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INTERNATIONAL BUSINESS

1.

Answer
Answers
(a) What was the critical catalyst that led Kodak to start taking the
Japanese marketseriously?
Kodak: The Changing StrategiesBy 2000, Kodak, the company
thatpioneered the imaging industry byinventing easy-to-use cameras
andphotographic film, was in deep crisis. Withthe advent of digital cameras
in the mid1990s, Kodak found its sales declining asconsumers preferred
the new cameras,which did not use films. The growingpopularity of digital
cameras led to a slumpin film sales, which was a major revenuegenerator
for Kodak. Additionally, the newtechnology attracted a lot of
competitionfrom traditional as well as new players. Inorder to maintain its
lead in the industry,Kodak decided to adopt the new technologyand
reinvent itself from a camera and filmmanufacturer to a digital imaging
company. The case discusses the evolution of thedigital camera market
and the shrinkingfilm business. It also highlights the strategies adopted by
Kodak to embrace the newtechnology to sustain its leadershipposition.
(b) From the evidence given in the case do you think Kodaks charges of
unfairtrading practices against Fuji are valid? Support your answer.
On December 5, 1997 the US lost its first major trade dispute in the newly
formedWorld Trade Organization(WTO). The high-profile case pitted
photographic paper and film giants

Kodak and Fuji against one another along with their


respectivegovernments, the US and Japan. Kodak claimed that Japan's
photographic market &distribution structure, "deny[ed] [Kodak] fair and
equitable marketopportunities."
Essentially, Kodak was arguing that it could not penetrate theJapanese
market beyond a certain level due to structural restraints,
governmentintervention, and back-room policies that favored Fuji.
On the other hand, Fuji & theJapanese government contended that
Kodak's poor showing in Japan was due todeficient marketing,
management, and investment in the Japanese market. Fuji and
theJapanese government refused to enter into negotiations with Kodak
because they perceived Kodak's allegations as groundless.This refusal to
even discuss Kodak's complaint prompted a May 1995 Kodak filingwith the
US Trade Representative's office under Section 301, which allows the US
touse unilateral action against unfair trading practices. This was viewed to
be Kodak's best chance to pry open the Japanese market. To Kodak's
jeopardy, the case wasturned over to the WTO's Dispute Settlement Body
in June of 1996. On December 5,1997 the WTO ruled against Kodak and
the US saying it had found no evidence that,"Japan rigged its domestic
markets to favor Fuji Photo Film Co. over Kodak.
2.

Questions :
1 Which company is truly Multinational ? Why?
2 List three differences between Company , Multi National company and
Trans Multi National Company ?
Answer
1 Which company is truly Multinational ? Why?
A Truly Multinational Company
The Axel Johnson Institute, the predecessor to Nordic Water, was founded
as early as in the beginning of thesixties in Nynshamn. It was an
exceptional institute, as it was privately owned. From the beginning the
businessconcept was clean water. Here they should develop, design,
manufacture and deliver machines and equipment for water and

wastewater treatment. It appears to have been an excellent business idea.


At the Institute they were innovative and soon they obtained patents for a
number of products which were exported under the name of Axel Johnson
Engineering with greatsuccess. The business was doing well and soon we
became leaders on the international market. A position whichwe have
managed to keep over the years.The company has developed and
changed in many ways but it has always adhered to the original business
idea.Today our name is Nordic Water and our head-office is in Gteborg.
Besides we have offices and servicedivisions in Nynshamn, Mariestad,
Klippan and Hanhals. Our main market is outside Scandinavia. So far
wehave offices in Norway, Germany, The Netherlands, Spain and
China.We may not be the biggest but we are world leaders when it comes
to water purification From the standpoint of the multinational marketer, the
differences between nations overseas are great. In the past, these
differences generally led a U.S. company to view its strategy in each
country strictly as a local problem. However, in recent years the situation
has been changing, and the experiences of a growing number of
multinational companies suggest that there are real potential gains to
consider in standardizing various elements of the marketing programs used
in different areas. These gains range from substantial cost savings and
more consistent dealings with customers to better planning, control,and
exploitation of ideas with universal appeal.
One of the most widely discussed developments of the past decade has
been the emergenceof
multinational companies as important competitors in an ever-growing
number of industries. As thetrade barriers in Western Europe and
elsewhere have diminished, more and more companies have
foundattractive opportunities for expansion in countries other than their
traditional home markets. For some ofthese companies, operations abroad
have become so extensive and so complex as to require
significantchanges in organization and operating methods. The problems
confronting management in a trulymultinational company are clearly
different in degree, if not in kind, from those of traditional firms.
At a time when most CEOs would be drawing their retirement plans,
Sundram Fasteners (SFL) CMD SureshKrishna, 67, is busy plotting the
companys growth strategy. Over the next five years, his target is to take
SFLand its associate companies turnover from Rs 800 crore this fiscal to
Rs 2,000 crore.Naturally when I met him, my question was: Forty four years
of hard work at SFL, what keeps you going? Hisreply was: Set a target,

