International Business - ICFAI CASE STUDY ASSIGNMENT

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QUESTIONS FOR
CASE STUDY ASSIGNMENT








International Business






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Executive MBA Program,
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QUESTIONS FOR CASE STUDY ASSIGNMENT

International Business

ANSWER THE QUESTIONS FOR ANY TEN CASE STUDIES

Questions for 18 case studies are given below. Each case study assignment has 2 questions. Students are required to answer questions for any 10 case studies (20 answers). Students are advised to submit answers for all 10 cases in one go, for results to be adjudged in one instance.

6 should be from the first 12 case studies (Set A: No. 01 to 12) involving BRIC countries, and 4 should be from the remaining 8 case studies (Set B: No. 13 to 20).
Each case study assignment has 2 questions. Students are required to answer questions for exactly 10 case studies (20 answers).

Students are advised to submit answers for all 10 case studies in one go, for results to be adjudged in one instance.


Set A: Case Studies on International Business involving BRIC Countries



01. Gazprom – Naftogaz Ukrainy Dispute: Business or Politics?

a.            Study the vulnerability of Gazprom’s exports to Europe with respect to its long-term commitments of gas supplies to European countries. What can such a company do to reduce its dependence?

Answer: In both economic and political terms, energy resources form the strongest link between Russia and the outside world. As most of Russia’s energy exports go to the European Union, the relationship between these two players is often referred to as a situation of strong energy interdependence. Russia, providing more than 30% of gas and oil imported to the EU, is its most important supplier. In 2013 Russia exported 153.9 million tonnes of oil (66% of its total export), 139 billion cubic metres (bcm) of natural gas (70%) and 60.5 million tonnes of coal (50%) to the EU, and therefore has the structural power to



b.            Ukraine heavily subsidized its domestic gas consumption. At the same time, it wanted to break free from the Russian influence and become a market-oriented economy. How can this be achieved given its dependence on the subsidized gas imports from Russia? Discuss the painful transitions of such economies, when they are forced to reduce subsidies and increase the prices of gas and other basic services.

Answer: The strong asymmetry and lack of parallelism in structures, which also function as leadership of energy sectors, characterise the EU–Russia relationship. These differences, reinforced by diverging approaches to international relations, prevent closer energy cooperation and construction of mutual trust. While discussing the Russian energy approach, it has to be underlined that there is no abstract decision making at the Kremlin. Hence it is necessary to make reference to Vladimir Putin and his entourage,


02. The Indian Rupee-US Dollar Exchange Rate: The Economic Impact of a Strengthening Currency

a.            Analyze the case and present the implications of rupee appreciation on the exports and on the Indian economy.

Answer: The Indian rupee has appreciated by nearly 10% since late 2006, posing an acute dilemma for Indian policymakers. In some ways, the present strength of the currency, which is now hovering just above the symbolic Rs40:US$1 mark, is an enviable problem. It suggests that the country's attractiveness to foreign investors is increasing and signals optimism about the Indian economy more generally. However, the



b.            What are the various ways in which exchange rate management is facilitated?

Answer: Do you think Indian government fix the value of Indian Rupee against US dollar? If not, who fixes it? RBI? No; at present none of these entities fix the value of Indian Rupee. Now the value of Indian Rupee (or any other currency) is determined by market. Yes, Market! The demand and supply forces in currency market. If the demand for Indian currency is high, Indian rupee will have high value, and if demand is low, it will depreciate.
Also, understand that a high value for Indian currency means, the exchanged rate of Indian rupee against US dollar will be less. Or to explain with an example : Rs.40 against 1 US dollar means high value for Indian rupee when compared with Rs.70 against 1 US dollar.
So, if market forces determine the value of a


03. The US-China Exchange Rate Stand-Off

a.            Analyze China’s exchange rate policy and its impact on the US and the world economies. What, in your opinion, are the main factors behind the huge trade deficit that the US has with China?

