UTAR UKMB3013 International Business

UNIVERSITI TUNKU ABDUL RAHMAN

FACULTY OF ACCOUNTANCY AND MANAGEMENT

ACADEMIC YEAR 2019/2020

DECEMBER 2019

Bachelor of Accounting (Hons)

UKMB3013
INTERNATIONAL BUSINESS

Tutorial Questions

TUTORIAL 1

To discuss administrative issues and general discussion about marketing concepts, study
method, group project, exams and career with students.

TUTORIAL 2: Chapter 1: Globalization

1) What is globalization of markets? How do global companies such as IKEA, Starbucks,

and McDonald's facilitate the creation of a global market?

Short Case Study: China’s Hisense - An Emerging Multinational

2) What makes Hisense different from other manufacturers of consumer electronics?

What factors have contributed to its success?

3) Why has Hisense established multiple R&D centers? How do these R&D centers fit
into the firm’s global strategy?

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TUTORIAL 3: Chapter 2: National Differences in Political Economy

1) What are the various types of risk that a business could face in doing business in a
particular country?

Short Case Study: Starbucks Wins Key Trademark Case in China

2) Discuss the concept of property rights protection and why it is so important to

companies. What does the court ruling against Xing Ba Ke mean for other companies
that are already doing business in China, or are considering entering the market?

3) How important is the Chinese market to Starbucks? Does the presence of look-alike
companies like Xing Ba Ke deter firms from entering the market?

TUTORIAL 4: Chapter 3: Differences in Culture

1) What are the two dimensions of a society's social structure that stand out as being of
particular importance when explaining differences between cultures?

2) Discuss how the three values central to the Confucian system of ethics: loyalty,
reciprocal obligations, and honesty in dealings with others help explain the economic
success of some of the countries that practice Confucianism.

3) Explain how the education system of a country impacts international business.

4) What are the implications for international business of differences in the dominant
religion or ethical system of a country?

TUTORIAL 5: Chapter 4: Ethics in International Business

1) A visiting American executive finds that a foreign subsidiary in a poor nation has hired a
12-year old girl to work on a factory floor, in violation of the company’s prohibition on
child labor. He tells the local manager to replace the child and tell her to go back to
school. The local manager tells the American executive that the child is an orphan with
no other means of support, and she will probably become a street child if she is denied
work. What should the American executive do?

2) Under what conditions is it ethically defensible to outsource production to the

developing world where labor costs are lower when such actions also involve laying off
long-term employees in the firm’s home country?

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3) A manager from a developing country is overseeing a multinational’s operations in a

country where drug trafficking and lawlessness are rife. One day, a representative of a
local “big man” approaches the manager and asks for a “donation” to help the “big
man” provide housing for the poor. The representative tells the manager that in return
for the donation, the “big man” will make sure that the manager has a productive stay
in his country. No threats are made, but the manager is well aware that the “big man”
heads a criminal organization that is engaged in drug trafficking. He also knows that
the big man does indeed help the poor in the run down neighborhood of the city where
he was born. What should the manager do?

TUTORIAL 6: Chapter 5: International Trade Theory

Short Case Study: Moving U.S. White Collar Jobs Offshore

1) Will the United States suffer from the loss of highly skilled and high paying jobs?
What does the transference of white-collar jobs mean to the average American?

2) What does the transference of white-collar jobs mean to recipient countries such as
India and the Philippines?

3) Why do American companies transfer white-collar jobs to countries like India and the
Philippines?

TUTORIAL 7
Group Presentation

TUTORIAL8
Group Presentation

TUTORIAL 9: Chapter 8: Regional Economic Integration

1. What are the economic and political arguments for regional economic integration?
Given these arguments, why don’t we see more substantial examples of integration in
the world economy?

Short Case Study: Creating a Single European Market in Financial Services

1) What are the benefits of creating a single financial market in the European Union for
companies? Does it make sense for consumers?

2) What are the impediments to creating a single financial market in the European Union?
What does the potential for this type of market mean for countries like Great Britain

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that have not joined the euro-zone?

TUTORIAL 10: Chapter 11: The Strategy of International Business

1) What makes up the value chain of a firm? Describe the roles of primary activities and
support activities in the value chain.

2) Describe the various pressures for local responsiveness.

3) Describe globalization strategy.

4) Describe localization strategy.

TUTORIAL 11: Chapter 11: Entering Foreign Markets

Case study: Tesco’s International Growth Strategy

1) Why did Tesco’s initial international expansion strategy focus on developing nations?

2) How does Tesco create value in its international operations?

3) In Asia, Tesco has a long history of entering into joint venture agreements with local
partners. What are the benefits of doing this for Tesco? What are the risks? How are
those risks mitigated?

4) In March 2006, Tesco announced that it would enter the United States. This represents
a departure from its historic strategy of focusing on developing nations. Why do you
think Tesco made this decision? How is the U.S. market different from others Tesco has
entered? What are the risks here? How do you think Tesco will do?

