental policies can have far-reaching impacts upon the activities
and profits of business organizations.
Businesses that did not meet the requirements of the new regulation after the
published transition date could be fined or otherwise punished for not following the
law set out by the regulation. In the same way, changes in governmental policies
can impact the methods used to obtain natural resources, can radically change the
public's perception of the safety of products offered for sale by businesses, and can
force businesses to alter or abandon practices that become economically prohibitive
due to changed policies.
4. You are an employee of an U.S. firm that produces personal computers in
Thailand and then exports them to the U.S. and other countries for sale. The
personal computers were originally produced in Thailand to take advantage of
relatively low labor costs and a skilled workforce. Other possible locations
considered at that time were Malaysia and Hong Kong. The U.S. government decides
to impose punitive 100 percent ad valorem tariffs on imports of computers from
Thailand to punish the country for administrative trade barriers that restrict U.S.
exports to Thailand. How should your firm respond? What does this tell you about
the use of targeted trade barriers?
As long as the manufacturing requirements haven't changed significantly, looking at
Malaysia or Hong Kong again for production would appear obvious. By the U.S.
government introducing a specific ad valorem tariff on Thai computer imports, it
would be easy to get around these by looking at other locations. Hence such
targeted trade barriers can often be easily circumvented without having to locate
production facilities in an expensive country like the U.S.
5. You are the CEO of a company that has to choose between making a $100 million
investment in Russia or the Czech Republic. Both investments promise the same
long-run return, so your choice is driven by risk considerations. Assess the various
risks of doing business in each of these nations. Which investment would you favor
and why?
When assessing the risks of investment, one should consider the political,
economic, and legal risks of doing business in both Russia and the Czech Republic.
The political risk in Russia is still high but it is undergoing continual governmental
changes, and courting foreign investment. Relatively, the Czech Republic is more
stable, but it may have less potential. On the economic front, both countries have
inflation and high economic turmoil as unproductive factories are still struggling.
From the legal perspective, the Czech Republic is making clear progress, while the
situation in Russia is unclear. Thus at this time, the risk in Russia would clearly be
higher.
1. Why is organizational structure an important issue for international companies?
Organizational structure is important for all firms of any significant size. It is
important to set up lines of authority and communication so that jobs can be done
as efficiently as possible. However, one can argue that this is even more important
in international (multi-national) companies.
The reason for this is that these companies face more complex organizational
problems. They will have operations in many different countries that may need to
coordinate with one another. Their employees in the various countries may or may
not be able to work well together. The firm must decide whether to add layers of
bureaucracy, for example, to help coordinate the activities of related sections of the
company that are in different countries. Because international companies are larger
and face more complex organizational issues, the organizational structure is
particularly important for them.
2. What are the advantages and disadvantages of a virtual corporation?
Advantages: It permits greater flexibility than is associated with more typical
corporate structures, and rather than building competence from the ground up and
incurring high start-up costs that could limit future production decisions. Virtual
corporations form a network of dynamic relationships that allow them to take
advantage of the competencies of the other organizations and respond rapidly to
changing circumstances.
Disadvantages: the potential to reduce management's control over the
corporation's activities. From the standpoint of employees, it may replace the
security of long-term employment and th promise of ever-increasing salaries with
the insecurity of the global market.
3. What are the advantages and disadvantages of international division?
Perhaps the simplest start for many organizations is to adopt what is known as an
international division. With the addition of an international division, the domestic
organization may remain relatively unchanged while an additional side structure is
added. This additional structure (in collaboration with the domestic structure) takes
on the responsibility for virtually all international business. This structure assumes
that there are skills associated with doing business overseas that will transcend the
typical business lines. Market assessments, compliance with export/import
regulations, arranging shipping, identification of local representatives,
establishment of dedicated sales offices, production facilities, etc. are all examples
of tasks often assigned to the international division.
Advantages: The international division is effective in consolidating international
activity under one area of responsibility. Such a division develops international
expertise that can serve all areas of the organization. This eliminates the need for
every part of the organization to master the ins and outs of doing business overseas
(this can sometimes be quite complex).
Disadvantages: On the other hand, the existence of an international division
encourages the organization to approach their business in an artificially
dichotomous manner. Part of the business organization focuses primarily on the
home country market, while the international division serves "the rest of the world".
In most organizations such a structure lends itself to a continuing preoccupation
with the home country market.
5. The three levels of control in international business are strategic, organizational,
operational.
Strategic control allows a firm to monitor both the formulation and implementation
of the strategy. Organizational control involves adopting the appropriate
organizational design to fit the internal and external environment. Finally,
operational controls relate to the operating processes and systems within a
company.
6. The four basic steps in establishing an international control system
are setting the control standards for performance, measuring actual performance,
comparing performance against standards, and responding to deviations. These
steps are applicable to any area and any level of control.
1. Why do companies become involved in exporting instead of staying in the home
country? Give examples for each reasons.
- There are number of reasons, all of which are linked to the business goal to
increase profits and sales or to protect them from being eroded. Most common
reasons companies export:
- to serve markets where the firm has no or limited product facilities. Eg: DuPont
supplies some of its foreign markets by exporting because no firm can afford to
manufacture a complete product line in every country where its goods are sold.
- to satisfy a host government requirement that the local subsidiary have exports.
Eg: Ford located a radio plant in Brazil that exports to Ford's European assembly
plants.
- to remain price competitive in the home market.
- to test foreign markets and foreign competition inexpensively. Eg: P&G began to
introduce products on a worldwide basis early in their development to avoid giving
competitors time to react in other markets.
2. Why do US firms not export?
- Because of thier preoccupation with the vast American market and reluctance to
become involved in a new, unknown, and risky operation.

