Quiz #2 - quiz PDF

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M Jurgens Fall 2020 QUIZ #2 LEADERSHIP ACROSS BORDERS/CULTURES PROFESSOR JURGENS This quiz is made up of four questions, each is worth 2.5 points for a total of 10 points possible. It is worth 5% of your grade. All work is to be individual. There is to be no collaboration or discussion of this quiz between students. NEC’s honor code applies in full to this quiz. The quiz is a take-home quiz. You may use class slides, readings, videos, and any other materials from the course to help you develop your responses. Do NOT copy any sentences from any of the course materials or the internet – that would be plagiarism. Please develop your own response to each question. All answers should be given in complete sentences. Please be careful of your grammar. I will be taking off for poor sentence structure and grammar. You may save this document onto your desktop and type your answers into the document. Once you are done, you save it and then upload it to Blackboard. Alternatively, you may type out your answers in a completely separate document, save it, and then upload it to Blackboard. Remember, you must provide a Microsoft word or PDF document. Any other format will be not be accepted (you will receive a ‘0’)! Don’t hesitate to email me if you have any questions. I will be checking my emails at least once a day (during the week, much more often). Here is my email address: [email protected] Good luck!

1. (worth 2.5 points) Acme Games is an inventor and designer of sophisticated board games. Five years earlier when Acme Games was launched as a new company, senior management was marketing and selling its products in the US. Now, Acme is considering globalizing by entering new foreign markets. The company is hesitating between one of the following four product/market strategies: Export (copy/paste); Adopt; Adapt; or Arbitrate. A consultant to the company has been asked to recommend one of four strategies. She has gathered some information that might help her decide which strategy to recommend. Below is the information the consultant obtained. INFORMATION: In global board game markets, there is strong pressure for products to fit into the local cultures and to meet the preferences of the countries targeted. Successful products are all in the local language of the country. The names of the products and the cultural references are all local. For example, many board games are made in the colors of the local sports teams and use the names of local sports arenas. The consultant has also learned that there is little pressure to reduce the cost of the game to sell into a foreign market. Reducing the cost of the board games will have almost no impact on how many games are sold. Customers buying board games are very rich and are indifferent to

M Jurgens Fall 2020 the price of the product. The cost of a board game is insignificant as compared with the incomes of most people buying these games. Which of the four market/product strategies should the consultant recommend to Acme export (copy/paste); Adopt; Adapt; or Arbitrate? Please fully explain your response and give at least two reasons why your chosen strategy will be the most successful of the four for Acme’s globalization. Your response should be between 90-110 words.

2. (worth 2.5 points) Michael Porter and Paul Krugman studied agglomeration theory and found out that highly successful and performant economic activity tends to ‘cluster’ in specific geographic regions. Please give an example of a cluster, describe the economic activity in this cluster, indicate the location of the cluster, and explain why it deserves to be designated as a ‘cluster’. Use the definitions provided in the readings and in class to develop your answer to this question. Your response should be between 125-175 words.

3. (worth 2.5 points) In the early 2000’s, the US wood furniture industry suffered greatly due to a series of events that led the firms in the industry to lose their competitive edge. The first event was a change in customer demand – customers no longer wanted to buy furniture to pass on to their children. The second event was a drop of investment in new manufacturing technologies. The third event was the lowering of US tariffs on wood products that made it possible for low-cost producers from China to sell inexpensive furniture items in the US market. The lowering of US tariffs on imports of wood furniture was part of a global effort under the World Trade Organization to reduce tariffs worldwide on all kinds of goods. In exchange for the US lowering tariffs on wood furniture and other products, China and other countries lowered their tariffs on products exported by the US.

M Jurgens Fall 2020

In class, we looked at how different sectors of the wood furniture industry responded to the loss of competitiveness and to the competition coming from (mostly) China. There were three principle responses: a) Companies stopped manufacturing in the US. They made agreements with foreign manufacturers and began selling foreign made goods in the US under US brand names. b) Companies imported wood components (parts) and completed the manufacture of the wood products here in the US. These customized products were then sold to US consumers. c) Companies focused on manufacturing and selling high-quality niche products to US customers that could be sold at a higher price. Taking fully into consideration what you have learned about global trade, trade agreements, and globalization, please identify three positive outcomes for consumers and workers (in the wood furniture industry) of the series of events described above. The events include: the lowering of tariffs on goods imported into the US, the growth in the number of Chinese made furniture on the US market, and the US companies’ response to increased competitiveness. Your answer should be between 125 and 175 words.

4. (worth 2.5 points) Jojo’s Fountains manufactures high-tech water fountains for use in office and industrial environments. Presently, Jojo only sells within the US, but has clients who would buy its water fountains in foreign countries if Jojo sold outside the US. Because the water-fountains use such cutting-edge technology, Jojo has a very large and costly engineering department. Of the 300 employees in the company, 150 of them work in the engineering department. In addition, the department uses a lot of expensive high-tech equipment and has an enormous laboratory space to make experiments. Whether Jojo sells 1000 fountains or 100,000 fountains, the cost of the engineering department remains the same. The cost per year of the engineering department is $3,000,000. Presently, Jojo sells 10,000 water fountains per year at an average manufacturing cost in the US of $800 per water fountain. Jojo is considering globalizing its operations. If it globalizes, sales could grow to 50,000 water fountains per year. The average manufacturing cost in foreign countries will be $800 per water fountain. Based on the information above on Jojo’s activities, which statement is the most correct? Please explain your choice in 40 words. a. Jojo should not globalize. No benefits will come to Jojo from globalizing.

M Jurgens Fall 2020 b. The company presently manufactures water fountains in the US at a cost of $800 per water fountain. Globalizing will allow the company to manufacture water fountains at a lower cost. c. If Jojo manufactures in a foreign market, the cost of its engineering department will double, bring the cost of engineering to $6,000,000. d. Globalizing will allow Jojo to spread the cost of the engineering department across a greater number of domestic and foreign sales. The cost of the engineering department per water fountain will decline from $300 to $60. e. Jojo will have to develop new products to enter global markets to meet the demands of its existing client in foreign markets....