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AEREN FOUNDATION’S Maharashtra Govt. Reg. No.: F-11724
NAME :
(NAME TO APPEAR ON THE CERTIFICATE)
REF NO :
COURSE :
SUBJECT:
AN ISO 9001 : 2008 CERTIFIED INTERNATIONAL B-SCHOOL
MBA
INTERNATIONAL BUSINESS
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CASE 1 (20 Marks)
Kodak started selling photographic equipment on Japan 1889 and by the 1930s it had a dominant position in
the Japanese market. But after World War II, U.S occupation forces persuaded most U.S companies including
Kodak to leave Japan to give the war torn local industry a chance to recover. Kodak was effectively priced out
of the market by tariff barriers; over the next 35 years Fuji gained 70% share of the market while Kodak saw
its share slip to miserable 5%. During this period Kodak limited much of its activities in Japan.
This situation persisted until early 1980s when Fuji launched an aggressive export drive, attacking Kodak in
the north American and European markets. Deciding that a good offence is the best defense, in 1984 and the
next six year, Kodak outspent Fuji in Japan by a ratio of more than 3 to 1. It erected mammoth $ 1 million near
signs as land marks in many of the Japan’s big cities and also sponsored Sumo wrestling, Judo, and tennis
tournaments and even the Japanese team at the 1988 Seoul Olympics. Thus Kodak has put Fuji on defensive,
forcing it to divert resources from overseas to defend itself at home. By 1990’s, some of Fuji’s best executives
had been pulled back to Tokyo.
All this success, however , was apparently not enough for Kodak. In may 1995, Kodak filed a petition with the
US trade office, that accured the Japanese government and Fuji of “Unfair trading practices”. According to the
petition, the Japanese government helped to create a ‘ profile sanctuary’ for Fuji in Japan by systematically
denying Kodak access to Japanese distribution channels for consumer film and paper. Kodak claims Fuji has
effectively shut Kodak products out of four distributors that have a 70% share of the photo distribution market.
Fuji has an equity position in two of the distributors, gives large year –end relates and cash payments to all
four distributors as a reward for their loyalty to Fuji, and owns stakes in the banks that finance them. Kodak
also claims that Fuji uses similar tactics to control 430 wholesale photo furnishing labs in Japan to which it is
the exclusive supplier. Moreover Kodak’s petition claims that the Japanese government has actively
encourages these practices.
But Fuji a similar counter arguments relating to Kodak in U.S. and states bluntly that Kodak’s charges are a
clear case of the pot calling the kettle back.
(a) What was the critical catalyst that led Kodak to start taking the Japanese market seriously?
(b) From the evidence given in the case do you think Kodak’s charges of unfair trading practices against Fuji
are valid? Support your answer.
CASE 2 (20 Marks)
Two Senior executives of world’s largest firms with extensive holdings outside the home country speak.
Company A : “We are a multinational firm. We distribute our products in about 100 countries. We
manufacture in over 17 countries and do research and development in three countries. We look at all new
investment projects both domestic and overseas using exactly the same criteria”.
The execution from company A continues, “ of course the most of the key ports in our subsidiaries are held by
home country nationals. Whenever replacements for these men are sought, it is the practice, if not the policy,
to look next to you at the lead office and pick some one (usually a home country national) you know and
trust”.
Company B : “ We are multinational firm. Our product division executives have worldwide profit
responsibility. As our organisational chart shows, the united states is just one region on a par with Europe,
Latin America, Africa etc, in each division”.
The executive from Company B goes on to explain, “the worldwide Product division concept is rather difficult
to implement. The senior executives incharge of this divisions have little overseas experience. They have been
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promoted from domestic ports and tend to view foreign consumers needs as really basically the same as ours.
Also, product division executives tend to focus on domestic market, because it generates more revenue than
foreign market. The rewards are for global performance, but strategy is to focus on domestic. Most of the
senior executives simply do not understand what happens overseas and really do not trust foreign executives,
even those in key portions?
Questions :
1 Which company is truly Multinational ? Why?
2 List three differences between Company , Multi National company and Trans Multi National Company ?
CASE - 3 (20 Marks)
Strategic R & D by TNCs in Developing Countries
TNCs have had long units in developing host countries for adapting products and processes to the local
conditions, and in a few cases, to products for local markets. Since the min-1980s, however, they have also
started locating strategic R & D centres in some developing countries, for developing generic technologies
and products for regional or global markets. The main incentives for this are : (a) access to highly qualified
scientists as shortages of research personnel emerge in certain fields in industrialised countries, (b) Cost
differentials in research salaries between developing and industrialised countries, and (c) rationalisation of
operations, assigning particular affiliates the responsibility for developing, manufacturing, and marketing
particular products worldwide. Th new trends are more visible in industries dealing with new technologies,
such as microelectronics, biotechnology, and new materials. In these technologies, the location of R & D can
be geographically de-linked more easily from the location of manufacturing. It is also possible to separate R &
D in core activities from that in non-core activities. Consequently, countries like India, Israel, Singapore,
Malaysia or Brazil serve TNCs as good locations for strategic R & D.
For instance, Sony Corporation of Japan has around nine R & D units in Asian developing countries. It has
three units in Singapore conducting R & D on core components such as optical data shortage devices,
integrated chip design for audio products and CD-ROM drives, and multimedia and microchip software. It has
three units in Malaysia working on video design, derivative models and circuit blocks for new TV chases,
radio cassettes, discman and hi-fi receiver designs. It has one unit in Republic of Korea focusing on the design
of compact discs, radio cassettes, tape recorders, and car stereos. It has one in Taiwan designing and
developing video tape-recorders, minidisk players, video CDs, and duplicators. Finally, it has one unit in
Indonesia focusing on the design of audio products.
Such units often work in collaboration with science and technology institutes in the host country. For instance,
Daimler Benz has established such a unit in Bangalore, India, in collaboration with the Indian Institute of
Science to work on projects related to its vehicles and avionics business. Current work includes interface
design of avionics landing systems and smart GPS sensors for use by the group’s business worldwide.
Source: World Investment Report 1999.
Questions:
(a) Explain why MNCs have located R & D centres in developing countries?
(b) Mention the areas where R & D activities can easily be decentralised.
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CASE -4 (20 Marks)
VK Ltd a multi-product Company, furnishes you the following data relating to the year 2000.
First Half of the year Second Half of the year
Sales Rs. 45,000 Rs. 50,000
Total Cost Rs. 40,000 Rs. 43,000
Assuming that there is no change in prices and variable costs and that the fixed expenses are incurred equally
in the two half years periods calculate for the year 2000.
1. The Profit Volume ration
2. Fixed Expenses
3. Break-Even Sales
4. Percentage of margin of safety.
5 marks each
