Mgcr 382 2nd Group Assignment

MGCR 382- 002 - International Business

2nd Assignment

Group 30

1000 words (excluding cover page)

Melissa Videira Bder 260743241[pic 1]

Ben Huang 260740476

Mohamed Mseddi 260713434

Aamir Raza 260613003

Jay VanPut 260664724

Aramex Aims to Disrupt…

1. International strategy

• Definition: The effort of managers to create value by leveraging core competencies from the home market to foreign markets.
• Explanation: Potential multinational firms must develop effective international strategies in order to successfully expand. This may include, but is not limited to, addressing issues of country differences and necessary product adaptations.
• Example: Aramex sees Africa as an area of growth; however, Africa’s’ current ecommerce activity has been predominantly domestic. International strategy needed to address this must include a solution for the region’s payment challenges, seeing as most retailers do not accept their credit cards.

1. Foreign Direct Investment

• Definition: Investment that gives the investor a controlling interest in a foreign company.
• Explanation: Foreign direct investment is one possible way for a company to go international. By moving to another country (or controlling part of another company), the investor becomes an MNF.
• Example: Aramex made some recent acquisitions such as the 25% stake in Ohio-based WS One Investment, which helps providing cross-border mailbox services out of the US.

China Cutting Edge in Mobile Tech

1. Frugal Innovation

• Definition: The process of reducing the complexity and cost of a good and its production to target Base of the Pyramid consumers.
• Explanation: By making the product or service more affordable this way, it is easier to export and sell to developing countries.
• Example: Chinese restaurants expecting to cut down on wages for waiters by using the automated ordering and payment function in an app, which is an innovation that can be used in foreign markets as well.

1. Intellectual Property

• Definition: The creative ideas, innovative expertise, or intangible insights that create a competitive advantage for an individual, company, or country.
• Explanation: Businesses can benefit from copying successful intellectual ideas from foreign companies.
• Example: The relative tech industries of the US and China constantly following in each other’s footsteps and looking at one another for new ideas.

Jollibee Moves Down…

1. Strategic Alliance

• Definition: An agreement between two or more parties to pursue a set of agreed upon objectives, while remaining independent organizations.
• Explanation: Strategic alliances can be effective modes of international entry for firms seeking a greater degree of control without excessive commitment – in comparison to full acquisition, for example.
• Example: Jollibee, a Filipino company, signs an agreement with the Japanese firm, Ise Foods, to oversee their egg production.

Ikea Plans for India…

1. Motives for Internationalization

• Definition: Reasons that motivate companies to control foreign operations.
• Explanation: These motives include seeking foreign markets, acquiring resources, reducing risks and learning. These factors guide decisions about whether, where and how to engage in international business.
• Example:     Ikea wants to establish itself in India because it wants to seize India’s retail market which is expected to grow to $1 trillion by 2020 and to source more raw materials from India.

1. Laws and Regulations

• Definition: Rules determined by political process and enforced by the state.
• Explanation:   Laws and regulations can be a barrier to entry for MNCs and may restrict their operations after entering the country.
• Example: Until 2011, India restricted foreign companies to run single-brand retailers by themselves. This regulation delayed Ikea’s plans for opening stores in India.

3G Capital buys Company…

1. Organizational Culture: 

• Definition: The shared meaning and beliefs that shape how employees interpret information, make decisions, and implement actions.
• Explanation: The organizational culture of MNCs can have important impacts on employees’ work ethics, motivation and potentially their output.  
• Example: Under 3G Capital’s management, the culture of the acquired companies often shifts to a very competitive environment where harsher austerity measures and layoffs are commonplace, threatening the job security of employees.

Uniqlo in Asia…

1. Nearshoring

• Definition: Outsourcing business processes, especially information technology processes, to companies in a nearby country, often sharing a border with the target country.
  Explanation: Nearshoring can be a good way for a company to save on transportation costs if the neighboring countries have cheaper labor costs. This may help them save on transportation costs as well.
• Example: Uniqlo manufactures many of its garments in India, Japan’s close neighbor in order to save on costs. Uniqlo will be able to recognize added benefits because they will are looking to expand there and already meet the 30% in-country production pre-requisite.

1. Pressure for Global Integration

• Definition: reasons why a company combines different activities around the world so that they operate using the same methods, etc.
• Explanation: With the growth of the international marketplace being able to expand can make or break a company. Companies that stay at home will have to battle with other international companies coming in to steal their market shares.
• Example: Uniqlo are looking to expand to neighboring markets with growing economies. In addition, European behemoths such as Inditex are starting to enter the continent, putting pressure on Uniqlo to capitalize on these untapped markets (such as Vietnam).

Asian Fashion in US & Europe

1. Multi-Domestic Strategy

• Definition: An approach that emphasizes responsiveness to the unique conditions prevailing in different national markets.
• Explanation: Allows for a smoother penetration into the foreign market, especially for those companies with non-standardized products. knowing how the foreign market will differ from home can help companies make effective changes to products.
•  Example: The implementation of a multi-domestic strategy did not occur until after the failure in the US. If Uniqlo knew about size difference in US they would have been able to access more customers earlier on.

1. Liability of Foreignness

• Definition: The insight that firms face social and economic costs when they operate in foreign markets.
• Explanation: Potential costs and obstacles to be considered when entering foreign markets can be pivotal in a firms’ international success.
• Example: Mainstream Chinese fashion retailers struggle in the West. The firms face issues including cultural barriers (differences in tastes) and economic differences (pricing issues).