Semester Two Final Examinations, 2020 IBUS7302 Operating International Business Page 1 of 3 This exam paper must not be removed from the venue School of Business EXAMINATION Semester Two Final Examinations, 2020 IBUS7302 Operating International Business This paper is for St Lucia Campus (External) students. Examination Duration: 120 minutes Reading Time: minutes Exam Conditions: This is an Open Book examination Any calculator permitted – unrestricted Materials Permitted In The Exam Venue: (No electronic aids are permitted e.g. laptops, phones) Open book; videos will not be available during the examination. Materials To Be Supplied To Students: None Instructions To Students: Additional exam materials (eg. answer booklets, rough paper) will be provided upon request. Provide your responses on the Blackboard site. Answer only three (3) essay questions from the four (4) questions provided. All questions are worth equal marks. Plagiarised answers will be awarded zero marks. This examination contributes 40% towards your final grade in this course. Venue ____________________ Seat Number ________ Student Number |__|__|__|__|__|__|__|__| Family Name _____________________ First Name _____________________ For Examiner Use Only Question Mark Total ________ Semester Two Final Examinations, 2020 IBUS7302 Operating International Business Page 2 of 3 ANSWER ONLY THREE (3) OF THE FOUR (4) QUESTIONS Please provide clear and comprehensive answers in an essay format, not exceeding 600 words for each whole question. Bullet point answers will be worth a fraction of the marks allocated. The questions may have multiple parts (e.g., A, B, C) you must answer all parts of each question to receive full marks. All questions are worth equal marks, it will be marked out of 10 points. Question 1. In international business, the nature of markets significantly influences the nature of firms that evolve in these markets. After World War II, the multinational enterprise responded to imperfections in international markets and evolved its particular form of the time, while recently, international markets have fewer imperfections and there are many more markets than previously. The global factory is now the new-form multinational enterprise. However, with the recent COVID crisis and trade wars between the US and China, and international exchange restricted, this pattern of development may have been constrained (Answer all parts) (A) What are market imperfections, providing examples (2 Pts) (B) What does market internalization mean (2.5 Pts) (C) How does the new-form global factory differ from the multinational enterprise post-WWII (2.5 Pts) (D) How do smaller and medium-sized firms relate to the global factory (1 Pt) (E) In your opinion, will the nature of the international firm return to the traditional MNE of post-WW II form as a result of the current trade restricting events (2 pts) Question 2. Assume you are the HR director for a small company that has begun to use international assignments. You are considering using an external consulting firm to provide pre-departure training for employees, as you do not have the resources to provide this ‘in-house’. (A) First, address the reasons for the significance of a pre-departure training program for employees and their respective family members. (2.5 Pts) (B) Secondly, what components will you need to address in the training (2.5 Pts) (C) Thirdly, what are some of the contextual, situational, and individual difference variables that may directly or indirectly influence a pre-departure training program (2.5 Pts) (D) Finally, address why some Multinational Corporations (MNCs) appear reluctant to provide access to training programs. (2.5 Pts) Question 3. Consider the firm in terms of a value chain. (A) Discuss the difference between primary activities and support activities, (2.5 Pts) and (B) Provide examples of each. (2.5 Pts) (C) Discuss how national differences influence an international business firm’s support activities with clear examples. (5 Pts) Semester Two Final Examinations, 2020 IBUS7302 Operating International Business Page 3 of 3 Question 4. TNA Australia provides innovative production solutions for the global processing and packaging industry. It was founded by Alf and Nadia Taylor in 1982 and today has operations
across the world. The firm, which maintains a manufacturing base in Melbourne, Australia, utilises innovation in a traditional manufacturing sector to follow a strategy of incremental internationalisation that has seen it become the biggest player in its industry worldwide. The company spent much of the 1980s installing machines for the Australian potato chip manufacturer Smith’s chips. At the end of 1989, the TNA team congratulated themselves on their achievements at Smith Chips. However, they also look into the economics behind their venture. As Australia had only 20 million people, they realised there was a limit to the amount of chips such a small population could consume. This led them to become involved in international markets. They approached Austrade, the Australian Trade Commission, and were provided with a very small export development grant. This allowed TNA to set up TNA Europe. Alf Taylor went to the UK and set up a small office in England with two employees. He chose the UK and Europe for the firm’s first overseas venture, as he believed the technical aspects of the firm’s product were suited to this region. The company needed to consider the easiest path to success when financing its internationalisation, Taylors says, as each stage of expansion was used to finance the next stage. This is a model that TNA has continued to implement as it has expanded globally. The UK market initially offered fewer hurdles for TNA. For example, the idiosyncratic differences between English and Australian firms using packaging machines were lower than they were in other parts of the world. Europe had slightly larger discrepancies, but the lack of compatibility with TNA in the US meant that this was an extremely difficult market to enter initially. TNA Australia’s first in the UK was with Walkers, a company that is now part of the PepsiCo Group. After the UK, TNA launched into Continental Europe which they mastered in six years. Alf Taylor believes that having a strategically oriented global mindset was a key factor in TNA’s ability to move into the global marketplace. In the packaging industry, there are probably only about 20 competitors worldwide. The industry is worth approximately A$1 billion, a relatively small industry in Taylor’s view. TNA sought to gain an advantage over its competitors by employing suitable strategies for the industry environment. Importantly, the company analysed its competitors and determined that the competition collectively suffered from a lack of vision, such that the industry believed there was a physical limitation to what was possible with packaging machines. This provided TNA with confidence that if it implemented a grand vision, it would be able to dominate its competitors, whom it determined were extremely parochial. For example, the US packaging suppliers did most of their business in the United States, the Germans operated in Germany, and so on. TNA’s insight was that this made no sense from a business perspective; it didn’t matter where in the world a product was being packaged, the packaging requirement shouldn’t be different – they were correct. Today, 95 percent of TNA’s revenue is from their offshore business. Alf Taylor describes the initial process of market entry: “Banging on doors and it was just hard slogging … We had no money and we hired a van, stuck a machine in the back of a van and drove it around and put it in people’s factories, and ran trials. You sit there and philosophise and give them the laws of physics like there is no tomorrow, and they don’t believe any of it. But as soon as you sit the gear in their factory and run their product on that machine and show them how efficient that is, it’s doing double the speed … So if you managed to get them to let you go in with a machine at no cost to them, then you had a pretty good chance of getting in.” Reflect on TNA Australia Pty Ltd. case above on international entry strategy and alliances and answer all the following questions. (A) TNA has chosen to retain its production of packaging machinery exclusively in Australia. What do you think are the advantages to TNA in doing this What might the drawbacks be (5 pts.) (B) Does this strategy make sense Why – justify your answer (2.5 pts.) (C) What advantages has TNA’s entry into the markets it has chosen provided for its deepened international expansion (2.5 pts.) END OF EXAMINATION