Answer: A major cause of the rapidly growing U.S. trade deficit with China is currency manipulation. Unlike other currencies, the Chinese yuan does not fluctuate freely against the dollar.2 Instead, China has tightly pegged its currency to the U.S. dollar at a rate that encourages a large bilateral trade surplus with the United States.
As China’s productivity has soared, its currency should have adjusted, increasing in value to maintain balanced trade. But the yuan has instead remained artificially low as China has aggressively acquired dollars and other foreign exchange reserves to further depress the value of its own currency. (To depress the value of its own currency, a government can sell its own currency and buy government securities such as U.S. Treasury bills, which increases its foreign reserves.) China had to purchase $337 billion in U.S. Treasury



b.            If China allows the Yuan to move freely against the US Dollar and reach its true value, what, according to you, will be the impact on the economies of both countries as well as on the world economy?

Answer: Currency manipulation is one practice that violates the rules of the international trading system set out in the GATT and WTO agreements (Stewart and Drake 2010). Other Chinese government policies also illegally encourage exports. China extensively suppresses labor rights, which lowers production costs within China. An

04. Embraer: The Brazilian Aircraft Manufacturer’s Turnaround and Growth

a.            The competition between Bombardier and Embraer had far reaching effects, even affecting relations between Canada and Brazil. Comment on the issues in the Bombardier-Embraer face off, and analyze the relative competitive position of the two companies. What are the implications of international competition on the trade and diplomatic relations between countries?

Answer: Brazil–Canada relations have been cordial but relatively limited, although the relationship between the two countries has been gradually evolving over time.
Prior to the 1820s Brazil and Canada were both colonies of European powers, and had no direct contacts. Brazil's independence was much earlier than Canada's, and British control of Canada's relations with foreign governments lasted

b.            Analysts believed that the future prospects for Embraer were mixed. Analyze the strengths and weaknesses of Embraer, and comment on the opportunities and threats that affected Embraer’s future prospects and potential.

Answer: Outside of trade policy, relations have been much warmer. The foreign-policy making groups in each country tend to value multilateralism and human security. Canada is not necessarily opposed to Brazil's main goals of international recognition as a great power, and regional integration in South America. Canada's main goal in the region is to prevent the emergence of hostile trade blocs


05. McDonald’s Russia: A Jewel in the McDonald’s Emerging Market Operations?

a.            Explain the entry and expansion strategies of McDonald’s in Russia. What are the major reasons for McDonald’s instant popularity in Russia that continued to grow over the years?

Answer: McDonald’s shook up its leadership this week as it struggled to keep up with changing consumer tastes, appointing Steve Easterbrook, a veteran of UK high street restaurant chains, to replace Don Thompson as chief executive.
FT reporters around the world take a market-by-market look at the challenges facing the company.

b.            Critically analyze the challenges McDonald’s could face in the country in the future. What should the company do to overcome these challenges?

Answer: Mc Donald's is one of the world's largest chains of fast food restaurants. They operate thirty two thousand restaurants serving more than sixty million customers daily. The key to rapid and successful international expansion of Mc Donald's is the franchise model pioneered by them.
Mc Donald's recognized early in their life that overseas market required an extremely high degree of local responsiveness and that they

06. Carrefour’s Misadventure in Russia

a.            According to Thierry Garnier, Member of the Carrefour Group Executive Committee, “We are confident that retail business in Russia has considerable long-term potential, and the market is strategically important for the development of our company.” In the light of the above statement, what factors led Carrefour to suddenly exit the Russian retail market.


Answer:

b.            Critically analyze the Russian retail market in the light of Porter’s five forces model. Do you think the market is lucrative enough to attract more foreign players? Explain.


Answer:

07. Sakhalin-1 Project: Delivering Excellence in Project Execution

a.            Explain the significance of the Sakhalin-1 project to Russia in particular and to the world’s oil and gas industry in general.

