Assignment on International Management
Case 1:
Q.1 What are the advantages Rollers could gain from importing from and/or exporting to foreign countries such as Thailand?
ANS:: Rollers is a U.S based company and due to obvious reason the currency of U.S dollar is far stronger than Thailand's currency. So looking for import opportunities of sourcing given the fact that in the recent years Thailand has been able to control a growth capacity in GDP ratio of 8.4 percent to 11.4 percent from 1987 to 1989 and has tremendously developed its infrastructure and has been improved remarkably in the fields of power utilities, telecommunication, freight facilities at deep sea ports (source courtesy - doing business in the Pacific region), including recently undertaken efforts which are under way to improve employee training and increase the number of workers with secondary and post secondary education; will carry a viable weightings as there is more probabilities in view of the above that quality resource may be acquired from the countries like Thailand in relatively cheaper cost.
Besides Rollers can also look forward to gradual shift of its manufacturing processes to job work in Thailand but at the same time it will not be beneficial to look for a total shift of operations to Thailand, as government of Thailand has a foreign equity restriction regulation that says all foreign business in existence need to have Thai majority ownership except for foreign business existence before Nov 24th 1972. The date of entancement of ALEIN business law.
Besides Rollers Inc. may be able to carry out fierce brand promotion drive to light up the market of Rollers skates in Thailand as well as gain status symbol equity in the Thai market segment. Thus capturing the majority of the market and as due to the production cost product diminishing when the company does its sourcing from Thailand and/or component assembling in Thailand, it may thus influx a high quality low price product with considerable brand equity status in the Thai market. In this respect the company have to look for an alternative than to directly exporting to Thailand, as there is import duties levied on ad valarem basis or specific rates, which is higher. However it is minimal in case of exports done in Thailand. So the Rollers Inc. may adopts a business strategies in following steps,
p.t.o
1- Fierce branding & visual merchandising inside the Thai market as well as similar strategies in the U.S domestic market, after the ROCE is better after the second season of penetrating the THAI market.
Encourage Thai values during the visual merchandising to promote localization of the product. Punch lines like -"American dreams and Thai soul" may help this context
Thus we may asses that due to the present crisis that rollers Inc is facing due to its niche' pricing of the product, will be removed to make it's penetration into lower segments. Directly offering low pricing and high quality this improved scope of profitability, at the same time the maneuver will facilitate company's penetration into newer market segments, directly affecting the extent of net sales hence improving the ROCE , and NPV factors ;fruitful in the long run.
Q NO-2 what are the some of the disadvantages rollers could face as a result of foreign trade in the short run? In the long run?
ANS:: IN the short run the disadvantages may be -
) A relative difficulty in understanding the cultural differences in the marketing & supply chain managers of the company may be faced.
2) Establishment & identification of potential would -be sourcing agents may pose another difficulty.
3) Organizational liaison with the relative local govt. organizations to establish & widen proper channels may be a difficulty due to probable external pressures on the govt. of Thailand exerted by nationalistic forces or sudden adaptation of extreme protectionist attitude of the Thai govt. may pose a difficulty.
4) Convincing the distributors for the product salability factor an dmarket scope may be another difficulty.
5) Finding a host country troubleshooter liaison may be a difficulty too.
6) To make the distributors of the bottom up supply chain management system may be a difficulty.
A few long-term disadvantages may be -
) Adjusting to the proper brand promotion activity may pose a difficulty .
2) A product piracy by any host country competitor may pose a problem.
3) Finding proper and efficient distributors for the finished goods may pose a difficulty.
4) Finding adequate warehousing system in Thailand for a bottom up supply chain management on the basis of pull model instead of a push model may be required for the U.S based manufacturing process with the introduction of a buffer stock at the both ends of the production plant to reduce undue delays yet adjusting to lean production system, this may need to internal HRD development through worker training projects for the overseas operations.
5) Product development secrets going out of the outhouse resource i.e. the job work assembly floors of local market of Thailand may pose a threat to product piracy.
6) Weather situation affecting the product durability due to Thailand being in the heavy rainfall and surrounded by sea may be a difficulty.
7) Influence of Thai color tastes and combinations incorporating into the product to localize product for better salability may pose a problem.
Q NO-3, which theories of international business apply to Rollers, Inc in the short run? The long run?
ANS:: AS per the case the rollers incorporation has two different stages available to achieve its present goal, which is to which is to increase the profitability &return on shareholders investments. as per the theory of int. business strategy in query one of the primary strategy in query is to find a successful international trade ...
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7) Influence of Thai color tastes and combinations incorporating into the product to localize product for better salability may pose a problem.
Q NO-3, which theories of international business apply to Rollers, Inc in the short run? The long run?
