Page 285 - DMGT545_INTERNATIONAL_BUSINESS

International Business

notes 3. Are the following global industries or multi-domestic industries: bulk chemicals,
pharmaceuticals, branded food products, movie-making, television manufacture, personal
computers, airlines travel?
4. Discuss how the need for control over foreign operations varies with the strategy and core
competencies of a firm? What are the implications of this for the choice of entry mode?
5. What do you see as the main problems likely to be associated with implementation of a
transnational strategy?

6. An electronics firm is considering how best to supply the world market for microprocessors
used in consumer and industrial electronic products. A manufacturing plant costs about
$500 million to construct and requires a highly skilled work-force. The total value of the
world market for this product over the next 10 years is estimated to be between $10 billion
and $15 billion. The tariffs prevailing in this industry are currently low. Should a firm
adopt a concentrated or decentralized manufacturing strategy? What kind of location(s)
should the firm favour for its plant(s)?

7. A chemical firm is considering how best to supply the world market for sulfuric acid.
A manufacturing plant costs about $20 million to construct and requires a moderate skilled
work-force. The total value of the world market for this product over the next 10 years is
estimated to be between $20 billion and $30 billion. The tariffs prevailing in this industry
are moderate. What kind of location(s) should the firm seek for its plant(s)?

8. A firm must decide whether to make a component part in-house or to contract out to an
independent supplier. Manufacturing the plant requires a non-recoverable investment in
specialized assets. The most efficient suppliers are located in countries with currencies
that are expected to appreciate substantially over the nest decade. What are the pros and
cons of (a) manufacturing the component in-house and (b) outsourcing manufacture to an
independent supplier? What option would you recommend? Why?
9. Explain how information technology, particularly Internet data interchange, plays a major
role in materials management?
10. What are the factors a firm contemplating international production should keep in mind?
Elaborate each one of them.

answers: self assessment

1. Central 2. Trade-off

3. Factory 4. International standards
5. Material management 6. Strategic
7. Time 8. Low
9. Upgrade 10. Logistics
11. Degree 12. Proprietary Product

13. JIT 14. Electronic data interchange
15. Large-scale

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