achieve it and keep raising the bar to prevent complacency from setting
in.A look back at the history of SFL reveals how Mr Krishna not only set
bigger and bigger targets but moreimportantly, looked at the big picture to
transform SFL into where it is today. Production facilities in three countries
with the fourth likely to commence manufacturing soon in China; an export
market that encompassesover 15 countries and a quality.
We tend to read the following terms and think they refer to any company
doing business in anothercountry.
Multinational
International
Transnational
GlobalAndrew Hines over atBNET has brief and clear definitions of each of
these terms, Get your international business terms right.Each term is
distinct and has a specific meaning which define the scope and degree of
interaction withtheir operations outside of their home country.
International companies
are importers and exporters, they have no investment outside of theirhome
country.
Multinational companies
have investment in other countries, but do not have coordinated
productofferings in each country. More focused on adapting their products
and service to each individual localmarket.
Global companies
have invested and are present in many countries. They market their
productsthrough the use of the same coordinated image/brand in all
markets. Generally one corporate officethat is responsible for global
strategy. Emphasis on volume, cost management and efficiency.
Transnational companies
are much more complex organizations. They have invested in
foreignoperations, have a central corporate facility but give decisionmaking, R&D and marketing powers toeach individual foreign
market.Andrewss advice is if in doubt about the right term to use, try the
generic term
international business
.
A
Multinational Corporation
(MNC)

is a corporation with extensive ties in international operations in more


thanone foreign country. Examples are General Electric, Exxon, WalMart,
Mitsubishi, Daimler Chrysler, etc...A
Transnational Corporation
is a MNC that operates worldwide without being identified with a national
homebase. It is said to operate on a border less basis
Posted by Muhammed Rafi at 09:21
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3.
Questions:
(a) Explain why MNCs have located R & D centres in developing countries?
(b) Mention the areas where R & D activities can easily be decentralised.
Answer
a), Explain why MNCs have located R & D centres in developing
countries?
Theories of the globalisation of innovation assume thatmultinational
corporations (MNCs) distribute their innovationactivities hierarchically, with
advanced technology beingconfined to the advanced industrialised
countries, while moreroutine low-end innovation is decentralised in a few
developingcountries. The emergence of about 40 research
anddevelopment (R&D) centres in Beijing, China, many of whichengage in
basic and advanced applied research, challenges theabove assumption.
This article argues that the cheap andabundant highly skilled labour of the
latecomer countries is anessential factor in attracting global R&D activities
but that thisfactor is far from being a sufficient condition for the
presencethere of advanced R&D activities. Through its analysis of
thehistorical transformation of local institutions and of their co-development
with MNCs, this paper identifies four majorknowledge assets that explains
why Beijing could attractadvanced R&D activities. First, Beijing has
developed a strongentrepreneurial culture that creates highly
motivatedengineers who are eager to learn new knowledge from
abroad.Second, the experienced Chinese returnees provide a
criticalbridging role between Western R&D management knowledgeand
local engineer culture. Third, the lack of inter-firm trustand networks makes

