Global Economics
Answer of Question 1
The joint venture is not a good idea because the potential for disputes and conflict is present in the joint venture. The partners in a joint-venture may differ in their opinion of managing the business affairs of the company (Campbell). Disagreement may arise between the partners regarding the future direction of the business and disputes on the capitalization of the business. The partners having conflicting goals and interests may affect the joint venture if the interests and goals are not communicated in a proper way.
Answer of Question No 2
The Heckscher-Ohlin theory indicates that the countries will export those products in which cheap and abundant factors of productions are used, and will import those products in which scarce factors of production are used. Heckscher-Ohlin theory is an elaboration of the theory of comparative advantage, they are relation to each other in a way that both consider that there are two good, two countries, and two resources, and the preferences of all people in the world are same.
Answer of Question No 3
Four attributes that are considered by Porter as significant in determining the reason a nation attains success in a specific industry are
- Factor endowment
- Demand conditions
- Relating and supporting industries
- Firm strategy, structure, and rivalry (Hill, Jones, and Schilling)
Factor endowment represent the position of a nation in the factors of production such as infrastructure and the the labor that are required in order to compete in an industry.
Demand conditions represent the nature of the domestic demand for the product or service. The local firms can, however achieve the competitive advantage if the consumers demand local products.
Relating and the supporting industries represent the absence or presence of the supplier and related industries that are competitive at the international level.
Firm strategy, structure, and rivalry involve the conditions that focus on the creation, organization, management, and the nature of rivalry prevailing at the domestic level. According to Porter, the management ideologies differ in every nation, and there is a strong relation between the domestic rivalry and competitive advantage of the industry.
Answer of Question No 4
The main points learned in the movie outsourced include understanding the cross-culture, leadership, and learning to learn and lead. In order to consider the suggestion of using a foreign location as a potential source due to lower cost, the important factors that would be considered include cross-cultural aspects, culture of the new location, business environment, positive and the negative aspects of outsourcing there.
Answer of Question No 5
Most of the companies in the world are conducting their basis by considering the volatile exchange rates so it is essential for them to adopt such strategies that reduce firm’s economic exposure. One method for maintaining flexibility strategically is to distribute the production to different countries around the world; this strategy helps the companies in hedging the fluctuations in the currency. Further, the companies can establish flexibility strategically by contracting out their production, which allows shifting of the supplier from one country to another in response of the change in the price that occurred due to the movements of the exchange rate. Moreover, the organizations should be aware of the macro-economic policies of the International Monetary Fund that can exert its influence on the operations of the company.
Answer of Question No 6
The FDI can be in the form of the mergers, acquisition, and Greenfield investment or in the form of the novel facility with a local firm that is already conducting its business. Moreover, FDI is mostly in the form of mergers and acquisitions instead of the Greenfield investment. The mergers and acquisitions are famous because they can be executed rapidly as compared to the Greenfield investment. Further,. The foreign firms are considered for acquisition because they comprise of valuable assets that have strategic importance. Additionally, the firms prefer acquisition because they consider that they can increase the acquired firm’s efficiency by transferring the technology, capital, and management skills.
Answer of Question No 7
Human rights are the moral norms and principle, which explain certain standards regarding human behavior. Human rights are given protection as the legal rights in the national as well as international law. The basic human rights in most of the regions across the world are same, such as right to education, protection from the slavery, freedom of speech, freedom from the torture, and freedom for religion. Every country tries to ensure the protection of the human rights so that every individual can enjoy all the rights and can spend their lives in an effective manner. But, in some countries such as Myanmar, the human rights were blatantly violated. China and United States are demanding that the security council of the United Nations should place international sanctions on the country because of the violation of the human rights. Both the United States and China has continued its business operations and are providing support in order to increase the inflow of the FDI in the country.
Answer of Question No 8
The economists are of the view the investments going to the underdeveloped countries instead of the developing countries help in the creation of the more jobs and also help in the economic growth of the underdeveloped countries so that the standard of living of people in the underdeveloped countries can be improved. The incentives of MNCs are to engage in the investment opportunities in Myanmar so that the economic conditions of the country can be improved. Many countries such as China and the United States have invested larger sum of FDI to Myanmar. The U.S. has invested $243.6 million as FDI in Mayanmar, while China has invested $14 billion as FDI in Mayamar (Mahtani). In order to prevent violation of human rights the United States have invested in the Myanmar so that more job can be opened for providing earning facility to people, they U.S. firms are also offering higher wages to the workers in order to facilitate easy living.
Answer of Question No 9
The MNCs, TNCs helps in enhancing development private sectors in developing countries by making investments in the private sectors, and by mobilizing the capital, so that revenue can be generated (Frieden, and Lake). The MNCs adopt mergers or acquisitions with the private sector companies of the developing countries; provide them the necessary skills, knowledge, and technology that ultimately pave the way to the growth of the private sector in the developing countries.
Answer of Question No 10
References
Campbell, Dennis. International Joint Ventures. The Netherlands: Kluwer Law International, 2009. Print.
Donald A, Ball. International Business. New York: McGraw-Hill, 2009. Print.
Frieden, Jeffry A., and David A Lake. International Political Economy: Perspectives on Global Power and Wealth. New York: Routledge, 2002. Print.
Hill, Charles W. L., Gareth R. Jones, and Mellisa Schilling. Strategic Management: An Integrated Approach. Mason, Ohio: South-Western, Cengage Learning, 2013. Print.
Mahtani, Shibani. "Apparel Retailer Gap Forges Ahead in Myanmar." The Wall Street Journal. 6 June 2014. Web. 16 Dec. 2014.
http://www.wsj.com/articles/apparel-retailer-gap-forges-ahead-in-myanmar-1402091240