ANS:: AS per the case the rollers incorporation has two different stages available to achieve its present goal, which is to which is to increase the profitability &return on shareholders investments. as per the theory of int. business strategy in query one of the primary strategy in query is to find a successful international trade through import &export method to minimize cost of productions , to achieve more competitive strategy to acquire further penetration scope for the company in the domes tic market sector , & second id to establish a successful new subsidiary through international business in relation to the int. business theory and secondly . The former being the short term goal and the latter the long-term goal. The future scope being, of attaining the status of a MNE having operations in more than two countries in the Singapore -johor -Riau triangle &greater china region.
However the Rollers inc. may be advised to rule out foreign direct investment method as the company is looking forward to Thailand as its project extension and there exists a restrictive requirement of Thai majority ownership in all foreign businesses except for those in existence before Nov. 24th 1972 date of entancement of the alien business law, but it will be relatively cost effective instead to import raw materiel so as to reduce cost of production, and thus open avenues for further higher growth potential resulting in a lower cost of capital &higher ROCE, directly &positively influencing the profitability &shareholders in come which are at the moment of the case presented primary goals of the company.
The company may however in the long run look forward to opening avenues of new foreign subsidiaries in Thailand so as to supply & penetrate into the Thai market thus opening channels &scope of multi market operations, which will further improve the ROCE & shareholders in come of the company, however there lies some constraints to the theory of establishing in context of international businesses as government of Thailand has a foreign equity restriction regulation that says all foreign business in existence need to have Thai majority ownership except for foreign business existence before Nov 24th 1972. The date of entancement of ALEIN business law. Contrastingly the rollers incorporation may look for other alternatives such as job work and /or component assemblage sourcing in the Thai market to produce goods at par value production cost to be able to offer competitive pricing to be able to penetrate deeper into the Thai market share before any host country competitor becomes a major competitor cutting down the probable market share in the Thai market.
Thus we may assess that the above discussed are the short and long term international business theories that apply to rollers incorporation consecutively as discussed above
Q NO-4 what long range plans other than establishment of a subsidiary in Thailand are options for rollers and may be more suitable for the company?
ANS:: Due to the external policy constraint in the form of the alien business law in Thailand as government of Thailand has a foreign equity restriction regulation that says all foreign business in existence need to have Thai majority ownership except for foreign business existence before Nov 24th 1972. The date of entancement of ALEIN business law, in this perspective it is a wise and strategic ally correct decision of rollers inc to not to look for any foreign direct investment or establishing a manufacturing plant in Thailand, however there are other options in the long run which may prove to be more suitable for the company, such as, to look out for a substantially well equipped Thai production floor/s which may provide a component production facility and also others similar Thai prod. floor/s which may expertise itself to assemble the components. It is however advisable in this regard that to keep the component manufacturing sources & Thai assembly plants separate for the mere sake of safeguard against product design piracy. Also it is to betaken care for that adequate brand safety production clauses are included into the purchase order so as to confirm ample lawful evidence &support in case of any violation of any such agreement.
This modus operandie will provide an alternative for subsidiary establishment in Thailand as well as it will provide a relative opportunity for the rollers incorporation to be able to do competitive pricing as a tool to penetrate deeper into the domestic U.S market as well as provide par value pricing to the Thai market. However at the present perspective it will help initially to establish a direct export from Thai land which will levy comparatively low import charges than to try and operate through establishing plant set up,at the same time this modus will create a channel for rollers inc. to slowly shift its operation to Thailand where it will be further cost effective to source raw materiel as well as component assembly , then simply import the finished goods into domestic U.S market , and influx the Thai market at the same time batch wise , pushing the products articles which have completed their life span in U.S domestic market into the Thai market , thus achieving a larger life span per article and multi market approachability which will create greater scope to produce more profitability net sales improvement &share holder's return.
Case 2 :
Q.1 Is sports Export Company a multinational corporation?
ANS:: The peripheral required for a company to be multinational says that 'A multinational company is a company that is based on in a one country but has operations in two or more countries'. In the light of this definition and the characteristics of the company to be a multinational which are namely - (i. having affiliated from that are linked by ties of common ownership ii. a common pool of resources iii. A strategic vision that guides all of the affiliates.)
We may thus assert that if and only if "The sports export company", which as apparent from the case presented above, is at a nascent stage and is on the verge of looking for overseas export opportunities achieves to secure functions of operation with distributors with host countries and secures a market positions under its own brand image in more than two foreign countries then it will suffice the requirement of being a multinational enterprise by virtue of the common definition as above. As the sports Export Company is at the moment on the look out for a business opportunities at more than one country, so as to substitute the competition it predicts to face in the domestic sector it is apparent that the company is positioning objectives and goals to become. The reason is of course a prime one for any company to change the business strategy to become MNE.
