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Hbc 2234: International Business Management Question Paper
Hbc 2234: International Business Management
Course:Bachelor Of Commerce
Institution: Dedan Kimathi University Of Technology question papers
Exam Year:2013
UNIVERSITY EXAMINATION 2013/2014
EXAMINATION FOR THE DEGREE OF BACHELOR OF COMMERCE.
YEAR THREE SEMESTER I1
HBC 2234: INTERNATIONAL BUSINESS MANAGEMENT
DATE: APRIL 2013 TIME 2HOURS
ATTEMPT QUESTION ONE AND ANY OTHER TWO QUESTION
Question 1
Whirlpools dramatic turnaround through internationalization
Home appliance maker whirlpool corporations, headquartered in Benton harbor Michigan generated $19 billion In annual sales in 2010,an increase of 26% from the previous year. Key factors influencing this performance include the acquisition of the Maytag corporation in 2010 and an increased global demand for its brands and innovative products. During the next several years, the company expects growth in Asia and Latin America to be significantly higher than in North America and Europe.
Whirlpool employs more than 80,000 employees in over 60 manufacturing and technology centers world wide. The firm manufactures washers, dryers, refrigerators, dishwashers, freezers, ranges, compactors and microwave oven in 13 countries and sell them in 170 others under brand names such as whirlpool, Maytag, magic chef, jenn air, Amana, kitchen aid, Kenmore, brastemp and bauknecht. Whirlpool generates almost 60% of its sales from north America,25 % from Europe,15% from Latin America and just 2% from Asia.
As the U S appliance market matured in the 1990s whirlpool faced intense domestic competition and more demanding buyers, resulting in lower profit margins. Meanwhile international market trade barriers fell, consumer’s affluence grew and capitalism flourished. Management realized that it could best deal with these threats and opportunities by undertaking a systematic program on internationalization. As a result whirlpool engaged in a series of moves over the next decade.
Whirlpool acquired the appliance business of Philips in Europe, 65% of Italian cooling compressor manufacturer and purchased Poland second largest appliance maker. In eastern Europe whirlpool created subsidiaries to sell and service appliances in Bulgaria, Hungary, Romania, Russia, Slovakia and the Czech republic.
In china whirlpool formed a joint venture to produce air conditioners and established a corporate headquarters and product development/technology center in shanghai. The company also opened regional offices in Hong Kong, New Delhi and Singapore. In Mexico whirlpool acquired vitromatic,a former joint venture partner in Mexico. It also developed low cost versions of popular models to target customers in low income markets in Latin America, china and India.
Three factors have driven this global expansion. First, whirlpool sought to reduce its costs of R&D, manufacturing and service by locating plants and other operations in lower cost locations such as china, Mexico and Poland. Second, flat to declining sales growth in the United States pressured management to target sales in new markets abroad. Third, whirlpool realized the firms manufacturing and assembly operations would benefit from a more global approach.
Management redesigned products with more standardized parts and ramped up marketing to make whirlpool a globally recognized brand. The company integrated the activities of regional subsidiary so that whirlpool most advanced expertise in appliance technology, production and distribution could be shared with the firm’s division world wide.
In 1999 whirlpool management launched a major campaign to differentiate the firm’s offerings by emphasizing innovative, value added products. In early 2,000 whirlpools enlisted 75 employees from almost every job classification and assigned them in groups to Benton, harbor, Italy and Brazil .training almost lasted one year and was conducted by an outside consulting group. The next step was to get the rest of the global work force involved. Whirlpool established an intranet site and created a do it yourself course in innovation the company established a rating system to identify high potential innovative ideas. Since 2010 revunue has quadruped annually. Whirlpool estimates that the new appliances in development from the system could produce $3 billion in annual sales up from the projections of $1.3 billion in 2010.
Cross regional R&D teams also collaborate on innovation to adapt offerings to meet local demands in diverse international environments. Whirlpool has benefited immensely from international business. the firm is a leading example of how internationalization can revive a declining sales and optimize cost structures. It has established international distribution that reduces expenses leading to higher profits and has positioned itself to challenge competition on a global scale. The firm has thrived through sensitivity and commitment to consumers in diverse cultural and economic settings around the world.
Yet not all is bright and sparkling on whirlpool horizon. Haier, china largest appliance maker established a production base and a distribution center in South Carolina in the United States. The world fifth largest kitchen appliance maker has captured nearly 20% and 50% of the markets for window air conditioners and small refrigerators respectively. The move is troubling given that whirlpool generates very little of its sale in Asia, the world most populous region where Haier already has a strong presence. Ironically Haier south Carolina factory is creating new jobs in the state. South Carolina receives foreign direct investment from various countries and is home to 4 Japanese and 18 European facilities. These trends show that globalization both benefits and pose new threats to whirlpools international ambitions.
As it struggles to remain a world class player in a key industry, whirlpool faces new challenges. Management wants to expand sales in emerging markets while defending the home market from the global rivals from china and elsewhere. The firm seeks to continue to leverage and enjoy all the benefit international business.
Based on the above case study answer the following questions.
i) What is the nature of whirlpool domestic and international business environments? [6 marks]
ii) What type of risks does the firm face? [5 marks]
iii) How can whirlpool benefit from going international? [5 marks]
iv ) What advantages acquired abroad can help management improve whirlpool performance in its home market? [5 marks]
v) What actions has whirlpool management taken to ensure that the firm succeeds in the local markets throughout the world? [5 marks]
vi) How can whirlpool effectively compete with new rivals originating from the low cost countries such as Haier from china? [4 marks]
Question 2
a) Write short notes on the following terms as used in international business
i) International investment
ii) BOOT
iii) Greenfield investment
iv) Joint ventures
v) licensing [5 marks]
b) Describe briefly the classical theories of international trade and state whether they are relevant today? [ 15 marks]
Question 3
a) Analyze critically five key tasks of international human resources managers?
[10 marks]
b) Evaluate five success factors for regional integration? [10 marks]
Question 4
a) Discuss the different organization arrangement for global operations?
[12 marks]
b) Explain the main role of international monetary and financial system in international trade? [8 marks]
Question 5
a) Describe seven factors to consider in selecting foreign direct investment locations?
[14 marks]
b) Explain the main factors contributing to product suitability for international markets?
[ 6 marks]
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