3. What are the advantages and disadvantages of exporting as an entry mode?

Exporting has two distinct advantages. First, it avoids the often substantial costs of
establishing manufacturing operations in the host country. Second, exporting may
help a firm achieve experience curve and location economies. By manufacturing the
product in a centralized location and exporting it to other national markets, the firm
may realize substantial scale economies from its global sales volume. This is how
Sony came to dominate the global TV market, how Matsushita came to dominate
the VCR market, how many Japanese automakers made inroads into the U.S.
market, and how South Korean firms such as Samsung gained market share in
computer memory chips.
Exporting has a number of drawbacks. First, exporting from the firm's home base
may not be appropriate if lower-cost locations for manufacturing the product can be
found abroad. Thus, particularly for firms pursuing global or transnational
strategies, it may be preferable to manufacture where the mix of factor conditions is
most favorable from a value creation perspective and to export to the rest of the
world from that location. This is not so much an argument against exporting as an
argument against exporting from the firm's home country. Many U.S. electronics
firms have moved some of their manufacturing to the Far East because of the
availability of low-cost, highly skilled labor there. They then export from that
location to the rest of the world, including the United States.
A second drawback to exporting is that high transport costs can make exporting
uneconomical, particularly for bulk products. One way of getting around this is to
manufacture bulk products regionally. This strategy enables the firm to realize some
economies from large-scale production and at the same time to limit its transport
costs. For example, many multinational chemical firms manufacture their products
regionally, serving several countries from one facility.
Another drawback is that tariff barriers can make exporting uneconomical. Similarly,
the threat of tariff barriers by the host-country government can make it very risky. A
fourth drawback to exporting arises when a firm delegates its marketing, sales, and
service in each country where it does business to another company. This is a
common approach for manufacturing firms that are just beginning to expand
internationally. The other company may be a local agent, or it may be another
multinational with extensive international distribution operations. Local agents often
carry the products of competing firms and so have divided loyalties. In such cases,
the local agent may not do as good a job as the firm would if it managed its
marketing itself. Similar problems can occur when another multinational takes on
distribution.