However as according to our case presented it is clear that the sport export company is still not operational so at the present status sport Export Company is not a multinational corporation.
Q.2 Why are agency cost lower for sport export company?
ANS:: According to the case presented the proposed way of operation of sports Export Company is such that it will operate via distributors of sports goods in different foreign countries and the distributors will then sell the rugby footballs at the retail level at the same time to avoid any rent or labour expenses Mr. Jim Morgan plans to manufacture the footballs by himself in his garage. Evidently the sports exports company is not involving it's sell into any foreign direct investment in terms of manufacturing operations overseas, as well as that the company proposes to remain fastidiously minimize in the labour and fixed asset expenditure at the base country where the manufacturing will take place. So incurring a limitized manufacturing cost whereas only added expenses will be incurred in terms of traveling expenses to establish a network of distributors aground the target overseas market. Which evidently will not be a recurring feature once the network is established and reorders are made except only the overhead will recur at that time in terms of fax and other communication charges, levied shipment charges, custom duty and banking transaction expenditure which will keep recurring in future. These can easily be regulated while pricing of the item or the product to be sold is done, so that the price per piece covers the overhead expenses to be incurred after bulk production in the due course of time. Also to be noted is this that the pricing in such a case of the product need not to be covering overhead charges per piece. But can be minimized average to a bulk quantity as bulk overhead will automatically be lesser than per piece accumulation of overhead charges thus a small differential will easily cover bulk overhead charges on a bulk amount of product. Thus in view of stringent method of resource uses in manufacturing process and with a careful low pricing and in view of the fact the company proposes no foreign direct investment in terms of manufacturing, the agency cost of sports export company will invariably than most other MMS's.
Q.3 Does sports Exports Company have any comparative advantages over potential competitors in the foreign countries that could produce and sell footballs there?
ANS:: The sports exports company will have several comparative advantages over potentials competitors in foreign countries, one of the primary being a young and motivated venture company and having a outlook to the stringent use of resources at the manufacturing base as Mr. Jim Logan himself is capable and efficient to produce footballs himself in his garage. Secondly the experience of Mr. Jim Logan working for a sporting goods store acquired him no how of customer taste in general. As well as deep inside into a market where several established branches already persist. Selling rugby football in cohesive competition and resultantly the value addition and how these affects the mass customer was well experienced by Mr. Logan. This no how and insight coupled with the ability of Mr. Logan to produce the footballs by himself not only reduces his costing of his costing of products but enables him to be able to continue effective trend analysis and product quality assertion. And product cycle periods also his experiences at the university level which opened ways for his multinational exposure and understanding the scope of his business venture overseas better, will help him tremendously.
In the same view it is important to notice that Mr. Logan studied finance and is a graduate in finance. Thus well versed in the analysis of ratios involved in fathoming the business health of a company namely the ROCE and profitability etc. which will enable him to make calculative strategic decisions about his business at every point of time including accounting manipulations and banking procedures with relative documentation required for overseas operations. Whereas any potential foreign manufacturer will be unaware of the competitive strategies of the establish rugby footballs manufacturing companies of the exporting country and it will have to generate and in house design process reengineering which will take more effort and time than what Mr. Logan can easily attain at any given time period or it will by this know how from somewhere at a higher price effecting its pricing strategy. Also any competitor of the sports export company in the host country will have a problem of maintaining the standards of product quality as it will need to either import certain if not resources such as accessories and packaging or generates accessories and packaging on order basis locally which will be difficult to source due to lack of such demands specifications and relative references to the same also there will be added expenditure for the competitor of sports export company in terms of human resource development cost and setup cost of product development processes. Another major factor of the advantage for Mr. Logan might be the currency strain of his own operation base countries against the host countries operation currency because if any add value offered by sports export company exclusive then it will be very difficult for the host country competitor to acquire the same from Mr. Logan base manufacturing country at the same time Mr. Logan export and export company have to also careful of the unfair trade practices that may be unfair practices that may be adopted by the potential of the host country. Which may adopted the policy a flooding the market with chipper replica knock offs, lower on quality but cheaper, or use its influence with local government to potentially obstruct sports exports company's game of market share through official redtapisam.
To make the customer literate about the product a strategic careful brand promotion maybe undertaken to facilities and answer during such a threat, as well as sound relation built up threat materializes from any host country competitor may also present a tribal shooting solution to such a solution. However in any case being the first company offering its services to customer sports exports company will have its own advantages so it will be important to keep a focus on cashing on it and create a firmness brand image of status. The sports exports company may thus look into adjoins collaboration of efforts with the host country's sports authority to promote rugby football and offer for partial conditional sponsorship of tournaments/ training camp etc. this will not only serve the purpose of increasing or demand for the product in the market or market creation but also will built firm ties which the host nation government level, in view that the host country currency strength against sports exports company's capital employed currency strength is greater thus the activity will only marginally increase the overhead charges of the marketed product. Thus with a focus on the strategies & careful marketing preconditions of sports exports company 's stringent use of resources and inset in Mr. Logan 's experiences the sports exports company will certainly have an competitive advantage over potential competitors in the host countries.
