Question 1 - JES, Inc., a U.S. technology company has recently developed a revolutionary lighting product that will replace incandescent lamps. The product offers exciting new features along with all of the features of conventional lighting products, but at a fraction of the manufacturing costs. As the international business manager of JES, you have been asked to choose the best mode of entry into the European market. You have the following options:
- Export your product from the United States.
- Enter into an alliance with a large European company.
- Manufacture the product in the United States and set up a wholly owned subsidiary in Europe.
- License a European firm to manufacture and market the lighting products in Europe.
In preparation for your choice, list the pros and cons of each method of entry. Which choice do you present to Mr. Salina (CEO and inventor of the new technology)? Be sure to support your decision.
Question 2 - Define a trade deficit and a trade surplus. What are the implications of a long-term trade deficit or trade surplus? What techniques are available to correct balance of payment deficit or surplus?
Does free trade equate to fair trade? Does free trade exist anywhere in the world?