Answer: The Sakhalin-I project, a sister project to Sakhalin-II, is a consortium to locate and produce oil and gas on Sakhalin Island and immediately offshore, in the Okhotsk Sea, from three fields: Chayvo, Odoptu, and Arkutun-Dagi.
In 1996, the consortium completed a




b.            Discuss the technical and environmental challenges faced by the team of the Sakhalin-1 project. How did they overcome these challenges?

Answer: For the past few years everyone at the conference has agreed that the expansion of the Sakhalin-2 LNG plant at Prigorodnoye in the south of the Island, which is also the subject of an annual pilgrimage for conference delegates, was a ‘no-brainer.’ The problem was that the Sakhalin-2 project did not have sufficient gas reserves to supply a third train. At the St Petersburg International Forum on 18 June Gazprom and Shell signed an Agreement of Strategic Cooperation to include global asset swaps that would enable

08. Volkswagen’s Marketing Strategy in India

a.            Volkswagen Group India found out through its research that the Volkswagen brand was not well known among the Indian consumers. The company launched an integrated marketing campaign to address the issue. Analyze this campaign and explain how it would increase the brand awareness of Volkswagen in India.

Answer: Raj Sawant, Business Head of Automark Motors, a Volkswagen dealer in Ahmedabad, Gujarat, India, said, "There are already over 170 advance bookings across India, and we have started delivering the cars as well. Going by the initial euphoria, we expect to sell around 300 Beetles in 2010."
Volkswagen Group India, the Indian subsidiary of leading automobile manufacturer, Volkswagen AG (Volkswagen), based in Wolfsburg, Germany, had entered the Indian passenger car market in 2001 by launching its car brand - Skoda. In 2007, two of its other brands Audi and Volkswagen, were also launched in India.
Over the years, Volkswagen Group India not

b.            Volkswagen Group India expected that the launch of a compact car, Polo, and a low priced car, UP! would help it to capture a significant share of the Indian passenger car market. Do you think, by launching these models, the company will dilute its brand positioning as a luxury car maker in India? Take a stand and justify it.

Answer: The central aspect of this model is to highlight the competitive rivalry within an industry. There are 2 main types of competitors internal and external. The internal competition refers to the direct pre-existing competition of a brand in the same product class while external competition includes suppliers and customers

09. Mylan’s Acquisition of Matrix

a.            Comment on Mylan’s strategy of inorganic growth in the context of the global generic drugs market.

Answer: In January 2007, Mylan Inc. (Mylan), one of the largest US generic drug makers, acquired a 71.5 percent stake in Matrix Laboratories Ltd. (Matrix), India, a leading Active Pharmaceutical Ingredients (API) supplier globally, for a cash and stock deal of US$736 million. The Mylan-Matrix deal was the largest acquisition in the Indian pharmaceutical industry and was viewed by analysts as a step toward backward integration for My


b.            Discuss the rationale behind Matrix’s decision to be acquired by Mylan. Discuss the benefits gained by Matrix and the bottlenecks it had to face as a result this acquisition.

Answer: In 2007, US-based Mylan Inc, a $7-billion generic drug maker, bought Matrix Laboratories, Hyderabad, for $736 million. In the seven years since, it has invested around $3 billion on acquisitions in India. It now regards India not just as a global sourcing hub, but also as a market. More than half its global employees are in India, as are 14 of its total 38 plants worldwide approved by the US Food and Drug Administration (FDA).
At a global level, Mylan is trying to carve out a niche in the lucrative injectables market. It is here that its most recent acquisition in India, Agila Specialties, for $1.6 billion last year makes a difference. Injectables are more

10. Brilliance Auto: A Chinese Automaker with Global Ambitions

a.            What strategies did Brilliance Auto adopt to foray into international markets? What are the major hurdles that Brilliance Auto needs to overcome, if it is to succeed in the European and the US auto markets? What can it do to overcome these?

Answer:


b.            Discuss Brilliance Auto’s efforts to introduce its vehicles in markets across Asia and Africa. Would the company be better off investing resources in growing its market share in these countries, instead of concentrating its efforts in Europe and the US?

