MI605
Discussion Question 1-1 (50 points)
Define international business and discuss the advantages and challenges of globalization. Discuss three (3) advantages and three (3) challenges of an international business. (50 points) (A 2-page response is required.)
Question 1-2 (50 points)
Discuss five (5) motives for establishing foreign operations. (A 2-page response is required.)
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Activity 2: International Business and Human Resources
Using ProQuest, the online database on the Ashworth College website, and the Internet, research Geert Hofstede and Hofstede’s Dimensions. For this Activity, focus on the following:
- Power Distance: To what degree does a culture encourage people to think of themselves as equals and to what degree does a culture encourage people to stay within a hierarchical social structure?
- Individualism vs. Collectivism: To what degree does a culture encourage individualism? Asian cultures tend to be group oriented, while American culture encourages individualism.
- Masculinity vs. Femininity: Is a culture oriented towards relationships or tasks? This dimension deals with the idea of masculine and feminine influences in the workplace.
- Uncertainty Avoidance: Does a culture encourage people to take or avoid risk?
Read the following two (2) scenarios and answer the questions at the end of each scenario. You must cite all resources used and include an APA-formatted reference list. Your Activity responses should be both grammatically and mechanically correct, and formatted in the same fashion as the Activity itself. If there is a Part A, your response should identify a Part A, etc. (100 points) (A 4-page response is required for the combination of Parts A and B.)
Part A Country A
The Problem: A mid-size hotel chain requested the services of a human resources consultant to assist in preparing employees for a merger with a similar company whose headquarters were located in the same country. The organization was very concerned about the type of employee anxiety that typically accompanies mergers and acquisitions. It was quite possible the merger might require some downsizing and change in organizational structure and management styles.
Country Background: Both hotel chains were located in Country A, a relatively small (about the size of the American state of New Jersey), highly industrialized country politically considered to be a “western democracy.” The country is considered to have a very open, friendly attitude towards tourism. The population is, for the most part, socially, racially, and economically homogeneous. The government is stable, the GNP is high, and crime is much lower than in other countries of similar size and economic status. Militarily, the country is pacifistic. Taxes are high, but much government assistance is provided in public education, including graduate school tuition, medicine, disability insurance, retirement benefits, utilities, transportation, and employee rights protection. In fact, all employees are guaranteed a seven-week annual vacation and maternal or paternal leave to all new parents. Professional and non-professional employees typically retire at age 53. Both freedom of expression and the right to private enterprise are considered sacred.
The Consultant: In the first meeting, the consultant was introduced to the organization and its key executives. The consultant began by explaining his background in human resources and his experience in the cost-efficient management of human capital. Suddenly the room went silent, and there was a definite freeze. Realizing his faux pas, the consultant cleared his throat and explained that his “real” emphasis was on assisting organizations to counsel and develop their employees to their fullest potential, especially during times of trauma. He then began talking about issues such as organizational learning.
Answer the following questions considering the above information.
- How would you describe this country’s culture in terms of Hofstede’s dimensions? Explain why.
- Why did the consultant change his image and presentation of services?
- What would you recommend that the consultant do differently?
Part B Country B
The Problem: A small hotel chain (with no international holdings) recently purchased a new information technology system. Top management wished to computerize all of their hotels’ operations. A consultant was hired to develop a training program to teach its employees how to operate the new computers.
Country Background: The hotel organization is located in Country B, which has been economically categorized as a developing nation. As a former European colony, it is still greatly influenced by its colonial legacy. Tourism is new to this country, and hotels cater to foreigners or to the country’s elite, who pride themselves on appearing European. A large social, cultural, and economic gap exists between this country’s rich and poor. Ninety percent of the country’s wealth is held by 10% of its population. Industry is 75 percent privately owned by a small cartel of leading families. The government is modeled after the European parliamentary system. However, in reality, the government is basically a single party system that has ruled since independence in 1960. While the government claims to be militarily neutral, newspaper editorials are clearly anti-socialist. The GNP is high for the region. Many observers believe that the country’s economic health reflects favorable trade and tax agreements that have encouraged large-scale foreign investors looking for relatively cheap labor markets. Government and company-supported services for the poor are meager and sporadic. The population consists of four key ethnic groups who possess different racial, linguistic, and religious origins. While 40 percent of the population is illegal immigrants, they are ethnically related and protected by their local
extended families. Family bonds are, thus, very important. In most cases, the ties to one’s clan are more important than one’s nationality. Nepotism and favoritism often influence personnel decisions as job descriptions and performance criteria are typically vague. In business and in government, members of the same family always hold positions of trust.