the entrance of MNCs into a 'loose' clustermuch easier. Fourth, the large
and dynamic Chinese marketthat desires high-tech products with low prices
shortens theproduct life cycle, forcing MNCs to upgrade their R&D
facilitiesin China. The findings show that the co-development of
localinstitutions with the MNC R&D centres can create locationalwindows of
opportunity for advanced R&D activities to becarried out in unconventional
sites outside the Triad countries. This article concludes with the discussion
on how Dunning'sOwnership, Location and Internalisation (OLI) framework
andMathew's Linkage, Leverage and Learning (LLL) frameworkmight be
useful in explaining this new phenomenon .
(b)Mention the areas where R & D activities can easily be
decentralised.
Decentralized R&D in the contemporary MNE The authors distinguish two
different environments in which R&D labsare performing. The first context is
characterized by the fact that R&D activities workalong with other functions
within the subsidiary in order to develop aparticularproduct which would be
brought on to the market by the subsidiary. In ordertobetter address local
needs, the R&D laboratory uses company-levelknowledgeand develops its
own manufactured goods. The second context reflects a more
contemporary view, implying thatlaboratories shape the companys core
knowledge. The way foreign R&Dcentersmay achieve such a task is by
reaping foreign comparative advantages(technological heritage, scientific
competences) and applying the latterin acompany-wide strategic
research. This can be done by developing keycapabilities and specialize in
a specific field which will make the lab essentialforthe companys growth.
Decentralized R&D labs will specialize in anarea of competence reflecting
the host-country knowledge legacy, andeventuallyenhance the enrichment
of group-wide technology. The key challengeinmanaging decentralized
R&D centers is to maintain and ensure aglobalcoherence and focus of
research.
Purpose
The purpose of this paper is to open up the research and development
(R&D) organisation byseparating product and process innovation and
exploring these activities in terms of the structural variableof centralisation
versus decentralisation.
Design/methodology/approach
Case studies of three multinational firms, representing food andbeverage,
mining and minerals, and pulp and paper industry.
Findings

Dual structures may exist within the R&D organisation, one for product
innovation and one for process innovation. Consequently, it is suggested
that the conventional notion of R&D organisationaldesign, equating R&D
more or less with product innovation, does not present a complete picture
for manyfirms
Research limitations/implications
Opening up the R&D organisation will help further the understandinglink
between the organisational structuring of product and process innovation,
and the efforts of organisations to develop resources and competitive
advantages.
Practical implications
The findings have implications for managing the strategy-organizational
fitconcerning innovation in process industry.
Originality/value
The conventional view regarding R&D as a single entity either
centralised or decentralised does not present a complete picture. This
paper clarifies the link between strategicinnovation determinants and the
organisational configuration of R&D.
4
Answer
VARIABEL COST
FIXED COST
40000

27000

13000
43000

30000
13000

57000
26000

83000

1. The Profit Volume ratio [pvr]


pvr=contribution/ sales
=sales-variable cost / sales
= 95000-57000/95000= 0.40
======================
2. Fixed Expenses=======26000
=======================
3. Break-Even Sales

Sales- variable = contribution margin


Break even sales= total annual fixed cost
___________________
Contribution margin/total sales
=26000/ 0.40
=65000.
4. Percentage of margin of safety
Subtract from the projected sales the amount of sales you
need to break even. For example, if you anticipate sales of
$95,000, but only need $65,000 to break even, subtract $65,000
from $95,000 to get a safety margin of $30,000.
2
Divide the safety margin by the projected sales to find the margin
of safety ratio. In this example, divide $30,000 by $95,000 to get
0.315.
3
Multiply the margin of safety ratio by 100 to find the margin of
safety percentage. In this example, multiply 0.315 by 100 to get
an 3.15 percent margin of safety
Business ethics
Question 1
Answer
1.Was the suspension fair?
Yes, I think the suspension was fair. Over a period of time, Joan was warned
several times abouther excessive absenteeism, both verbally and in writing, but she
did almost nothing about resolvingthe problem. Joan hasn't shown an inclination to
look for alternate solutions and she just expectsGreat American Market to put up
with her excessive absenteeism, and the loss in productivity thatcomes with it. It
appears to me that only a suspension would drive the point hard in this case.
2.Did Joan act responsibly?

