Ch 4 Mini Sim Going Global

Decision Point: Levels of International Involvement You've made the decision to go global with your solar kits, and it appears that India presents the best potential market for your products.It's time to jump into the pool, but you need to decide whether you're going to jump into the shallow end or the deep end.Consider the following levels of international involvement. Type the letter representing the level of international involvement into the correct circle on the continuum. Each correct answer is worth three points.

C, B, A

Decision Point: Ordering Light Bulbs You have hired an international agent and are ramping up production in your U.S. facility to keep up with the orders the agent has obtained. You receive an email from your purchasing manager.From: M. GomezSubject: OrderWe need to place a large order for bulbs for our solar kits. As you know, we import these bulbs from Japan. I have been watching the exchange rate between the U.S. dollar and the Japanese yen very carefully. The current exchange rate is $1 to 106.94 yen. However, sources tell me that the exchange rate is expected to be $1 to 115 yen very soon. Do you want me to place the order now or wait until the exchange rate changes?Please advise how you want me to proceed. Select an option from the choices below and click Submit.

Wait and place the order when the exchange rate changes.

Decision Point: The Exchange Rate and Your Company Now that you're exporting solar kits into the Indian market, you've been watching the dollar's exchange rate against the Indian rupees. Currently, $1 is worth 47 rupees. What do you hope the exchange rate is tomorrow? Select an option from the choices below and click Submit.

You hope that $1 will be worth less than 47 rupees tomorrow.

Decision Point: International Market Analysis You've done a considerable amount of research and have determined the following: Approximately 75% of the population in Ethiopia does not have electricity.Approximately 55% of the population in Nigeria does not have electricity.Nearly 40% of the population in Bangladesh does not have electricity.Nearly 25% of the population in Indonesia does not have electricity.Approximately 25% of the population in India does not have electricity. You recognize, however, that it would be wise to consider the population of those countries before determining which market(s) would have the greatest potential for your products, so you obtain that information as well. Your research reveals the following population estimates: Population of Ethiopia: 102,000,000 Population of Nigeria: 187,000,000 Population of Bangladesh: 163,000,000 Population of Indonesia: 260,000,000 Population of India: 1

Ethiopia: 102,000,000 x 75% = 76500000 Nigeria: 187,000,000 x 55% =102850000 Bangladesh: 163,000,000 x 40% =65200000 Indonesia: 260,000,000 x 25% =65000000 India: 1,327,000,000 x 25% =331750000

Decision Point: Your International Organizational Structure You've determined that India presents the greatest potential for your solar kits. Now it's time to decide the best approach for launching your solar kits internationally. You recognize that there are different types of organizational strategies available to you to introduce your solar kits in India. You want to go slowly and enter this new market with minimal risk and expense. Of the following, which approach will you use? Select an option from the choices below and click Submit.

Independent agent

Decision Point: How Subsidies Will Affect Your Sales You have decided to continue on with hiring an independent agent to sell your solar kits in India. Much to your surprise, the Indian government has announced that it intends to subsidize local manufacturers of solar kits in India. How will this impact the sales of your products? Select an option from the choices below and click Submit.

It will make your products more expensive in India than those of local competitors.

Mentoring Moment: Barriers to International Trade Governments can affect international business in many ways. You've just seen how a subsidy can negatively impact the price of your solar kits versus those produced by domestic firms. But subsidies aren't the only way that governments can set conditions for doing business within their borders and even prohibit doing business altogether.Tariffs are taxes on imports. These taxes make the imported good more expensive, giving a domestic producer a better chance at competing with the foreign producer. For example, India might impose a 15% tariff on imported solar kits. This would make your product more expensive for Indian consumers.Quotas put a physical limit on the quantity of a good that can be imported into a country in a given period of time. This leads to a reduction in the quantity imported and increases the market price, benefiting a domestic producer.Embargos are g

Tariff Type: Japan announces an import tax of 15% on US made vehicles Every wristwatch imported into Mexico is subject to a tax of 45 pesos Quota Type: The US allows the import of no more than 1.23 million tons of sugar each year Vietnam restricts the import of rice to 350,000 metric tons per year Embargo Type: Russia places a complete restriction on the importation of fish from Norway Subsidy Type: The government of Haiti supplements the income of farmers of agricultural commodities such as wheat, grain and cotton Local content law type: The Federal Highway Administration requires that steel and iron products used in highway construction projects must be sources from US companies Business practice: Companies wishing to import cheese into France must comply with lengthy customs procedures and provide additional trade documents such as Certificates of Origin and Certificates of Authenticity

Decision Point: Why You Wouldn't Hire an Independent Agent You're considering entering the Indian market through hiring an independent agent. Which of the following factors would make you reconsider your decision? Select an option from the choices below and click Submit.

The Indian government is considering imposing a tariff on solar kits.

Decision Point: Choosing an International Market On the basis of population, it would appear that India has the greatest potential for your solar kits. However, you realize that this is a huge decision, so you decide to do more research before finalizing your decision. Which of the following factors, if true, would make you less inclined to enter the Indian market? Select an option from the choices below and click Submit.

The U.S. dollar has skyrocketed in value against the Indian rupee.