International Business

Case study Presentation

Presenter:
Md. Ruhul Arefin
ID:34046
Case 01: Own Experience
• I woke up in the morning hearing the sound of my alarm clock in my phone that was
designed by a Chinese company, was manufactured in India and was bought from a
shopping center in Dhaka.
• Then I shaved my beard with a razor that was of a US company and was produced in
Bangladesh.
• For shaving, I used a shaving gel that was also of the same US brand and was also
produced in Bangladeshi factory.
• After that I turned on my desktop computer to do some work. In my desktop, the monitor
was produced by a South Korean company and manufactured in China.
• The keyboard and mouse I am using in the desktop are of a Swiss brand, were
manufactured in China.
• The motherboard and processor are of an American company and were manufactured in
China.
Case 01: Own Experience (Continued)
• The DVD rom attached in the CPU is of a Brand from Taiwan and was also manufactured in
Taiwan.
• The hard disk is of a South Korean brand that was manufactured in China.
• After typing some documents, I printed them with my printer that is of a Japanese brand
and was manufactured in Japan.
• All the devices and parts of computer mentioned here are bought from a computer market
in Dhaka.
• All the parts of the computer are placed on a computer table that is made out of American
oak wooden boards by a Bangladeshi furniture shop.
Case 02: Protesting Globalization in France
Question 1: How did anti-globalization debate start?
Answer:
• Globalization has received mixed reception from economists, politicians, business leaders
and others.
• Some of them think globalization is a shift towards a more integrated and interdependent
global economy.
• Many seem to stand against these claims and thoughts. The critics of globalization have
increasingly become vocal and active.
• In December 1999, in an effort to shut down a World Trade Organization meeting, forty
thousand demonstrators blocked the streets of Seattle.
• On that day, the World Trade Organization met in Seattle to launch a fresh round of talks to
break down obstacles to cross-border trade and investment .
• The meeting of WTO failed to reach an agreement.
Case 02: Protesting Globalization in France (Continued)
• Impression was that the demonstrators had succeeded in sabotaging the meetings.
These were the factors that gave rise to the debate about anti-globalization.
Question 2: What should France do to handle the different facet of globalization?
Answer:
• France could try to adapt to different cultures of the globe, especially the culture of the
Americans as they seem to dominate the global marketplace. They should welcome the
cultures of global institutions operating in their country.
• They could try to cooperate with the foreign corporations to find ways to convince their
people that they should embrace the positive externalities created by globalization despite
some of its harmful sides for the greater good.
• France can also take advantage of globalization to spread their own culture and heritage
around the globe. Their multinational firms are already expanding and excelling in many
global marketplaces. It would give them a strong ground in the global economy
Case 03: Walmart Violations
Question 1: What culture of US multinational is observed regarding outside
corruption from the example of Walmart?

Answer: From this example of Walmart, we can see that, while investing in
countries out of US, they try to accomplish their project anyhow. If they need to
violate the rules and regulations, bribe people to do unethical work for them,
they do all these things. Even if they get exposed, they go for damage control
rather than coming clean.
Case 03: Walmart Violations (Continued)
Question 2: Make a list of violations done by Walmart and the consequences of
them.
Answer: Violations done by Walmart are:
• Paid $52,000 as bribe to a local official to redraw the zoning area in San Juan
Teotihuacan, Mexico.
• Faced with growing evidence in Mexico, top Walmart executives decided to
engage in damage control rather than coming clean.
• They gave eight bribes totalling $341,000 to build Sam’s Club in a densely
populated area without any permission and licence.
• They made nine bribe payments to build vast refrigerated distribution center in
an environmentally fragile flood basin north of Mexico city.
Case 03: Walmart Violations (Continued)
The consequences are:
• In 2012, The New York Times published an article detailing bribery of
Walmart.
• The US Department of Justice and the Securities and Exchange Commission
both announced that they had started investigations into Walmart’s
practices.
Case 04: Why did Walmart Fail in Germany?
Question 1: How do you rate Walmart as an American firm?
Answer:
• The goal of Walmart is providing commodities at lower price.
• They do not believe in union of employees.
• As they follow tight cost controls and superb inventory management, it turned out to be
the most successful retailer in US.
