1. Consider that in Fall 2017, the Trump administration uses U.S. trade policy by imposing, say a 25% tariffs on steel imports from China as a fix to, what it perceives to be, a China's foreign exchange rate policy of devaluating the yuan against the US dollar. Keep in mind that China in 2016 is the top exporter to the U.S., followed by Mexico, who has pushed Canada down to the third spot. (Do succinctly summarize the content of the theory, model, principles that will be applicable as well as draw the appropriate diagrams and flow charts in doing the analysis and answering the following questions. Provide full logical explanation for your conclusions and answers. Please, be specific-as presented in the class room lectures-in summarizing the content and logical analytics.)
a. How would business change for companies producing in the U.S. in the tariff affected industry? Impact on competition, sales, profitability, employment and wages? Also analyze the impact, if any, this would have on business in that industry in Canada.
b. How would business change for companies in the rest of the U.S., that is in industries not subject to the tariff? Impact on competition, sales, profitability, employment and wages?
c. What would be the impact on offshoring activities of companies operating independently out of the Canada, U.S.,China and other emerging market locations (consider only one location at a time)? Analyze possible effect on wages of high-skilled workers relative low-skilled workers, possible effects on kind of activities performed along the skills-value added supply chain.
d. Keep in mind that both China and the U.S. are members of the WTO. Outline what options are available to China in tackling this U.S. trade policy? Discuss at least two options and their possible consequences for businesses in the U.S.
e. Suppose you are running an export company that produces in China, does foreign direct investment (FDI) in supply chains, and also exports to the U.S. What prospects does your business face in the U.S., in Canada? What feasible business options are available to you to maximize sales, profitability and brand salience in the U.S. market? What feasible business options are available to you to maximize sales, profitability and brand salience in international markets and locations?
f. Suppose you are running an export company that produces in China, does foreign direct investment (FDI) in supply chains, and also exports to the U.S. What prospects does your business face in the U.S., in Canada? What feasible business options are available to you to maximize sales, profitability and brand salience in the U.S. market? What feasible business options are available to you to maximize sales, profitability and brand salience in international markets and locations? What achievable market outcomes can you anticipate in competing in emerging markets against Western-based firms with advanced technology and deeper pockets than your company?
2. Expectations are that the U.S. economy in 2017-2018 is to perform better than other major markets and the U.S. dollar has appreciated against most currencies, including the Canadian dollar. What international business expansion or softening would you analyze as opportunities or challenges, if you operate in Canada a business (consider one sector at a time):
a) in the oil-patch (energy) servicing sector;
b) in retailing in Canada imported products made abroad;
c) in wealth management in the financial-banking sector; and
d) in designing gaming software and applications.
In each case, discuss what strategies you would use to mitigate some of the significant business risk under this given scenario.
3. Emerging markets are a major focus of international businesses, including Canadian international businesses, going forward.
a) What are the most important opportunities and challenges facing businesses operating in emerging markets today?
b) How might these challenges affect your decisions on how to expand (greenfield investment, acquisitions, local sourcing of inputs, R&D and talent, etc.) into emerging markets?
c) How can an involvement in overseas markets help a firm capture experience curve advantages more rapidly?
4. Thunder Rock is a small microbrewery on the outskirts of Toronto. Sales have grown rapidly in the last two years mainly through word of mouth. Thunder Rock has a small brewery that is producing at full capacity at the moment. Thunder Rock has been written up in many business publications as an example of a well-run small business. As a result of the publicity they have received a lot of attention from venture capitalists and companies that want to buy them out. Thunder Rock wants to grow their business but is unsure which direction they want to take. They could expand in the Canadian market, but it is saturated with many microbreweries already. China is a huge untapped market that does not have a lot of foreign beers yet. There are a couple of large Chinese breweries like Tsingtao, that dominate the market but there are many foreigners now living in China that have a different taste for beer than Tsingtao.
a) Describe in detail what would be your recommendation for how they should enter the Chinese market.
b) Explain the reasons why you chose this entry strategy and the advantages and disadvantages compared to other possible methods a business might enter a country.
c) What strategy would you recommend the Canadian international business in tapping the value in the globalization process in this case to avoid the "blues zone" often encountered in emerging markets by multinational headquartered in mature economies. Fully explain your reasoning.