The Consultant: Top company officials politely received the consultant. They spent a lot of time getting to know him on both a professional and personal level. While the consultant was flattered by the attention, he was also frustrated by the length of time needed to establish rapport. Impatiently, the consultant pressured company officials to permit him to present his ideas for a new employee development program. In addition to computer training, the consultant suggested new training in management and team building. He called himself a change agent and encouraged the company to develop a systematic career development and counseling system along with tuition benefits for any employee who wished to further his or her education. Finally, he suggested a full-scale cultural diagnosis to identify the need for culture change within the hotel chain.
Answer the following questions in light of the above information.
- How would you describe this country’s culture in terms of Hofstede’s dimensions? Explain why.
- Why did the consultant’s ideas fall on polite, but deaf ears?
- What would you recommend?
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Discussion Question 3-1 (50 points)
Explain the diamond of national competitive advantage theory. Then explain how the existence of the four (4) favorable conditions does not guarantee that an industry will develop in a given locale. Include discussion of how chance and government could have a negative impact on the character of a national diamond. (A 2-page response is required.)
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Discussion Question 3-2 (50 points)
In a short essay, discuss the theory of mercantilism, and discuss favorable and unfavorable balances of trade as they apply to international business. (A 2-page response is required.)
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Activity 4: Foreign Exchange
You must cite all resources used and include an APA-formatted bibliography. Your Activity responses should be both grammatically and mechanically correct, and formatted in the same fashion as the Activity itself. If there is a Part A, your response should identify a Part A, etc. (100 points) (A 4-page response is required for a combination of Parts A, B, and C.)
Part A What are the two major segments of the foreign-exchange market? What types of foreign-exchange instruments are traded within these markets?
Part B How is foreign exchange traded? What methods are available?
Part C Using ProQuest, the online database on the Ashworth College website, and Internet research, discuss the exchange rate arrangements used in the EU, Hong Kong, China, and the U.S.
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Discussion Question 5-1 (50 points)
Describe spot exchange rates, forward exhange rates, and currency swaps. Compare and contrast the characteristics and uses of each. (A 2-page response required.)
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Discussion Question 5-2 (50 points)
What is political risk and what three (3) approaches can managers use to predict political risk? Include a specific example (not used in the text) for each approach to support your answer. (A 2-page response is required.)
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Activity 6: Foreign Facilities and Supply Chain Management
The goal of this activity is to develop your skills in analyzing international business issues and finding relevant information. You must cite all resources used and include an APA-formatted bibliography. Your Activity responses should be both grammatically and mechanically correct, and formatted in the same fashion as the Activity itself. If there is a Part A, your response should identify a Part A, etc. (100 points) (A 4-page response is required.)
Part A Using ProQuest, the online database on the Ashworth College website, and Internet research, discuss what factors make international distribution more complex than domestic distribution.
Part B Using Toyota as an example, what has been the influence of Japan on supply chain management? In your answer, discuss the concepts of industrial clustering and quality.
Part C Why is global HRM more difficult than domestic HRM? How can staffing a foreign facility with locals alleviate some of these HRM difficulties?
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MI605 International Business
Stand-Alone Project: International Business Plan (200 points)
You should begin working on the Stand-Alone Project early in the course. Each lesson provides a benchmark for completing the Stand-Alone Project in a timely manner while working through the course. You will find this information in the “Stand-Alone Project Benchmark” section of each lesson. (200 points) (A 10-page response is required for the combination of Parts A, B, C, D, E, F, and G.)
Instructions: Assume the role of a corporate manager responsible for selling your company’s products in three (3) new international markets. You have been directed to conduct a competitive analysis of potential international markets for distribution of your company’s products/services and to develop an international business plan, which is both strategic for each region (European Union, Pacific Rim, and Latin America) and specific in detail for the establishment of milestone, forecasts capital requirements, human resource, and financial issues. Your business plan is to be submitted to the Executive Committee by the third business quarter.