4. a. N7 has purchased a large order from their manufacturer in China of three full
containers of electronics and plans to import them by vessel. They would like their
Chinese partners to arrange inland shipping to the port of Shanghai and load the
vessel. N7 will make contact with their import broker to clear the goods for import
into the U.S. at the port of Long Beach and assume the risks of the shipment once
loaded at the port of Shanghai. Once delivered they will ship the goods by truck to
their warehouse in Eastvale. What INCOTERM should be used? Explain.
a. FOB - INCOTERM 2010 - Port of Shanghai (loaded): Since the seller has more
knowledge of Chinese inland trucking companies and their ports, it is best to have
them make the inland transport arrangements. The buyer can take over the
transaction once the goods have been loaded and exported out of China since they
are skilled at importing into the U.S.

b. N7 just signed on a new, large distributor. This distributor is well versed in

exporting from the U.S. and prefers using their appointed trucking service to collect
the goods from N7's warehouse in Eastvale. They use an export agent to send the
goods from the port of New York to their location in Tel Aviv, Israel. The buyer has
agreed to pay additional costs for N7 to load the truck at N7's premises. The buyer
will be responsible both for exporting out of the U.S. and importing into Israel. What
INCOTERM should be used? Explain.
b. EXW - INCOTERM 2010 - Eastvale (Seller's warehouse): Since the seller is not
obligated to provide export docs, clear for export, or even load the incoming truck
EXW is the preferred INCOTERM to use. This alleviates N7 from all exporting
responsibilities and puts this on their customer. N7's only obligation is the make the
goods ready for collection and provide the buyer with information needed to clear
for export.

5. 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 shipment, but insists that the finished lumber can quickly be
resold in the Philippines for a profit. Outline the steps that the exporter should take
to effect the export of this shipment to the Philippines?
The steps are as follows:
The Philippine importer places an order with the American exporter, and asks the
American if he would be willing to ship under a letter of credit.
The American exporter agrees to ship under a letter of credit, and specifies relevant
information such as prices, delivery terms, and the like.
The Philippine importer applies to the Bank of Manila (or some other international
bank) for a letter of credit to be issued in favor of the American exporter for the
merchandise the importer wishes to buy.
The Bank of Manila issues a letter of credit in the Philippine importer's favor and
sends it to the American exporter's bank, the Bank of Seattle.
The Bank of Seattle advises the American exporter of the opening of a letter of
credit in his favor.
The American exporter ships the goods to the Philippine importer on a common
carrier.
The American exporter presents a 90 day time draft to the Bank of Seattle, drawn
on the Bank of Manila in accordance with the Bank of Manila's letter of credit and
accompanied by the bill of lading. The American exporter endorses the bill of lading
such that the title to the goods goes with the holder of the document - which at this
point in the transaction is the Bank of Seattle.
The Bank of Seattle presents the draft and documents to the Bank of Manila. The
Bank of Manila accepts the draft, taking possession of the documents and promising
to pay the now accepted draft in 90 days.
The Bank of Manila returns the accepted draft to the Bank of Seattle.
The Bank of Seattle tells the American exporter that they have the accepted bank
draft, which is payable in 90 days.
The exporter sells the draft to the Bank of Seattle for a discount from the face value
and receives the discounted cash value of the draft in return.
The Bank of Manila notifies the Philippine importer of the arrival of the documents.
It agrees to pay the Bank of Manila in 90 days. The Bank of Manila releases the
documents so that the Philippine importer can take possession of the shipment.
In 90 days the Bank of Manila receives the importer's payment so that it has funds
to pay the maturing draft.
In 90 days the holder of the matured acceptance, in this case the Bank of Seattle,
presents it to the Bank of Manila for payment. The Bank of Manila pays.
(If the exporter feels confident in and can completely trust the purchaser in the
Philippines, then a much simpler procedure than this could be followed.)
Chúng tôi có một lời giải được chuyên gia biên soạn cho câu hỏi này!
6. An alternative to using a letter of credit is export credit insurance. What are the
advantages and disadvantages of using export credit insurance as opposed to a
letter of credit for (a) exporting a luxury yacht from California to Canada, and (b)
exporting machine tools from New York to Ukraine?
Exporters prefer to get letters of credit from importers. However, when the importer
is in a strong bargaining position and able to play competing suppliers off against
each other, an exporter may have to forgo a letter of credit. The lack of a letter of
credit exposes the exporter to the risk that the foreign importer will default on
payment. The exporter can insure against this possibility by buying export credit
insurance. Students may suggest that in the case of the luxury yacht, should the
importer fail to make payment, the clearly defined laws of Canada would make it
easier to go after the importer than would be the case with the machine tools in the
Ukraine, and that therefore a letter of credit is less important for the yacht exporter.
On the other hand, students may note that there is probably more competition in
machine tools as compared to luxury yachts and that the exporter of machine tools
may lose the sale if the exporter insists on a letter of credit.

