Bernales, Rick Ashly C.

2BSA- 3

Global Strategy and The Multinational Corporation – Assignment #10

1. With reference to Figure 11.1, choose a sheltered industry—one that has

been subject to little penetration either by imports or foreign direct
investment. Explain why the industry has escaped internationalization.
Are there opportunities for profitable internationalization for firms
within the industry? If so, what strategy would offer the best chance of
success?
- The term 'shielded industry' refers to industries which are both secured
from private investment and inputs. By offering goods or services that are
limited instead of the substance of the items they market, these businesses
are beginning to prevent integration (they are either perishable or hard to
move). Fresh milk is an enterprise which is defined in the text of Figure
12.1 as a sheltered industry. Because fresh milk is perishable, it's
impractical to import or export it. I understand, however, that integration is
an opportunity for this business to buy dairy farms in other places,
however I do not expect it will be very successful.

2. With reference to Table 11.1, what characteristics of national resources

explain the different patterns of comparative advantage for the United
States and Japan?
- By looking at the various types of products and then comparing the
location, demographic and wealth of the countries concerned, the
characteristics of country's assets can be clarified. In contrast with Japan
and other countries, the United States, for example, is doing relatively well
in cereals. In addition, cereal conditions, including new product
development and willing farmers, are factory conditions, as well as a
positive government system for landowners. Related and cooperative
companies, with a concentration of nitrogen industries and processing
facilities, are participating. Cereals are part of the American diet, because
innovation and efficiency are enhanced by a distinct global climate. Also,
Americans have the resources to buy cereal, which increases the category's
strength. In energy exports, neither Japan nor the United States have a
competitive advantage.

3. According to Michael Porter's Competitive Advantage of Nations, some of

the industries where British companies have an international advantage
are: advertising, auctioneering of antiques and artwork, distilled alcoholic
beverages, hand tools, and chemical preparations for gardening and
horticulture. Some of the industries where US companies have an
 international competitive advantage are: aircraft and helicopters,
computer software, oilfield services, management consulting, cinema films
and TV programs, healthcare products and services, and financial
services. For either the United Kingdom or the United States, use Porter's
national diamond framework (Figure 11.3) to explain the observed
pattern of international competitive advantage.
- We can explain the advantages that the United Kingdom and the United
States have in certain industries by using Porter's National Diamond
Structure, presented in Figure 12.3. In determining whether an industry
can be competitive in a given area, Porter's national diamond framework
covers following factors. Market factors, factor conditions, linked and
funded markets, and regulation, organization and rivalry are these four
variables. This framework can be used to illustrate why the US, for
instance in the film or computer technology industries, has a competitive
advantage, while the UK has a competitive edge in the field of art and
hand tools. Silicon Valley brings together a range of related technology
companies and encourage each other just like what LA did to film
industry.

4. When Porsche decided to enter the SUV market with its luxury Cayenne
model, it surprised the auto industry by locating its new assembly plant in
Leipzig in eastern Germany. Many observers believed that Porsche
should have located the plant either in central or eastern Europe where
labor costs were very low or (like Mercedes and BMW) in the United
States where it would be close to its major market. Using the criteria
outlined in Figure 11.4, can you explain Porsche's decision?
- Costs and input supply: While input costs were some of the highest in
Germany, productive resources, performance, profitability
and technological expertise are among the highest in the world. It is also
famous for being a location where products of high quality are produced.
Being remembered as a German manufacturing product also gives prestige
to the name of Cayenne. For its high quality and modern engineering,
Porsche is renowned. So, the Built tag fits perfectly with the Porsche
picture. The biggest source of Cayenne materials is VW. The Wolfsburg
operations center of VW is similar to Porsche's Leipzig assembly plant.

Business strategy: Focused on productivity, craftsmen and design

excellence, the strategic reason for establishing a plant in Leipzig is to
distinguish Cayenne. Selecting for a distinction strategy allows Porsche to
sell Cayenne stronger than its competitors.

5. British expatriates living in the United States frequently ask friends and
relatives visiting from the United Kingdom to bring with them bars of
Cadbury chocolate on the basis that the Cadbury chocolate available in
the United States (manufactured under license by Hershey's) is inferior to
 “the real thing.” Should Mondelez International (formerly Kraft Foods,
which acquired Cadbury in 2010) continue Cadbury's licensing
agreement with Hershey or should it seek to supply the US market itself,
either by export from the United Kingdom or by establishing
manufacturing facilities in the United States?
- From over previous years, both firms have improved sustainability and
moved to the food corporation's strongest corners. For instance, Hershey
bought Kraft and moved into an extremely successful business. Mondelez,
visiting the gluten-free market, bought Love Life Foods. However, the
company is now under attack by institutional investors in recent years,
namely billionaire Nelson Peltz, as well as Mr. Ackman.

Rising commodity prices eventually caused the chocolate industry less

profitable and the sale of chocolate in the United States, the country's
leading buyer of cocoa, is difficult to raise.

6. Since 2013, McDonald's sales have been falling. Has it got the balance
right between global standardization and national differentiation
(Strategy Capsule 11.2)? How much flexibility should it offer its overseas
franchisees with regard to new menu items, store layout, operating
practices, and marketing? Which aspects of the McDonald's system
should McDonald's top management insist on keeping globally
standardized?
- While McDonalds experienced a drop in sales in 2014, I believe it also has
the appropriate combination between collective management and national
differentiation. Nevertheless, as the financial expert Simon Anholt points
out, poor offers of international delicacies of a nation should be seen as a
disadvantage; however, I think that if they strive for excellent standard of
these local offers while putting the cost flat, then I assume if they aim for
great quality of these local offers while keeping the price down.