New Era University.

College of Accountancy
SCHOOL OF MANAGEMENT
No.9 Central Avenue, New Era, Quezon City 1107 Philippines
Tel. Nos. (632) 8981-4227/Fax: (632) 8981-4240
E mail add: accountancy@neu.edu.ph

Title of the Activity:

ASSIGNMENT#10 GLOBAL STRATEGY AND THE MULTINATIONAL
CORPORATION

Submitted by: Submitted to:

Patricia Nicole Y. Cruz Prof. Mario Brillante Wesley C. Cabotage

Date Submitted: April 06, 2022

Section Schedule: 2BSA-2 (MW-2:30-4:00 PM)
Self‐Study Questions

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?

Businesses that are protected from foreign direct investment and imports
are referred to as "shielded industry." These businesses have avoided
internalization because their goods or services were reduced due to the
characteristics of the goods they offer (they are either perishable or hard to move).
A few of the protected industries illustrated in the text's figure is fresh milk. Fresh
milk cannot be imported or exported due to its intangibility. Although, I believe that
internalization in this industry is achievable through the purchase of dairy farms in
other countries; nevertheless, I do not think it would be particularly profitable.

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?

Examining many product categories and then comparing the countries'

geography, population, and resources may assist in understanding the unique
characteristics of national resources. When it pertains to grains, for example, the
United States outperforms Japan and other countries. This is because to the
country's size: the United States has more land for growing grains and making
cereals than Japan, the United Kingdom, Switzerland, or Taiwan. In addition,
critical circumstances for cereal include early product development, enthusiastic
farmers, and a friendly government attitude toward farmers. Among the related and
supporting industries involved is a concentration of fertilizer companies and
manufacturing facilities. Cereal is such an important element of the American diet
that it fosters a competitive environment that drives innovation and efficiency
 across the country. Additionally, Americans have the financial wherewithal to
purchase cereal, which adds to the appeal of the category. In mineral fuels, neither
Japan nor the United States have a competitive advantage. This is an area in which
Canada excels. Both land resources (availability) and firms capable of extracting
and marketing the commodity are required in this circumstance. This could be a
case in which a corporation gains a competitive advantage by exporting and
promoting its product overseas considering the absence of a national resource,
but this hasn't occured so. This is most likely the situation due to transportation
and commerce constraints.

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.

Using Porter's national diamond framework, we can explain the advantages

that the UK and the US have in numerous markets. Porter's national diamond
framework includes four variables when determining if a sector will be profitable in
a given country. The four elements are demand conditions, factor circumstances,
connected and supporting industries, and strategy, structure, and rivalry. This
notion can be used to illustrate why the United States has a competitive advantage
in some sectors, such as cinema and computer technology, but not in others, such
as art and hand tools. Silicon Valley pulls together a network of interconnected and
supporting tech companies, while Los Angeles does the same for the 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?

• For a variety of reasons, Porsche made the dangerous move of producing its
Cayenne model in Leipzig.

a) Conditions of Demand: German engineering, workmanship, quality, and

design are known across the world. Associating the Porsche brand name with the
assembly of a premium SUV model in Germany (Designed and Made in Germany)
would provide the vehicle these characteristics.

b) Germans dominate high-performance, high-end automobiles in terms of

strategy, structure, and rivalry: Porsche is maintaining its supremacy by
establishing a facility in eastern Germany, despite the fact that most of its
competitors have migrated to Eastern Europe for lower labor costs.

c) Factor Conditions: Germany is well-known for its high-quality products

and brands. This functions as a shroud, encasing the sumptuous Porsche
Cayenne in enchantment. Furthermore, the area has a high concentration of highly
skilled workers that is very productive. Looking merely at labor rates, the costs of
assembly in Eastern Europe are cheaper.

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?

Yes, because Mondelez International's global focus on constructing its

manufacturing network and developing an integrated supply chain organization
capable of delivering a demonstrated advantage while generating cost savings
which can be funded for economy continues to grow.

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?

Despite revenue declines in 2014, I believe McDonald's have found the right
blend of global uniformity and national distinctiveness. Yet, as business consultant
Simon Anholt pointed out, insufficient offerings of a state's original cuisines may
be seen as a drawback; even so, I assume that if marketers aim for great quality
while keeping pricing reasonable, this strategy has an opportunity to work. I feel
that their core goods (burgers, nuggets, and fries), as well as their store layouts
and franchising agreements, should be consistent throughout the board.