Answer:


11. Troubled Times for the Chinese Toy Industry

a.            In 2007, the Chinese toy industry had to deal with a number of product recalls. According to some officials in the Chinese government, the recalls were orchestrated by countries that were against large-scale imports of Chinese toys. Do you agree with this assessment? Justify.


Answer:

b.            In the context of the given case study, analyze the problems and challenges faced by the Chinese toy industry. What can China do to maintain its position in the global toy industry? Also, discuss the regulatory hurdles that may come in the way of the future development of the Chinese toy industry.

Answer:


12. Pfizer’s Intellectual Property Rights Battles in China for Viagra

a.            Describe the challenges faced by Pfizer in protecting its IPRs in China? Do you think China has been doing enough to provide adequate protection to IPRs? Do you agree with analysts that the Viagra patent litigation in China is indicative of China’s growing appreciation of the need to protect IPRs? Give reasons for your answer.

Answer:


b.            Imagine that you are the CEO of a pharma company with a large product portfolio of successful drugs. It has been proposed that your products should be introduced into the Chinese markets. Discuss the various considerations before you, keeping in mind the market conditions, the IPR problems, and your responsibilities towards your stakeholders.

Answer:



Set B: Case Studies on International Business not involving BRIC Countries

13. The European Union and Immigration from New Member Countries

a.            Discuss the types of immigration regimes in the old EU economies, and their impact on the growth of their economies and welfare systems.


Answer:

b.            In a free market, the market forces are supposed to determine the supply of and demand for labor. But in EU, where there are virtually no barriers to the free movement of goods or services or capital, how did restrictions come to be imposed on the free movement of labor? Discuss the pros and cons of such restrictions.

Answer:


14. The South African Economy: Coping with the Legacy of Apartheid

a.            What, in your opinion, were the factors that led to the eventual demise of the apartheid system? To what extent are South Africa’s economic problems a legacy of apartheid? Could they have also been caused by external factors, over which the government had little control? Justify your arguments with lucid explanations.

Answer:


b.            How can South Africa’s problems of income disparities, poverty, and unemployment be tackled? Can these problems be tackled together, effectively? Or, would solving one problem (say, that of unemployment) make another (say, income inequalities) worse?

Answer:


15. The Softwood Lumber Dispute between Canada and the United States

a.            Critically analyze the 2006 Softwood Lumber Agreement. What impact did the lumber dispute have on the trade relationship between the US and Canada?

Answer:


b.            Canadian lumber companies paid lower stumpage rates than their American counterparts. Do you regard this as a type of subsidy? Justify. What role do subsidies play in making an industry competitive?

Answer:


16. MTV Networks: The Arabian Challenge

a.            Experts felt that one of the biggest challenges faced by MTV while launching MTV Arabia was the prevalent culture in the Arab world. Discuss the Arab culture. How was it expected to pose a challenge to MTV?

Answer:


b.            Critically analyze MTV’s strategy in the Middle East. Comment on its entry strategy and also its strategy of providing mixed content to the market. Do you think MTV will be able to succeed in this market? Justify.

Answer:


17. Royal Ahold NV – The US Foodservice Accounting Fraud

a.            Elaborate on the circumstances that led to the accounting scandal at US Foodservice.

Answer: The case highlights the role of USF's management in the accounting fraud who intentionally booked higher promotional allowances to show higher income in order to get extra bonuses. It also examines the reasons that lead to accounting frauds such as poor financial and accounting controls, weak internal control system of the parent company over its subsidiaries, lack of transparency in accounting procedures and linking of management's compensation with the achievement of revenue targets.
Royal Ahold NV, the world's third-largest supermarket operator, ousted its chief executive and chief financial officers and said it will have to

b.            What were the reasons for huge differences in the income reported by Ahold according to the Dutch GAAP and the US GAAP? Explain.