• In 2018, the revenue of the company was more than US$500 billion and is the world’s
largest company right now.
• It is also the largest private employer in the world with 2.2 million employers.
• It is a publicly traded family owned business and the company is controlled by the Walton
family.
Case 04: Why did Walmart Fail in Germany? (Continued)
Question 2: How do you identify German culture that was missing in Walmart?
Answer:
• The first CEO of Walmart in Germany, Ron Tiarks didn’t know German and didn’t make any
attempt to learn. He decided to make English the official language in the management
level. He didn’t understand the difference between German and US shopping culture.
• The second CEO, Allan Leihton, a British also couldn’t speak German and used to run the
business from UK.
• At the management level, there was a widespread dissatisfaction with the relatively low
base payment at Walmart and the practice of transferring managers after one or two
years was not also in German culture.
• The managers didn’t like to share rooms while business trips.
• Many shoppers perceived Walmart as ‘American Junk’ offering low value, low priced
merchandise where in German culture, quality is value.
Case 04: Why did Walmart Fail in Germany? (Continued)
• German people also didn’t like greetings from strangers that Walmart shop does at entry
and exit points.
• Walmart offered a grocery bagging service but Germans didn’t like strangers handling their
groceries.
• Germans don’t usually smile at strangers but in Walmart, checkout clerks smile to the
shoppers.
• Walmart employees in German feels embarrassed at the Walmart chant and stretching
exercise while starting a new shift.
• German employees didn’t like Walmart ethics code. They interpreted it as a ban on
interoffice romance by puritanical Americans.
Case 04: Why did Walmart Fail in Germany? (Continued)
Question 3: What do you think Walmart should have done in Germany to save the failure?
Answer:
• Walmart should have appointed German CEO and should have adopted the culture of
local people.
• The company should have offered higher wages to employees, relaxed the cost control
while business trips, opened wage bargaining process between the unions and the
retailers and kept the managers log duration in a same shop.
• They should have stopped bagging service and greetings to the shoppers.
• They should have also avoided chant & stretching exercise in office as German employees
didn’t like that.
Case 05: The Collapse of Rana Plaza
Question 1: How important is the RMG sector to the economy of Bangladesh?
Answer:
• RMG sector plays an important role in the total economy of Bangladesh. Now-a-days RMG sector is
a multi-billion-dollar earning business and export industry in Bangladesh.
• Bangladesh is a fertile field for RMG sector. It has brought revolution to its economy contributing
about 81% to its total foreign income which was 3.89% in 1980-81.
• Solving Unemployment Problem: RMG sector have created job opportunities for more than 6
million people directly and about 30 million more indirectly.
• Women Social Status: In Bangladesh, the majority of workers of RMG sector are women. They are
now earning which has changed their contribution in family and social decision making.
• Development of other Key Sectors of Economy: The RMG sector stimulates the development other
key sectors of economy like Bank, Insurance, Transport, Logistic, Communication process, Buying
house, Liaison office, Money laundering etc.
Case 05: The Collapse of Rana Plaza(Continued)
• International Relation: Bangladesh exports garments to different nations of the world
such as U.S.A, UK, Germany, France and other E.U countries which make a better
international relationship among the nations.
Question 2: Why do think this sector has suffered from due quality?
Answer: This RMG sector suffered from many problems. Some are discussed below:
• Raw materials: Bangladesh imports raw materials for garments like cotton, thread color
etc. Foreign suppliers often supply low quality materials, which result in low quality
products.
• Unskilled workers: Most of the illiterate women workers employed in garments are
unskilled and so their products often become lower in quality.
• Improper working environment and safety problem: Taking the advantages of workers'
poverty and ignorance the owners force them to work in unsafe and unhealthy workplace.
Case 05: The Collapse of Rana Plaza(Continued)
• Lack of managerial knowledge:
1. Lack of marketing tactics,
2. Absence of easily on-hand middle management.
3. A small number of manufacturing methods.
4. Lack of training organizations for industrial workers, supervisors and
managers.
5. Autocratic approach of nearly all the investors.
6. Fewer process units for textiles and garments.
7. Sluggish backward or forward blending procedure.
8. Incompetent ports, entry/exit complicated and loading/unloading takes
much time.