Q no.4 The sports exports company has no immediate plans to conduct direct foreign investment. However, it might consider less costly methods to establish its business in foreign markets. What methods might the Sports exports company use to increase its presence in the foreign markets by working with one or more foreign companies?
ANS:: One of the most low cost initial strategies to find out most potential probable market may be a literature review of the product demand in the various countries. Mr. Logan may be for that matter get a lot of information on the Internet and can look for a viable market in the foreign host country for his probable product market segmentation. Sources of news like where and in which countries there is an official policy to promote rugby or if it is a upcoming sport in that country or in which countries there is a general tendency of interest on the sport of rugby football, and what are the reasons behind it may answer his initial queries about the product demands in those countries. Besides Mr. Logan can make an online survey report questionnaire for himself as exemplified below.
Example 1.1
* Do you play rugby
* Would you like to play rugby
* Why? ______________________________________________________________ .
* Date of Birth
* Sex
* Country of Birth
* Region
These above small questionnaire may be slot hosted with other sport related websites or
The home pages of met search engines like google, yahoo, is quick, and can be made
user friendly and short as well it may be presented in a creative way, visual
merchandising, more people to answer and to avoid wrong feedbacks about age groups,
to avoid wrong segment estimation. That is why it is asked to give date of birth instead
of age as people have a lesser tendency to lie about date of birth or he may also take the
help of a surveying agency for the purpose. The above operation will give a result over a
period of time in tremendously low cost and help to ascertain to focus him for a group of
countries and regions within thos3e countries and should start looking for ground
evaluation by visiting those places.
This will give Mr. Jim Logan a head start in knowing where he should go and where he should not, and zero down on probable markets and give him a demographic & cultural knowledge about those host countries before he goes there also if possible to get a contact list of the distributors there.
However in the initial stage it is important for Mr. Logan to asses the amount of production he will be able to conduct in one day which will set him upon a target that how many pieces of footballs he wishes to sell in a given time frame. To have a better scope of achieving his target Mr. Logan should begin by looking into more than one country/region as a possible product market to achieve his target of sales quickly and with the added advantage of being able to sell in different prices within the low borderline from country to country.
Also looking into several countries in one region makes him look big as well as gives him the opportunity to shift his goods to a different country market if it does not do well in one country market at a later stage. He may set his product cycle in such a way to give space and time to such maneuvers later, of course he should not forget to take samples of his products with him.
Q.5 The Sports Exports Company has no immediate plans to conduct direct foreign investment. However, it might consider other less costly methods to establish its business in foreign markets. What methods might the Sport Exports Company use to increase its presence in foreign markets by working with one or more foreign companies?
ANS:: Although sports export company does not have any immediate plans to conduct foreign direct investment but it may look for the potential of utilizing local sources for its resources manufacturing process in the host countries if such as scope existing and due to various economics situations the local resources tends to be cheaper. Also in this case the sports exports company may import resources and it may be a good idea to adopt the mechanism to job work delegations too, conditioning the finished goods quality accepted is done stringently. It also has to be noted that such search of an opportunities to localize sourcing in the host countries may boost capacity to productivity as well as it will let sports exports company have the opportunity of edging over any host country competitor trying the idea to penetrate market before hand, thus eliminating a factorial threat from a host country competitor that may arise in future.
Sports Exports Company in the same dimension put its efforts to find out the relative host countries sports authorities programs to encourage rugby footballs and is in a promotion bottleneck due to inadequate resources. The sport exports company may offers in these cases to provide organization of tournaments or sponsored training camps under the condition of having secured business right with the sports authorities and its activities. Thus it may in future look forward to supplies of not only rugby football but also all accessories related to the game. On the other hand it will succeed in making an effective campaign and the increase the level of popularity of rugby as sports in those host countries, thus creating an influx of demand creation. Strategic visual merchandizing may also play a major part into the achievement of these goal. This shot of promotional activity however will not be increase the costing is too much as it will be a long term investment to increase profitably and net sales. Also looking the factors of the currency exchange rate of the host country to the capital employment of the manufacturing of the company base manufacturing country may adjust to make such program cost effectives besides such as promotional activities will make it a positive feature to brand equity status of sports exports company in the host country if careful branding strategies are undertaken. At the same time the sports exports company will succeed to build the relationship within the authorities in the country, thus in the ways above sports exports company may increase its presence in the foreign markets.