First, select a product or service. It cannot be a product that is sold solely via the Internet, although the Internet can be one distribution outlet. You must have a physical sales presence in each region. For example, your product must be sold in “stores” in each of the three (3) new international markets. The Internet can be used as a communication tool to build awareness and drive traffic to your physical location within the region.
Next, select three (3) international markets for marketing your product/service. The Executive Committee has provided the following guidance for your selection.
- European Union: We want to have a physical presence with our name on the building.
- Pacific Rim: We must be focused on China.
- Latin America: We must be protected from the downside risks in this potentially unstable environment.
While this situation is hypothetical with respect to your role and your new product/service, base your competitive analysis on reality. Below is a guide (outline format) to assist you in writing your International Business Plan. You must provide the information identified in the outline (at a minimum), and you must also include descriptive explanations. Your business plan should be tailored to the specific needs and requirements of your selected product/service and international markets.
If you feel that any part of the instructions does not apply to a specific region/product, then you must address why the issue does not apply.
Part A Title Page
In addition to the required Activity Cover Sheet, you must submit a title page for your International Business Plan. Create a title page including the name of your company, a description of your product/service, the three international markets, your name and student identification number, and the date.
Part B Executive Summary
Your International Business Plan is a proposal to the Executive Committee. The committee members must first understand the scope of your proposal before delving into the details. So, summarize the primary points of your proposal, get to the point quickly, and report the most important facts contributing to the adoption of your proposal and your anticipated business results. This is not a selling document, but rather a clarifying document to ensure the reader has a general understanding and positive disposition toward your proposal. Use the key approach (who, what, where, why, when, how, and how much) to summarize the following.
- Your globalization plan
- Factors critical to the plan’s success
- Key issues that require decisions by the Executive Committee
- Key risks, risk triggers, and contingency plans to manage the identified risks
Part C Product/Service (By Region)
- Description of the Product/Service: Include pictures or graphic representations; these can be very important to your success. Detail the product/service, marketing channels, distribution, etc. Make sure you indicate any modifications to the product description needed for each of your new international market regions. A product description is a clear, precise statement of the “product,” including, from an international perspective, factors that must be included to be accepted in the specific region. Provide detailed information on the transformation required to be regionally successful.
- European Union
- Pacific Rim
- Latin America
- Description of Consumer Target Market: This information must be supported with specific information about the size in units and value ($). You must be specific in your target market information. For example: males, ages 18-24, high-school graduates going to college must be linked to individual countries. Alternatively, limit the market size information by excluding select elements.
- Target Market Size
- Value
- Growth Rate
- Product/Service Consumer Benefits and Costs: For each region, provide region specific information on the value proposition to the consumer. This information must be specific and detailed to the region. This section must answer the questions, “What’s in it for me?” and “When I purchase your product what benefit do I receive?”
- Price Strategy and Estimate of Price Elasticity: Each region requires a separate pricing strategy. Make sure that your pricing strategy is specific to the region, as well as to the cultural and economic realities of the target market. A “poor response” is one claiming that your product will be the lowest priced product. Establishing a price on an international scale requires an understanding of the relationship between price and demand: elasticity. In most cases, this is the difference between profitability and losses. You must develop price elasticity curves consistent with your pricing strategy and your target market.
Part D Manufacturing/Operation/Supply Chain (By Region): Discuss each of the following.
- Compatibilities of Supply Chain: Both global and corporate business strategies
- Configuration of Supply Chain: Location and type of operations
- Coordination of Supply Chain: Relationship to other global operations
- Control of Supply Chain: Span and freedom of independence
- Implementation Plan
- Capital Requirements (very broad brush)
Part E Market/Sales (By Region): Discuss each of the following.
- Global Marketing Strategy
- Sales Structure (local, regional, global)
- Branding
- 4 P’s of Marketing (product, price, place, promotion)
Part F Financial, Payment, Collections, Currency (By Region): Discuss each of the following.
- Currency Issues (By Country and Region)
- Credit Terms
- Financial Records
- Income Statement
- Cash Flow
- Corporate Reporting
- Capital Requirements
- Taxes
Part G Management Structure and Human Resource Requirements
- Management Structure (By Country and Region)
- Experience and Skill Level
- Transitional Strategy
- Form of Operations
Homework Assignments and Papers 