TUTORIAL 12: Past Year Question

Foreign Retailers in India

For years now, there has been intense debate in India about the wisdom of relaxing the country's
restrictions on foreign direct investment into its retail sector. The Indian retailing sector is highly
fragmented and dominated by small enterprises. Estimates suggest that barely 6 percent of India's
almost $ 500 billion in retail sales take place in organized retail establishments. The rest takes
place in small shops, most of which are unincorporated businesses run by individuals or
households. In contrast, organized retail establishments account for more than 20 percent of sales
in China, 36 percent of sales in Brazil, and 85 percent of all retail sales In the United States. In
total, retail establishments in India employ some 34 million people, accounting for more than 7
percent of the workforce.

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Advocates of opening up retailing in India to large foreign enterprises such as Walmart,

Carrefour, Ikea, and Tesco, make a number of arguments. They believe that foreign retailers can
be a positive force for improving the efficiency of India's distribution systems. Companies like
Walmart and Tesco are experts in supply chain management. Applied to India, such know-how
could take significant costs out of the economy. Logistics costs are around 14 percent of GDP in
India, much higher than the 8 percent in the United States. While this is partly due to a poor road
system, it is also the case that most distribution.is done by small trucking enterprise, soften with
a single truck that have few economies of scale or scope. Large foreign retailers tend to establish
their own trucking operations and can reap significant gains from tight control of their
distribution system.

Foreign retailers will also probably make major investments in distribution infrastructure such as
cold storage facilities and warehouses. Currently, there is a chronic lack of cold storage facilities
in India. Estimates suggest that about 25 to 30 percent of all fruits and vegetables spoil before
they reach the market due to inadequate cold storage. Similarly, there is a lack of warehousing
capacity. A 1ot of wheat, for example, is simply stored under tarpaulins, where it is at risk of
rotting. Such problems raise foods costs to consumers and impose significant losses on farmers.
Farmers have emerged as significant advocates of reform. This is not surprising because they
stand to benefit from working with foreign retailers. Similarly, reform-minded politicians argue
that foreign retailers will help to keep food processing in check, which benefits all. Ranged
against them is a powerful coalition of small shop owners and left-wing politicians, who argue
that the entry of large, well-capitalized foreign retailers.

In 1997, it looked as if the reformers had the upper hand when they succeeded in changing the
rules to allow foreign enterprises to participate in wholesale trading. Taking advantage of this
reform, in 2009 Walmart started to open up wholesale stores in India under the name Best Price.
The stores are operated by a joint venture with Bharti, an Indian conglomerate. These stores are
only allowed to sell to other businesses, such as hotels, restaurants and small retailers. By 2012,
the venture had 20 stores in India. Customers of these stores note that unlike many local
competitors, they always have products in stock and they are not constantly changing their
prices. Farmers, too, like the joint venture because it has worked closely with farmers to secure
consistent supplies and has made investment in warehouses and cold storage. The joint venture
also pays farmers better prices - something can afford to do because far less produce goes to
waste in its system.

For its part, in 2011 the Indian government indicated that it would soon introduce legislation to
allow foreign enterprises like Walmart entry into the retail sector. On the basis on this promise,
Walmart and Bharti were planning to expand downstream from wholesale into retail
establishments but their plans were put on hold in late 2011 when the Indian government
announced that the legislation had been shelved for the time being. Apparently, opposition to
such reform had reached such a pitch that implementing it was not worth the political risk.
Opponents argued that global experience showed that FDI leads to job losses, although they cited
no data to support this claim. Whether India will further relax regulations limiting inward FDI
into retail remains to be seen.

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(Adapted from Mullins, J. W. & Walker, O.C (2016), Marketing Management. New York:
McGraw Hill)

Q1. (a) Refer to the case, describe the retailing sector in India. (6 marks)

(b) Analyze the potential benefits experienced by India from the entry of retail
establishment. (15 marks)

(c) Identify the entry mode that Walmart use in India and evaluate the outcomes.
(12 marks)

(d) In your opinion, does India welcome foreign retailers in its country? (7 marks)

TUTORIAL13 : Chapter 15: Global Marketing and R&D

1) Imagine you are the marketing manager for a US manufacturer of disposable diapers.
Your firm is considering entering the Brazilian market. Your CEO believes the
advertising message that has been effective in the United States will suffice in Brazil.
Outline some possible objections to this. Your CEO also believes that the pricing
decisions in Brazil can be delegated to local managers. Why might she be wrong?

2) Within 20 years we will have seen the emergence of enormous global markets for
standardized consumer products. Do you agree with this statement? Justify your
answer.

3) You are the marketing manager of a food products company that is considering
entering the Indian market. The retail system in India tends to be very fragmented.
Also, retailers and wholesalers tend to have long-term ties with Indian food companies,
which makes access to distribution channels difficult. What distribution strategy would
you advise the company to pursue? Why?

4) Price discrimination in indistinguishable from dumping. Discuss the accuracy of this

statement?

Tutorial 14

Revision

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