Answer: On March 7, Ahold reported net earnings of EUR 1.1 billion using Dutch GAAP, the accounting standard Ahold has used for decades. As required by the SEC, Ahold performs a reconciliation at the end of the fiscal year of its results under Dutch GAAP to US GAAP. Due to differences between Dutch GAAP and US GAAP, accounting standards related to goodwill, derivatives, and real estate gains our results were materially impacted, resulting in US GAAP net earnings of EUR 120 million, after preferred


18. Crisis Management at Toyota

a.            Discuss the crisis management strategy of Toyota with special focus on its PR approach in the United States.

Answer: Crisis management is a critical organizational function.  Failure can result in serious harm to stakeholders, losses for an organization, or end its very existence.  Public relations practitioners are an integral part of crisis management teams.  So a set of best practices and lessons gleaned from our knowledge of crisis management would be a very useful resource for those in public relations.  Volumes have been written about crisis management by both practitioners and researchers from many different disciplines making it a challenge to synthesize what we know about crisis management and

b.            Giving a brief overview of the crisis, present your opinion on whether a spate of recalls and the subsequent PR fiasco seriously sullied the Toyota brand that had been synonymous with quality and reliability. What lessons can you draw from the crisis? If you were the PR manager of Toyota, how you would have handled this crisis? Give reasons for your approach.

Answer: There are plenty of definitions for a crisis.  For this entry, the definition reflects key points found in the various discussions of what constitutes a crisis.  A crisis is defined here as a significant threat to operations that can have negative consequences if not handled properly.  In crisis management, the threat is the


19. BP’s Continuing Safety Problems: The Gulf of Mexico Crisis

a.            Critically analyze the Gulf of Mexico oil spill and its impact on the environment. What could BP have done to prevent the explosion on the oil rig? In your opinion, will the oil spill in the Gulf of Mexico eventually lead to the company’s collapse? Take a stand and justify.

Answer: The Deepwater Horizon oil spill (also referred to as the BP oil spill, the BP oil disaster, the Gulf of Mexico oil spill, and the Macondo blowout) began on 20 April 2010 in the Gulf of Mexico on the BP-operated Macondo


b.            Discuss the approach adopted by BP to resolve the crisis. Do you think BP acted responsibly in dealing with the disaster or did it try to cover up the whole crisis only to later on downplay the consequences? Critically discuss.

Answer: The Deepwater Horizon rig, owned and operated by offshore-oil-drilling company Transocean and leased by oil company BP, was situated in the Macondo oil prospect in the Mississippi Canyon, a valley in the continental shelf. The oil well over which it was positioned was located on the seabed 4,993 feet (1,522 metres) below the surface and extended approximately 18,000 feet (5,486 metres) into the rock. On the night of April 20 a surge of natural gas blasted through a concrete core recently installed by



20. Coca-Cola’s Business Practices: Facing the Heat in a Few Countries

a.            Discuss the nature of the allegations that led to the boycott of Coca-Cola’s products by universities in the US.

Answer: Criticism of Coca-Cola has arisen from various groups, concerning a variety of issues, including health effects, environmental issues, and business practices. The Coca-Cola Company, its subsidiaries and products have been subject to sustained criticism by both consumer groups and watchdogs, particularly since the early 2000s.
In 2003, the Centre for Science and Environment (CSE), a non-governmental organisation in New Delhi, said aerated waters produced by soft drinks




b.            As one of the world’s leading multinational corporations with an iconic brand, what kind of strategies should Coca-Cola use to face the boycott especially in the face of increasing consumer activism?

Answer: For many years Coca-Cola faced criticism in connection with the low wages and poor conditions for migrant workers employed at its Minute Maid subsidiary. Conditions improved somewhat after Minute Maid signed a contract with the United Farm Workers in 1972. Coca-Cola sold off its Florida citrus groves in 1994, ending its contractual relationship with the UFW.
Many, but not all, of the hourly workers at Coca-
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