Note: Solve any 4 Cases
CASE: I UNFAIR PROTECTION OR VALID DEFENSE?
Mexico Widens Anti-dumping Measure…Steel at the Core of US-Japan Trade Tensions…Competitors in Other Countries Are Destroying an American Success Story…It Must Be Stopped”, scream headlines around the world.
International trade theories argue that nations should open their doors to trade. Conventional free trade wisdom says that by trading with others, ………………
charged with dumping causes international competitors to keep their prices higher in a target market than would other wise be the case. This would allow domestic companies to charge higher prices and not lost marketshare—forcing consumers to pay more for their goods.
Questions
1. “You can’t tell consumers that the low price they are paying for a particular fax machine or automobile is somehow unfair. They’re not concerned with the profits of companies. To them, it’s just a great bargain and they want it to continue.” Do you agree with this statement? Do you think that people from different cultures would respond differently to this statement? Explain your answers.
2. As we’ve seen, the WTO cannot currently get involved in punishing individual companies for dumping—its actions can only be directed towards governments of countries. Do you think this is a wise policy? Why or why not? Why do you think the WTO was not given the authority to charge individual companies with dumping? Explain.
3. Identify a recent antidumping case that was brought before the WTO. Locate as many articles in the press as you can that discuss the case. Identify the nations, product(s), and potential punitive measures involved. Supposing you were part of the WTO’s Dispute Settlement Body, would you vote in favour of the measures taken by the retailing nation? Why or why not?
CASE: II WAITING IN NEW DELHI
Richard was a 30-year-old American, sent by his Chicago-based company to set up a buying office in India. The new office’s main mission was to source large quantities of consumer goods in India: cotton piecegoods, garments, accessories and shoes, as well as industrial products such as tent fabrics and cast iron components.
India’s Ministry of Foreign Trade (MFT) had invited Richard’s company to open this buying office because they knew it would promote exports, bring in badly-needed foreign exchange and provide manufacturing ………………………..
to deal with?
Questions
1. Why did Richard not able to jell with local conditions?
2. If you were Richard, what would you do?
CASE: III THE P&G FIASCO
The break-up of the joint venture between the American FMCG (Fast Moving Consumer Goods) giant, Procter and Gamble (P&G) and the leading Indian business group, Godrej in 1996 is a case that goes down in the history of corporate India as an event few would like to forget. It was a shortlived marriage. The year was 1992 and the two ………………………….
would be taken over by P&G, which would also retain the detergent brands, Trilo, Key, and Ezee. Most of PGG’s 550 people and the distribution network consisting of some 3000 stockists would stay with P&G. Godrej would absorb about 100 salespeople and get back its seven soap brands, which had been leased to PGG.
Questions
1. What according to you, are the factors that favoured the alliance between P&G and Godrej?
2. What went wrong with the joint venture? Why did it break up within four years of its formation?
3. What signal s does this joint venture fiasco send to other foreign investors?
CASE: IV CHINESE EVOLVING ACCOUNTING SYSTEM
Attracted by its rapid transformation from a socialist planned economy into a market economy, economic annual growth rate of around 12 per cent, and a population in excess of 1.2 billion, Western firms over the past 10 years favoured China as a site for foreign direct investment. Most see China as an emerging economic superpower, ……………….
accounting principles assumed the state always paid its debts—eventually. Thus, Chinese enterprises don’t generally provide for lower-of-cost or market inventory adjustments or the creation of allowance for bad debts, both of which are standard practices in the west.
Questions
1. What factors have shaped the accounting system currently in use in China?
2. What problems does the accounting system, currently in use in China, present to foreign investors in joint ventures with Chinese companies?
3. If the evolving Chinese system does not adhere to IASC standards, but instead to standards that the Chinese governments deem appropriate to China’s “special situation”, how might this affect foreign firms with operations in China?
CASE: V THE JUGGERNAUT ROLLS ON – BUT THE ROAD AHEAD IS HUMPY AND BUMPY
It al started with the takeover of Tetly in 2000.Then became Daewoo Commercial Vehicles (2004); Tyco Global (2004); Natsteel (2005); Teleglobe (2005); Brunner Mond (2006); Millienniums Steel (2006); Eight O’Clock (2006); Ritz Carlton (2006); Corus (2007); PT Bumi Resources with 30 per cent stake (2007); and General Chem Partners (2008)……………………
. The company today has R&D centres in Pune, Jamshedpur, Lucknow, in India, and in South Korea, Spain, and the UK.
With the announcement of the launch of one lakh rupee car Nano, Tata Motors has gained the attention of people around the world.
Questions
1. Do you think the challenges listed above are genuine? If yes, how do you think the Tatas will face them?
2. With the widest range of cars (from the cheapest to the costliest) under its belt, how do you think Tata Motors will manage and sustain?
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