International business

        1. You run a small company that manufactures plastic injection molded pieces for the construction industry. Currently, you manufacture your product in Windsor, Ontario and a small plant in Texas. You sell your products in both Canada and the United States. You are aware that NAFTA presented your company with increased access to the American market. You want to expand, and are aware of something called the "European Union", but are unsure of what it means, whether Canada has joined and what your firm can do to get access to this large market. You are also interested to know whether there are other "groups of countries like NAFTA or the EU" out there. a) What are the primary impediments to integration of countries? Are these impediments difficult to overcome? Explain your answer. 2. Explain in the five levels of economic and political integration and give examples of specific countries/regions that might fit these levels.  What are main principles of GATT/WTO and what major types of trade policy instruments and trade policy issues/frictions/disputes international business managers should incorporate in their decision-making process? 3. Emerging markets are a major focus of international businesses, including Canadian international businesses, going forward. a) What are the most important opportunities and challenges facing businesses operating in emerging markets today? b) How might these challenges affect your decisions on how to expand (greenfield investment, acquisitions, local sourcing of inputs, R&D and talent, etc.) into emerging markets?c) How can an involvement in overseas markets help a firm capture experience curve advantages more rapidly? 4. (a) What are the different strategies to enter and compete in the international environment?(b) Analyze the six different ways for a firm to enter a foreign market. What considerations would drive a company to choose among them?(c) Firms that compete in global markets often face pressures for local responsiveness. Describe what is meant by local responsiveness, and identify the underlying reasons that local responsiveness pressures exist.(d) Under what circumstances is entering into strategic alliances a risky undertaking?(e) What types of core competencies are the most valuable for penetrating foreign markets? 5. Consider that in Fall 2017, the Trump administration uses U.S. trade policy by imposing, say a 25% tariffs on steel imports from China as a fix to, what it perceives to be, a China’s foreign exchange rate policy of devaluating the yuan against the US dollar. Keep in mind that China in 2016 is the top exporter to the U.S., followed by Mexico, who has pushed Canada down to the third spot. (Do succinctly summarize the content of the theory, model, principles that will be applicable as well as draw the appropriate diagrams and flow charts in doing the analysis and answering the following questions. Provide full logical explanation for your conclusions and answers.  Please, be specific–as presented in the class room lectures—in summarizing the content and logical analytics.) a. How would business change for companies producing in the U.S. in the tariff affected industry? Impact on competition, sales, profitability, employment and wages?  Also analyze the impact, if any, this would have on business in that industry in Canada. b. How would business change for companies in the rest of the U.S., that is in industries not subject to the tariff? Impact on competition, sales, profitability, employment and wages?c. What would be the impact on offshoring activities of companies operating independently out of the Canada, U.S., China and other emerging market locations (consider only one location at a time)?  Analyze possible effect on wages of high-skilled workers relative low-skilled workers, possible effects on kind of activities performed along the skills-value added supply chain.  d. Keep in mind that both China and the U.S. are members of the WTO.  Outline what options are available to China in tackling this U.S. trade policy?  Discuss at least two options and their possible consequences for businesses in the U.S.e. Suppose you are running an export company that produces in China, does foreign direct investment (FDI) in supply chains, and also exports to the U.S.  What prospects does your business face in the U.S., in Canada?  What feasible business options are available to you to maximize sales, profitability and brand salience in the U.S. market?  What feasible business options are available to you to maximize sales, profitability and brand salience in international markets and locations?f. Suppose you are running an export company that produces in China, does foreign direct investment (FDI) in supply chains, and also exports to the U.S.  What prospects does your business face in the U.S., in Canada?  What feasible business options are available to you to maximize sales, profitability and brand salience in the U.S. market?  What feasible business options are available to you to maximize sales, profitability and brand salience in international markets and locations?  What achievable market outcomes can you anticipate in competing in emerging markets against Western-based firms with advanced technology and deeper pockets than your company? 