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 decision-making, 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 hightech 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 companylevelknowledgeand 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 double-hulled 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.