9. Time-consuming custom clearance etc.
Case 05: The Collapse of Rana Plaza(Continued)
• Insufficient for loan: Insufficiency of the loan in time, the uncertainty of electricity, delay
in getting materials, lack of communication, the problem in taxes etc. Often obstruct the
industry.
• In the world market, 115 to 120 items of dress are in demand whereas Bangladesh
supplies only ten to twelve items of garments.
• Price competitiveness: China and some other competitors of Bangladesh have
implemented sharp price-cutting policies in exporting garment products over the last few
years, but Bangladesh has failed to respond effectively to such policies.
Case 05: The Collapse of Rana Plaza(Continued)
Question 3: How do you relate the importers of RMG in default?
Answer:
• BGMEA has announced an export goal in Apparel Summit 2014 for increasing annual export of RMG to
US$50 billion by 2021.
• However, it become very tough and tough because of the defaultness of buyers or importers.
• During economic recession of 2008-9, it was though that we would loss importers in our RMG sector.
Dramatically our export had grown up during that time.
• Within 5/6 years importers lost their interest from us. The main reason is that we didn't follow proper
industrial building code in our RMG sector and for that lots of worker died in accident within a very quick
time and due to that USA withdraw our GSP advantage in 2013.
• On the other hand, in India, RMG sector is growing very fast. China also reduces their products prices. So,
our regular importers felt safe to go there.
• One other important thing our RMG works protest against their low wages with a regular interval. So,
importers thought we didn't give them (workers) proper wages.
These are the main reason importers are default in our RMG sector.
Case 05: The Collapse of Rana Plaza(Continued)
Question 4: Evaluate the importance of Walmart in our RMG sector relating to the global recession and what
was the role and argument put by Walmart not to take part in the account?
Answer:
• During global economic recession in 2008-2009 at developed counties, people of those countries cut off
their additional cost of living. They tried to buy low cost garments.
• Since Walmart has a renounce for low price shopping, it's selling was increased during that time.
• Walmart placed more order and increased their purchases of low-cost products from our country. So, during
that period, production in RMG sector jumped up around 25%.
• While our RMG sector facing different types of safety problems, Walmart pledged to give $1.8 million to
train 2000 Bangladeshi factory managers about fire safety while some nongovernment organization reported
that it would cost $3 billion to make the needed fire safety and building improvements of 5000 garment
factories.
• Walmart stated that they would not pay for factory renovations but expected to increase the costs of goods
purchased.
Case 06: The Rise of India’s Drug Industry
Question 1: How might (a) U.S pharmaceuticals companies and (b) U.S consumers benefit
from the rise of the Indian pharmaceutical industry?
Answer:
• The rise of the Indian pharmaceutical industry has lowered the costs of U.S companies,
enabling them to protect their earnings in an increasingly difficult domestic environment
where the government health care regulation and increased competition have put
pressure on the pricing of many pharmaceuticals.
• This has also benefitted the consumers as lower pharmaceutical prices mean lower
insurance costs, smaller co-pays and ultimately lower out-of-pocket expenses than if those
pharmaceuticals were still manufactured domestically.
Case 06: The Rise of India’s Drug Industry(Continued)
Question 2: Who might have lost out as a result of the recent rise of the Indian
pharmaceutical industry?
Answer:
• U.S and other countries' pharmaceutical manufacturers would lose out on a significant
market share due to the rise of this industry as India has cheaper labour costs than other
countries.
• In fact, total manufacturing employment in this sector fell by 5 percent between 2008 and
2010.
Case 06: The Rise of India’s Drug Industry(Continued)
Question 4: What international trade theory (or theories) best explain the rise of India as a major exporter of
pharmaceutical?
• Answer: We would try to explain the rise of India as a major exporter of pharmaceutical through two
international trade theories:
i) The new trade theory:
• It suggests that, being first mover in an industry brings comparative advantage. It helps to capture
government procurement, to select best possible location for trading. to capture market distribution system.
• India was the leading country to produce generic drugs in early 1990s and 2000s. Though India had started
its journey as an international pariah for violating intellectual property rights but signing an agreement with
WTO in 2005 facilitated their entrance into the global market.
• Having experience of producing generic drugs, a skilled force and low wage rate have singled them out in the
international market.