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?
- Companies like MD International that act as intermediaries between sellers in one
country and buyers in another provide many valuable services for their clients.
Manufacturers can expand their sales through MD International without committing
the time and other resources that would be required to develop a market for their
products in Latin America. MD International has knowledge of the market and its
regulations, can provide assistance with financing strategies, has relationships with
buyers in the region, and so on. All of these areas of expertise take time and money
to develop. By hiring MD International manufacturers can access the expertise they
need, yet still concentrate on what they do best - manufacturing.

2. Why did MD International focus on Latin America? What are the benefits of this
regional approach? What are the potential drawbacks?
- When Al Merritt founded MD International in 1987 he chose to focus on Latin
America. Merritt was familiar with the area and he wanted to take advantage of
changing government regulations in the region. Many Latin American countries
were opening their markets at the time and also expanding their health care
spending. Together, these created an ideal situation for MD International to expand.
While focusing on a single region allows MD International to be an expert in the
market place and capitalize on economies of scale and scope, it also limits the
company's ability to diversify when conditions in the local market change. MD
International found this out the hard when in 2001 when economic crises in Brazil
and Argentina and a slowdown in Mexico forced the company to make pay cuts and
lay off one third of its workforce.

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?
- While expanding into Asia or Europe would allow MD International to diversify and
avoid some of the problems associated with focusing on a single region, it would
also be costly. MD International is currently able to offer assistance to sellers as an
expert in the region and is also able to gain the economies associated with
operating in a single location. If MD international chooses to expand its services it
will need to develop the type of knowledge and connections in the new region that
it has in Latin America. Some students may suggest that the company consider
joining forces with a distributor in the new region as a way to speed up the process
and lower the cost of expansion. Other students however may wonder whether such
a move could ultimately damage MD International's reputation as an expert in Latin
America.

4. How important has government assistance been to MD International? Do you

think helping firms such as MD International represents good use of taxpayer
money?
- Many students will probably suggest that government assistance has been quite
important to MD International. The company has taken advantage of various
services including help with circumventing customs restrictions and getting
financing. Many students will probably agree that these services do ultimately
benefit tax payers because they help MD International bring together buyers and
sellers which in turn helps the export sales of U.S. manufacturers creating more jobs
for U.S. workers.
What are the differences between Supply Chain and Value Chain?-
- The integration of all the activities, persons, and business through which a product
is transferred from one place to another is known as supply chain. Value Chain
refers to a chain of activities that is indulged in adding value to the product in every
single step till it reaches the final consumer.
- The concept of Supply Chain is originated from operational management, whereas
value chain is derived from business management.
- Supply Chain activities include the transfer of material from one place to another.
On the other hand, Value Chain is primarily concerned with providing value for price
product or service.
- The order of supply chain begins with product request and ends when it reaches
the customer. Unlike value chain, which begins with the customer's request and
ends with the product.
- The major objective of the supply chain is to gain complete customer satisfaction
which is not with the case of the Value Chain.
1. What characteristics and qualifications should a company consider when
choosing managerial candidates for foreign assignments?
a. Technical competence—Corporate decision makers, expatriate managers, and
local managers concur that technical competence, usually indicated by past
domestic or foreign job performance, is the largest determinant of success in
foreign assignments.
b. Adaptiveness—Although some companies rely only on technical competence to
select expatriates, three types of adaptive characteristics are important for an
expatriate's success when entering a new culture:
- the need for self-maintenance, such as being self-confident and able to reduce
stress
- those related to the development of satisfactory relationships with host nationals,
such as flexibility and tolerance
- cognitive skills that help one to perceive correctly what is occurring with the host
society
An expatriate who lacks any of these may be unable to function effectively.
Unfortunately, companies cannot always assess these adaptability characteristics
accurately. If the expatriate cannot adapt, he or she may leave the foreign
assignment, either by choice or by company decision.
c. Local acceptance—Expatriates may encounter some acceptance problems
regardless of who they are. Local employees may feel that the best jobs go to
overpaid foreigners, especially because companies sometimes send managers
abroad to reward or find a place for them, rather than for what they can contribute
effectively. Expatriates may have to make unpopular decisions to meet global
objectives, or local management may have had experiences with expatriates who
made short-term decisions and then left before dealing with the longer-term
implications. If negative stereotypes are added to these attitudes, the expatriate
may find it very difficult to succeed.

