1. You just got a job at Good Manufacturing Corp, which makes bikes for children. Congrats! They are considering buying up packaging business. From a corporate strategy perspective, what might be two reasons to buy this business? (10 points)
From a corporate strategy perspective, buying packaging business is beneficial for the company since it opens larger opportunities for shipping its products and saving costs on packaging. The reliable shipping allows the company to deliver its bikes to customers remote from the production facilities of the company. In addition, the company does not need to outsource packaging. Instead, the company’s bikes will be packed just as they are manufactured. Therefore, the company can supply its products to customers from the production line to the customer home or retailer. In such a way, acquiring the packaging business, the company reaches two goals, on the one hand, the company increases the reliability of shipping and prevents damages to bikes, while, on the other hand, the company will save costs on packaging because Good Manufacturing Corp. will not need the supplier of packaging any more.
2. Good Corp is considering selling their amazing product in Japan. What are some of the pros and cons of entering Japan by exporting, alliances, or foreign direct investment? (15 points)
The exporting will raise the problem of overcoming possible fiscal barriers, although the process of globalization and integration of Japan in the global economy through the membership in the WTO and involvement of Japan in free trade agreements, eliminate fiscal barriers. The major challenge the company is likely to face is the high transportation costs since the company will need to deliver its products to Japan. On the other hand, Japanese customers will buy authentic products.
Alliances allow the company to save costs on transportation and use production facilities of local manufacturers to assemble Good Corp’s products, bikes for children. In addition, the company will use the network of local company to sell its products faster and easier. However, the company will have to share its profits with its business partners in Japan as well as provide them with technology used by the company to assemble bikes in Japan.
Foreign direct investments open the way to minimize the transportation costs. Moreover, the company can count on tax credits or other loyal policies from the part of local authorities, who are interested in foreign direct investments. However, the minimization of the transportation costs raises the problem of building production facilities in Japan, developing local network and other issues that increase costs of entering Japanese market substantially.
3. Good Corp is considering forming an alliance with supplier. What are five things that you can tell them that will increase the chance of alliance success? (25 points)
First, the company should choose a reliable and reputable supplier, whom the company has been already worked with and has an extensive experience of successful cooperation.
Second, the company should make sure that the supplier is capable to supply the target quantity of items. The supplier should have resources and capabilities to manufacture and supply the target quantity of items.
Third, the company should be able to control the quality of products supplied by its new business partner. For instance, the company should be able to introduce its quality control system in the production facilities of the supplier.
Fourth, the company should offer the supplier a competitive price to attract supplier.
Finally, the company should consider alternative suppliers to compare them and, if necessary, to sign an alternative supply to maintain the stable supply, if the main supplier has some problems or cannot supply the items needed.
4. Good Corp is now considering expanding into Canada. Good Corp’s leadership is surprised to learn that the Canadian government wants Good Corp to partner with a Canadian manufacturer to form a joint venture. Currently, the negotiations between Good Corp, the Canadian manufacturer, and the Canadian government are stalled because the Canadian government seems unhappy with the way things are going. What do you think the Canadian government wants from the potential joint venture? (25 points)
In all probability, the Canadian government wants new jobs created in Canada and higher taxes paid off by the joint venture. Hence, the government expects the company to move the production facilities to Canada and to find local suppliers to localize the business. Hence, Good Corp will stimulate the creation of new jobs in Canada as more employees will be needed to manufacture more products, and local suppliers will get more orders that will increase revenues of the national budget from taxation.