KOLEJ UNIVERSITI TUNKU ABDUL RAHMAN

FACULTY OF ACCOUNTANCY, FINANCE & BUSINESS

ACADEMIC YEAR 2013/2014
JANUARY EXAMINATION

ABDM3233 INTERNATIONAL BUSINESS PLANNING

DIPLOMA IN BUSINESS STUDIES

(INTERNATIONAL BUSINESS)

Instructions to Candidates:
Number of Questions on Paper:

Section A:
Section B:

1 case study
4 questions

Number of Questions to be Answered:

Section A:
Section B:

Compulsory
3 out of 4

This question paper consists of 5 questions on 4 printed pages.

(25 marks)
(75 marks)

2
ADBM3233 INTERNATIONAL BUSINESS PLANNING
SECTION A: COMPULSARY (25 marks)
Question 1
Wary of China, Companies Head to Cambodia
Phnom Penh, Cambodia Tiffany & Company is quietly building a diamond-polishing factory in
Cambodia, a country popularly associated more with killing fields and land mines than costume
jewelry.
Some of Japans biggest manufacturers are also rushing to set up operations in Phnom Penh to make
wiring harnesses for cars and touch screens and vibration motors for cellphones. European companies
are not far behind, making dancing shoes and microfiber sleeves for sunglasses.
Foreign companies are flocking to Cambodia for a simple reason. They want to limit their
overwhelming reliance on factories in China.
Problems are multiplying fast for foreign investors in China. Blue-collar wages have surged,
quadrupling in the last decade as a factory boom has happen together with waning numbers of young
people interested in factory jobs. Starting from last year, the labour force has actually begun shrinking
because of the one child policy and an aging population.
Every couple of days, Im getting calls from manufacturers who want to move their businesses here
from China, said Bradley Gordon, an American lawyer in Phnom Penh.
But multinational companies are finding that they can run from Chinas rising wages but cannot truly
hide. The populations, economies and even electricity output of most Southeast Asian countries are
smaller than in many Chinese provinces, and sometimes smaller than a single Chinese city. As
companies shift south, they quickly use up local labour supplies and push wages up sharply.
While wages and benefits often remain below levels needed to provide proper housing and balanced
diets, the manufacturing investment foreign direct investment (FDI) in Cambodia rose 70 percent
last year from 2011 is starting to raise millions of people out of poverty.
However, only a small numbers of companies, mostly in low-tech sectors like garment and shoe
manufacturing are seeking to leave China entirely. But, FDI in China nonetheless slipped 3.5 percent
last year while investment in Cambodia rose to $1.5 billion.
Overall, monthly compensation for industrial workers has increased as much as 65 percent in the last
five years in Cambodia, although from such a low base those workers here remain among the poorest
in Asia.
Strikes this winter temporarily crippled numerous Taiwanese-owned garment factories in eastern
Cambodia producing simple garments like bathing suits and lead to offer higher pay and benefits.
At the Phnom Penh Special Economic Zone here in central Cambodia, Minebea is trying to attract
workers by building a modern, four-storey dormitory for 2,000 people with six beds to a room and a
large recreation hall a big change from plywood houses with thatched roofs in which millions of
Cambodians still live. Employment at the zone is doubling this year to 20,000 workers, and is
projected to redouble to 40,000 in the next several years, said Hiroshi Uematsu, the zones managing
director.
Sceptics like David J. Welsh, say that rising food and housing costs prevent many workers from fully
benefiting from rising wages. Ken Loo, secretary general of the Garment Manufacturers Association
in Cambodia, said that his industry needed to resist workers demand for further pay increases to
preserve international competitiveness.

This question paper consists of 5 questions on 4 printed pages.

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ADBM3233 INTERNATIONAL BUSINESS PLANNING
But some factories have moved anyway, at the request of Western buyers who fear depending
exclusively on a single country. While moving to a new country with unproved supply chain is a risk,
Ms. Olchanetzky said, They think theres risk in staying in China, too.
(Source: Adapted from Bradsher, K., 2013. Wary of China, Companies Head to Cambodia viewed 7
October
2013,
<http://www.nytimes.com/2013/04/09/business/global/wary-of-events-in-chinaforeign-investors-head-to-cambodia.html?pagewanted=all&r=1&>)
Required:
(a)

Based on the case, discuss the benefits of foreign direct investment (FDI) towards Cambodia.
(6
marks)

(b)

More and more investors are having the intention in shifting their production plants from
China to Cambodia. Examine the impacts that would likely faced by China if such situation
arises.
(9
marks)

(c)

Distinguish between horizontal FDI and vertical FDI. Illustrate your answer with appropriate
diagrams.
(10
marks)
[Total: 25
marks]

SECTION B (75 marks)

Answer THREE (3) out of four (4) questions.
Question 2
(a)

Explain the THREE (3) ways that small and medium enterprises (SMEs) can
internationalise.
(12 marks)

(b)

Using Porters Diamond Model, examine how certain industries are able to compete
competitively on global markets. Support your answers with an aid of diagram.
(13 marks)
[Total: 25
marks]

Question 3
(a)

Explain the main intangible resources that a firm can tap on. Support your answer with
appropriate examples.
(9
marks)

(b)

Examine the screening process when managers are looking for potential markets and sites.
(16 marks)
[Total: 25
marks]

Question 4
(a)

Discuss the purposes of international capital market.

marks)

This question paper consists of 5 questions on 4 printed pages.

(9

(b)

4
Analyse the strategic choices local firms can choose when confronting multinational
enterprises.
(16
marks)
[Total: 25 marks]

ABDM3233 INTERNATIONAL BUSINESS PLANNING

Question 5
(a)

Examine the steps involved in dissolution of an alliance.

marks)

(8

(b)

Differentiate between explicit knowledge and tacit knowledge. Support your answer with
appropriate examples.
(8
marks)

(c)

Discuss the THREE (3) views of globalisation.

marks)

(9
[Total: 25

marks]

This question paper consists of 5 questions on 4 printed pages.