2. Which term defines the personnel who are citizens of neither the home country
nor the host country? Why hiring them is often advantageous?
- They are third-country nationals. They may accept lower wages and benefits than
will employees from the home country, and they may come from a culture similar to
that of the host country. In addition, they may have worked for another unit of the IC
and thus be familiar with the company's policies, procedures, and people. This can
simplify the training and development requirements for such recruits.

3. What are the main challenges that face MNEs in their management of overseas
operations?
- The challenges that face MNEs in the management of their operations include:
effective global staffing; international reward management; performance
management of expatriates; training, development and knowledge transfer within
MNEs; diversity management in an international context; managing corporate social
responsibility and ethical dilemmas; managing the employment relationship; and
global talent management.

4. What factors determine the approach of an International HR department to their

management of overseas employees?
- The approach of an International HR department to their management of overseas
employees will be affected by the way an organization internationalizes, and the
structural forms the MNE may adopt, as well as its orientation. Overseas employees
will largely be managed by the overseas subsidiary's own HR department. The
approach of an International HR department will also depend on the degree of local
responsiveness and global integration the organization is seeking to achieve.

5. What risks might deter a potential expatriate from taking up an international

assignment?
- The lack of personal security in some countries, fear of robbery, or kidnapping and
terrorism are all factors which deter expatriates from taking up overseas positions in
high risk countries. Multinationals need to have disaster planning and management,
policies and processes, and to be prepared for emergency evacuation of personnel.
In the context of high-risk areas or the possibility of terrorist attack, anywhere in the
world, the International HR department has to take its responsibility seriously to
ensure the health, safety, and welfare, of its international workforce.

6. What is the difference between a global manager and a global mindset?

- The global manager is someone who has succeeded in operating in other cultural
work environments. The global manager needs a global mindset, that is a frame of
mind that values cultural diversity and enables a global manger to adapt to different
international settings. Managers develop a global mindset by incorporating
complexity in their thinking. A global mindset helps managers develop a broader
perspective on events, it helps them organize these events into broader
frameworks, and it helps them make decisions that incorporate more data and more
contradictions in decision-making. A global manager is able to manage diversity, in
order to do this; the global manager must have a global mindset. Assumption: In
order for a global manager to succeed he needs to have a global mindset. A global
mindset combines an openness to and awareness of diversity across cultures and
markets with a prosperity and ability to synthesize across this diversity. Global
managers have exceptionally open minds. They respect how different countries do
things, and they have the imagination to appreciate why they do them that way.
The difference is this: the global manager is a person who has a global mindset,
meaning a mind that is open to diversity and understands cultures.

7. Discuss two HR activities in which a MNC must engage that would not be required
in a domestic environment

.
- International Staffing (Recruitment and Selection) Multinationals need to hire
international managers to fulfill positions in its various locations. These managers
may be locals, expatriates, home-country nationals, and third country nationals. In
the domestic setting, the HR department needs to recruit and select job candidates
that will fulfill domestic positions.
For example, companies such as General Electric, Ford and Toyota have managers
from the parent company sent as expatriates and also they hire host-country
managers/employee and third country managers. Hiring this mixture of people
enables General Electric to maintain the parent company's visions and objectives,
adapt locally and be able to broaden its international perspectives.
- International Performance Appraisal - in the international settings, performance
appraisal is a big consideration. In the domestic setting, there is uniformity in the
performance management system, while in the international settings, there are
different factors that must be considered such as culture, the business goals of the
parent company and the subsidiary, who will conduct the performance appraisal
and how and when it will be conducted. The experiences (adapting to the host
country culture and business environment) must also be taken into consideration.
In Multinationals like McDonald's, there is a uniform performance appraisal system.
The performance appraisal system of McDonald's is standardized across every store
in all its locations worldwide. Despite this, each franchisee from different countries
needs to take into consideration the different factors in the business environment in
appraising employees. Performance appraisal is done by the store manager with
reference to the performance guidelines, systems and forms of the parent company.