6. Expectations are that the U.S. economy in 2017-2018 is to perform better than other major markets and the U.S. dollar has appreciated against most currencies, including the Canadian dollar. What international business expansion or softening would you analyze as opportunities or challenges, if you operate in Canada a business (consider one sector at a time): a) in the oil-patch (energy) servicing sector; b) in retailing in Canada imported products made abroad; c) in wealth management in the financial-banking sector; and d) in designing gaming software and applications. In each case, discuss what strategies you would use to mitigate some of the significant business risk under this given scenario. 7. Set up an offshoring model in which Home’s skilled labour has a higher relative wage than Foreign’s skilled labour labour and in which the costs of capital and trade are initially uniform across production activities.a. Will Home’s offshored production activities be high or low on the value chain for a given product? That is, will Home offshore production activities that are skilled and labour-intensive, or low-skilled and labour-intensive? Support your answer with analytics and visual diagrams.b. Suppose that Home uniformly increases its tariff level, effectively increasing the cost of importing all goods and services from abroad. How does this affect the slicing of the value chain? What is effect of the tariff increase on the value-chain and skills-activities on it. Support your answer with analytics and visual diagrams.c. What happens to the relative wage (wages of high-skilled workers relative to low-skilled workers) in each country? Support your answer with analytics and visual diagrams. 8. Thunder Rock is a small microbrewery on the outskirts of Toronto. Sales have grown rapidly in the last two years mainly through word of mouth. Thunder Rock has a small brewery that is producing at full capacity at the moment. Thunder Rock has been written up in many business publications as an example of a well-run small business. As a result of the publicity they have received a lot of attention from venture capitalists and companies that want to buy them out. Thunder Rock wants to grow their business but is unsure which direction they want to take. They could expand in the Canadian market, but it is saturated with many microbreweries already. China is a huge untapped market that does not have a lot of foreign beers yet. There are a couple of large Chinese breweries like Tsingtao, that dominate the market but there are many foreigners now living in China that have a different taste for beer than Tsingtao. a) Describe in detail what would be your recommendation for how they should enter the Chinese market. b) Explain the reasons why you chose this entry strategy and the advantages and disadvantages compared to other possible methods a business might enter a country.c) What strategy would you recommend the Canadian international business in tapping the value in the globalization process in this case to avoid the “blues zone” often encountered in emerging markets by multinational headquartered in mature economies. Fully explain your reasoning. 9. For Callaway Golf, one of the largest American golf club equipment manufacturers, the world market is a very big part of its total market for clubs. The golf industry has a strong worldwide appeal. The game is extremely popular in countries around the world including Scotland (golf's birthplace), England, Sweden, Spain, South Africa, South America, Australia, New Zealand, and Japan, where golf enthusiasm rises to unheard of levels. Many countries and continents from around the world are represented both professionally and at the amateur level in worldwide competitions. Golf enthusiasts from around the world follow the sport through televised tournaments, daily newspaper coverage, golf magazines, weekly golf journals, sports reports, as well as Internet websites. Golf-related websites are among the largest categories of Internet sites. However the golf market is also highly competitive with many other firms making golf clubs and related equipment. a) Which Global strategic market choice should Calloway use? Explain.   10. You are the Chief Financial Officer (CFO) of a company that operates in almost two dozen countries around the world: in Europe, Central and South America, and Asia. You manufacture your product (which is used in the auto industry) in many countries, and also sell them in the same countries as well as others: all in the regions described above. You also import items from many countries, for use in your manufacturing process. a) What is the difference between a free floating exchange rate and a managed or dirty float system? What is a pegged exchange rate? How does it work? What is the advantage of a pegged exchange rate regime? b) Describe the difference between fixed and floating exchange rates. How do exchange rates affect individual international businesses? Which is better from the view point of international businesses? Explain your answer. c) Consider the current floating exchange rates in the international monetary system.  Coming into 2017-2018, if the U.S. Federal Reserve reduces the quantity of US dollars to raise interest rates, while the Bank of Canada lowers the interest rate to support economic activity in Canada, what is the likely impact on the US dollar against major international currencies?  What is the likely impact on the Canadian dollar?  As the CFO, what exchange rate strategies can you recommend to tackle the foreign exchange market risk that your company may be exposed to?  Explain your answer.