Answer All Five Questions: Each Will Be Judged

Answer All Five Questions Each Answer Will Be Judged On Com

Answer all five questions. Each answer will be judged on completeness, correctness, clarity of presentation and freedom from errors in spelling and grammar.

Paper For Above instruction

Question 1: How might JC's related diversification strategy result in economies of scope and market power?

Jewell Company’s (JC) diversification strategy, characterized by acquiring businesses with similar core features—such as staple manufactured goods sold through volume retail channels—can lead to significant economies of scope and increased market power. Economies of scope arise when JC can leverage its existing resources, expertise, and systems across multiple business lines, thereby reducing costs and increasing efficiency. For example, JC’s shared internal capabilities such as accounting systems, product merchandising skills, and acquisition competencies can be utilized across different product lines, resulting in lower overall costs and streamlined operations.

Additionally, the external linkages, particularly through distribution channels with major retailers like Wal-Mart, enable JC to negotiate better terms, achieve wider market penetration, and enhance its bargaining position. This interconnectedness not only smooths distribution and logistics but also bolsters market power, providing JC with influence over retailers and suppliers. With a diversified yet interconnected portfolio, JC can cross-promote products, bundle offerings, and exert leverage in negotiations, thus strengthening its position within the marketplace. Furthermore, by operating in related sectors, JC can identify cross-selling opportunities and develop integrated marketing strategies that reinforce its competitive edge, reinforcing economies of scope and augmenting market power.

Question 2: Discuss multi-domestic strategy, global strategy, and transnational strategy. On what factors are these strategies based?

The multi-domestic, global, and transnational strategies are distinct approaches that multinational enterprises (MNEs) adopt based on their objectives, industry characteristics, and environmental considerations.

Multi-domestic strategy emphasizes customizing products, marketing, and operations to meet the specific needs of individual markets. Firms pursuing this strategy recognize the cultural, legal, and consumer differences across countries and respond accordingly. An example is food companies offering different flavors or packaging for different regions. This strategy is based on factors such as cultural diversity, regulatory environments, and customer preferences, advocating decentralization and tailored approaches.

Global strategy focuses on standardization, offering uniform products worldwide to achieve economies of scale and a consistent brand image. This approach is suitable when customer preferences are similar across countries or when cost efficiency is a priority. It relies heavily on centralized management, standardized products, and global branding, and is driven by factors like technological similarity, market convergence, and cost leadership considerations.

Transnational strategy combines the benefits of both approaches—seeking to achieve global efficiency while remaining responsive to local differences. It requires a complex organizational structure to coordinate activities across borders, balancing standardization and localization. The transnational strategy is based on factors such as dynamic global markets, diverse customer preferences, and the need for innovation, leveraging regional advantages and achieving both cost savings and local responsiveness.

Question 3: How would you respond to the statement, “I would never want to be dependent on an alliance. I prefer an acquisition so that everything would be under my control.”?

While acquiring a company provides a firm with full control over its operations, it also involves higher costs, integration complexities, and greater risks. Alliances, on the other hand, offer strategic flexibility, shared resources, and access to new markets or technologies without the significant financial investments that acquisitions demand. Relying on alliances can allow a company to mitigate risks associated with unfamiliar markets or technologies, and foster collaborative innovation.

Moreover, alliances can serve as a strategic testing ground before committing to a full acquisition. They often facilitate knowledge transfer, enhance competitive positioning, and can be less disruptive than a takeover. While control is important, a balanced approach recognizing that alliances provide opportunities for growth, learning, and risk management might be more effective than outright ownership, especially in uncertain or rapidly changing environments.

Question 4: What do you think about the use of offshoring by MNEs? Is it a threat to jobs in the U.S.? Has it benefited MNEs and other countries more than the U.S.?

Offshoring, where multinational enterprises (MNEs) relocate production or services abroad to reduce costs, has become a common practice due to competitive pressures and globalization. It can lead to job displacement in the U.S., especially in manufacturing and low-skilled service sectors. However, offshoring also enables firms to lower production costs, enhance competitiveness, and invest savings into innovation, expansion, and higher-value activities.

For the U.S., offshoring can be a double-edged sword; while it may threaten certain jobs, it can also stimulate economic growth through increased profitability, access to cheap inputs, and enhanced global market presence. Furthermore, offshoring benefits MNEs by reducing costs and increasing shareholders' value. Other countries benefit from job creation, technology transfer, and economic development opportunities. Nonetheless, the social costs within the U.S., such as job losses and community impacts, often fuel political debates about the ethics and long-term implications of offshoring.

Question 5: How do exchange rates influence business activities?

Exchange rates play a vital role in international business, impacting trade balances, investment decisions, and profitability. Fluctuations in currency values influence the relative cost of goods and services across borders. A depreciating domestic currency makes exports cheaper and more competitive internationally, potentially increasing export sales, but also raises the cost of imported inputs, which can increase production costs. Conversely, an appreciating currency can hamper export competitiveness but reduce the costs of imported raw materials and components.

Companies engaged in cross-border transactions must manage exchange rate risk through hedging strategies, currency options, or adjusting their operational structures. Exchange rate volatility can also affect pricing strategies, supply chain decisions, and profitability margins. For instance, sudden currency devaluations can erode profit if exports are not hedged, while favorable exchange rates can provide significant competitive advantages. Therefore, understanding and managing exchange rate risks are central to strategic planning and operational efficiency in global markets.

References

• Cavusgil, S. T., Knight, G., Riesenberger, J. R., Rammal, H. G., & Rose, E. L. (2014). International Business. Pearson.
• Cultures and Organizations: Software of the Mind. McGraw-Hill.
• Hill, C. W. L. (2019). International Business: Competing in the Global Marketplace. McGraw-Hill Education.
• Rugman, A. M., & Verbeke, A. (2004). A perspective on regional and global strategies of Multinational Enterprises. Journal of International Business Studies, 35(1), 3-18.
• Ghemawat, P. (2007). Redefining global strategy: Crossing borders in a networked world. Harvard Business Review Press.
• Johanson, J., & Vahlne, J.-E. (1977). The internationalization process of the firm. Journal of International Business Studies, 8(1), 23-32.
• Shapiro, C., & Varian, H. R. (1999). Information Rules: A Strategic Guide to the Network Economy. Harvard Business School Press.
• Kirkpatrick, C., & Parker, D. (2012). International Economics. Routledge.
• Hull, C. E., & Slinn, C. (2003). The impact of the Euro on multinationals’ currency strategies. International Business Review, 12(4), 445-463.
• Gordon, P. (2004). Offshoring and the U.S. economy. Economic Review, 89(4), 63-86.