No, I don't think Joan acted responsibly. In spite of receiving verbal and
written warningsnumerous times, Joan just did not put in efforts to make a
backup plan for her baby's care. Joanacted irresponsibly by not finding an
alternate babysitter or daycare center. Added to this, Joan didnot even try
to swap shifts with a co-worker.
3.Should she be fired?
Not yet. I think Joan should be given another opportunity after her 15-day
suspension period. Joancan use this time to make up a good plan for her
baby's care, probably by making an arrangementwith an alternate
babysitter who can step-in when the regular babysitter is unavailable, or
byconsidering a regular, nearby day care center.
CASE-2 (20 Marks)
You own a cement company, and deal with most the local
contractors for cement, sand, etc. You have
a reputation of high quality products, and for good customer
service with your customers. Your
foreman has just run the standard quality control tests you have
performed regularly on your products.
When the test results are ready, you discover that the new batch
of product is 9% less durable than
your usual material. It is still well above all industry standards and
meets all building codes and
requirements for the purposes for which it is intended, but it is,
nevertheless, not up to your usual
standards. Throwing it away would cost your company many
thousands of dollars.
You decide to sell the cement anyway.
Questions:
1) Should you tell your customers?
YES, YOU SHOULD INFORM THE BUYERS IN AN INFORMAL
WAY.
------------------------------------------

2) Should you discount the price?


NOT NECESSARY, BUT GIVE THEM A VOLUME DISCOUNT.
-------------------------------------3) Should you tell your employees, so they will be knowledgeable
with the customers?
ONLY THE SENIOR EMPLOYEES LIKE THE SUPERVISOR/
FOREMAN/ SALES MANAGER ETC
----------------------------------------------4) Would you use this cement on foundations for your own
house?
I WOULD USE IT BY MIXING WITH QUALITY CEMENTS.
=======================

Questions 3
Answer
1) Should Fred be reinstated?
FRED SHOULD NOT BE REINSTATED,
BECAUSE HE had been fired for poor performance and absenteeism
----------------------------------------Should Fred be reinstated?
Yes, Fred should be given another chance. Everybody needs to be given a
second chance, and Ithink Fred should should be given one, especially
since he had gone through a rehabilitationproblem and his treatment
counselor's letter said that Fred's prognosis indicated a clean andsober
lifestyle. Having said that, if Fred repeats his poor attendance and job
performanceissues, he should be permanently relieved of his duties without
any scope for reinstation in thefuture.

2) Was the company fair to Fred in helping him receive treatment?


THE COMPANY WAS RIGHT IN HELPING FRED TO RECEIVE THE
TREATMENT.
--------------------------------------Was the company fair to Fred in helping him receive treatment?
Yes, I think the company was more than fair to Fred in helping him receive
treatment.

3) Did the personnel director behave ethically toward Fred?


YES, HE ACTED ETHICALLY TOWARD FRED.
---------------------------------Did the personnel director behave ethically toward Fred?
In fact, I thought the personnel director went out of his way and helped
Fred receive treatment.The personnel director behaved very ethically
toward Fred by approving his unemploymentinsurance claim, which
allowed him to continue receiving insurance benefits even after
gettingformally discharged from his duties.

4) Did he act ethically for his company?


YES, he acted ethically for his company
---------------------------------------------Did he act ethically for his company?
While I think that the personnel director behaved very ethically toward Fred,
I still think heacted unethically toward the company by approving Fred's
unemployment insurance claim. Thepersonnel director's act was unethical
toward the company, especially when you consider thefact that the
company did not have any employee assistance program in place and that
Fred didnot inform the company about his drug problem earlier.

5) Would it be fair to other employees to reinstate Fred?