• Now, western countries where labour cost is too high, have chosen India to be their manufacturing hub.
Case 06: The Rise of India’s Drug Industry(Continued)
ii) Porter's diamond model: Porter theorizes four broad attributes of a nation shape the environment in which
local firms compete.T hese attributes are:
• Factor endowments: India has abundance of that such as skilled workforce, low labour cost, and widespread
use of English as a business language.
• Demand conditions: Being a hugely populated country, there is an acute necessity of drugs in India. As India
is sustaining in this industry since 1990s so their workforce and consumers are quite knowledgeable.
• Related and supported industries: As India has performed consistently well under the WTO agreement, even
today the U.S FDA has issued approvals to produce pharmaceuticals for sale in the U.S to some 900 plants in
India which is a spill over effect of their performance.
• Firm strategy, structure and rivalry: The labour cost is immensely low in India than their other counterparts
and sustaining in this industry since 1990s has equipped them with expertise so they can supply high quality
products at a low cost.
In this case. India meets Michael Porter's factors of factor endowment, demand conditions,
supporting industries and firm strategy efficiently.
Case 06: The Rise of India’s Drug Industry(Continued)
Question 5: How Bangladesh can take advantage of the lesson from the case of Indian drug industry?
Answer:
• After apparels, the pharmaceuticals industry is the most promising sector of Bangladesh at this juncture.
• The sector is not only catering to domestic needs, but also exporting to over 100 countries including the
United States and Europe.
• India has set a landmark in the pharmaceutical sector so Bangladesh can emerge as the world's next big
supplier of pharmaceuticals by acting as the 'India Plus One' source of low-cost medicines in the global
market.
• Copying and reverse engineering is critical to economic catch-up in a range of industries, not just
pharmaceuticals.
• Again, this is a sector where R&D plays a vital role in its growth so collaboration with multinational
companies could enrich this sector like India.
• Although, our pharmaceuticals industry is strong in terms of their manufacturing base, it is weak in terms of
backward linkage. However, the planned establishment of API parks may solve this problem.
Case 07: FDI by Cemex
Question 1: How do you experience the demographic change in global FDI from CEMEX
behaviour?
Answer: Cemex's international expansion strategy was driven by a number of factors.
• First, the company wished to reduce its reliance on the Mexican construction market,
which was characterized by very volatile demand.
• Second, the company realized there was tremendous demand for cement in many
developing countries, where-significant construction was being undertaken or needed.
• Third, the company believed that it understood the needs of construction businesses in
developing nations better than the established multinational cement companies, all of
which were from developed nations.
• Fourth, Cemex believed that it could create significant value by acquiring inefficient
cement companies in other markets and transferring its skills in customer service,
marketing, information technology and production management to those units.
 Case 07: FDI by Cemex (Continued)
• Initially, Cemex targeted other developing nations, acquiring established cement makers in,
Venezuela, Colombia, Indonesia, the Philippines, Egypt, and several other countries.
• It also purchased two stagnant companies in Spain and purchased Houston-based Southland,
one of the largest cement companies & turned them around. Bolstered by the success of its
Spanish ventures, Cemex began to look for expansion opportunities in developed nations.
• In 2000, Cemex purchased Houston based Southland, on of the largest companies in the United
States, for $2.5 billion. Following the Southland acquisition, Cemex had 56 cement plants in 30
countries, most of which were gained through acquisitions.
• In 2004, Cemex made another major foreign investment move, purchasing RMC of Great Britain
for $5.8 billion. RMC was a huge multinational cement firm with sales of $8 billion. The RMC
acquisition had transformed Cemex into a global powerhouse in the cement industry with more
than $15 billion in annual sales and operations in 50 countries.
We can see that Cemex is investing mainly in the developing countries as they have a lot of scope
there. They are also acquiring inefficient companies and using their experience in their favour.
Case 07: FDI by Cemex (Continued)
Question 2: What is the observation of the prospects of CEMEX in the future?
Answer:
• Cemex has made it clear that it will continue to expand and is eyeing
opportunities in the fast-growing economies of China and India where
currently it lacks a presence and where its global rivals are already expanding.
• For doing these, they might acquire small or inefficient cement companies
and use their experience to improve and enlarge their business all over the
world.