It would not be fair to other employees to reinstate FRED.
I don't think Fred should be given any special consideration, or be treated
by Sam's Saunas in adifferent way when compared to the way it treats
other employees. Sam's Saunas should treatFred in the same way as it
would treat any other employee who has supposedly recovered from
Questions 4
Answer
1) The question is, who is responsible?
According to the Dictionary.com, responsible is defined as being
answerable or accountable, asfor something within one's power, control, or
management.In the above case, we are presented with a few numbers of
characters. The persons responsibleare the captain, which were Mr. Slosh,
the first mate Mr. Mudd and the Company because allcontributed to the
situation so therefore all characters are responsible for the tragedy. First
andforemost the company which is controlled by Mr. Rich should be held
responsible for allowingMr. Slosh to be the captain knowing that he got
arrested on two drunken driving convictionswithin two months of the
accident. It should have been the companys right and duty to fire himor
replace him with another captain. The company should have also ensured
that his first mateMr. Mudd knew how to control the ship and read the map
for the safety of them onboard. Mr.Slosh is also responsible in some way;
he should have not allowed the captain Mr. Mudd to drink while on sail for
their own safety and the safety of the ship. Mr. Mudd should not have
beendrinking because he knew what would have happened but instead he
did and caused a tragedy byleaving the navigation ship to his first mate Mr.
Mudd who had no knowledge on how to operatethe ship. Also Mr. Slosh
should have known that its a law not to drink and drive and he brokethat
law so therefore he should be held responsible for the outcome as well.
The CEO shouldn'tallow any form of alcoholic beverages on the ship,
reason being, to ensure the safety of thecaptain and his crew. According to
the Virtue theory, it states that whether an intention is right or wrong, it
focuses on whether or not the person is expressing good character. In this
case none of the characters were portraying good virtues. Mr. Slosh was
being nave to be drinking anddriving and Mr Rich was being carefree,

meaning he did not ensure that the captains were up to par, all he was
concerned about was his money and the profit at the end of the season
2) Against whom should criminal charges be leveled?
Criminal charges should be leveled against the first mate Mr.Mudd and Mr.
Slosh because their responsibilities were somewhat equal.Mr.Mudd knew
that Mr. Slosh was drinking and heMr.Mudd knew that he could not take
over from Mr. Slosh so therefore he should have ensuredthat Mr. Slosh
didnt drink any alcohol., so therefore he should be the one to get most of
thecharges as well as Mr. Slosh because he was drinking and driving and
because of him drinking,he had to give his first mate to take over and he
did not have clue what to do. Due to all this, itcaused the company millions
of dollars for even the most minimal clean up. If Mr. Slosh was notdrinking,
his first mate Mr. Mudd would not have to take over causing all the
damages. Both parties were acting unethical and so there unethical
behavior would lead to consequences. The justice theory states that when
situations arises, we need to compare and weigh the conflictingclaim and
strike a balance and in this case both parties did not carry out their duty
and so chargesshould be leveled against them both.
3) What should be done, if anything, to punish the corporation itself?
To punish the corporation itself, their license should be taken away
(suspended). Thecompany should also be fined for the damages that were
done, The government shouldensure that they clean up the place, work
with other regulatory bodies to execute a clean upuntil they are finished
they cannot conduct any business. Also to punish the corporation touse the
license, they will have to clean up everywhere before they can operate any
more business. Also to punish the corporation, the captain Mr.Slosh should
be arrested andcharged. Until their ships are up to scratch they should not
conduct any business because itwas stated in the case that the doublehulled tanker, was long due for renovation and, it wassuggested, would not
have cracked up if the hull had been trebly reinforced, as some
currenttankers were.
4) What about the CEO?
The CEO was being very unethical in not ensuring that the captains were
able to sail beforeassigning them to the duty. He was also catering for the
greater good of the company andensuring the majority is happy. According

to the Justice theory, it justifies the actions taken by Mr. Rich, take into
consideration his speech. It was aimed at producing higher amounts of
profit with regards to the shareholder. According to him, his shareholders
and the increase of their profits are his priority. Also he was able to do his
part in helping with the clean-up byselling out 2million. These actions justify
his cause under this view.The action of Mr. Rich however one may view it,
depends solely on his intentions on doingthat action. One must note that
Mr. Richs statement at the end of the case studies. There itmade mention
of his obligation to the shareholders, which was to gain much profit as
possible. From this statement alone, we may be able to conclude that Mr.
Richs intention of donating the 2million to clean up was to gain better
views from the people. Because of thathe may retain the status of his
company, despite the oil-spill scenario.

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