Discuss the business & regulatory problems faced by multinational companies

INTERNATIONAL BUSINESS

Discuss the business and regulatory problems faced by multinational 

 

CASE STUDY (20 Marks)

Google, the leading Internet search engine based in the US, started providing its services in China in the year 2000. Though the company became one of the leading search engines in the Chinese market, it started losing its market share rapidly to the local players like Baidu. In order to remain competitive, Google decided to launch a Chinese website www.google.cn and agreed to censor the content, in January 2006. Though Google was criticized by the industry experts for its decision to censor the content, the company defended its stance by claiming that providing censored results was better than not providing any details at all. However, soon Google started facing problems, and its website was blocked several times for its quality of censorship, spreading obscene content etc. The company remained second to Baidu in the local search engine market. Google’s other services like YouTube, Blogger, and Picasa were also blocked. By the end of 2009, Google realized that its website was being attacked and the attacks originated in China. Google also found that Gmail accounts of some of the advocates of human rights in China were broken into. In January 2010, Google reported that its corporate infrastructure had been subjected to a targeted attack from China and announced that it would not censor its results anymore and was ready to shut down its Chinese operations, if required. The events leading to its decision to stop censoring the search results in China, adversely affected Google’s operations in China.

Answer the following question.

Q1. Discuss the business and regulatory problems faced by multinational companies in China.

Q2. Examine the reasons for media censorship in China. Q3. Give an overview of the case

Case (20 Marks)

Progressive Chemical Industries Ltd, is engaged in Manufacturing and export of specialty chemicals, having turnover of Rs 300 crores. The Company is growing and having good export orders. The CEO is in mood to expand the business and aiming to reach turnover of Rs 1000(thousand) crores in next 5 (five) yrs. The CEO is worried about the increase in input costs and workers demands. Union has threatened to go on strike indefinitely. Union has demanded 50% increase in salary and other benefits, But is not agreeing to link it to productivity. It has also raised issues like unsafe, hazardous working conditions, leakage of poisonous gases affecting the health of workers. The consultant has advised the CEO to be strict and take strict action against the erring employees and be ready to declare lockout if situation warrants.

Answer the following question.

Q1. Prepare a draft agreement for the above situation which could be acceptable for Management and Union.

Q2. As a HR Head how would you convince the Union and workers?

Q3. Do you feel management policies/practices are right?

Q4. What are the various laws which could be applicable in the above problems?

CASE STUDY (20 Marks)

EU Trade Commissioner Karel De Gucht, the Belgian Minister of Foreign Affairs Steven Vanackere representing the Presidency of the Council of the European Union (EU), and the Korean Minister for Trade Kim Jong­Hoon today signed a Free Trade Agreement (FTA) between the EU and South Korea. This FTA is the most ambitious trade agreement ever negotiated by the EU and the first with an Asian country. Today’s signature signals a significant step on the road to its implementation and is one of the main events of the EU­Korea Summit taking place in Brussels today. “The agreement between the EU and South Korea marks a significant achievement in improving our trade links. It will provide a real boost to jobs and growth in Europe at this critical time. This wideranging and innovative deal is a benchmark for what we want to achieve in other trade agreements”, said Commissioner De Gucht. “Tackling the more difficult non­tariff barriers to international commerce can cut the costs of doing business as much if not more than getting rid of import duties.” The text of the FTA was initialed between the European Commission and South Korea on 15 October 2009. Since then the text of the Agreement was translated into Korean and 21 EU languages. All EU Member States have signed the FTA ahead of today’s official signing ceremony. The date of provisional application will be 1 July 2011, provided that the European Parliament has given its consent to the FTA and the Regulation of the European Parliament and of the Council implementing the bilateral safeguard clause of the EU­South Korea FTA is in place. The EU Member States will have to also ratify the agreement according to their own laws and procedures. One study estimates that the deal will create new trade in goods and services worth €19.1 billion for the EU; another study calculates that it will more than double the bilateral EU­South Korea trade in the next 20 years compared to a scenario without the FTA. The agreement will remove virtually all import duties between the two economies as well as many non­tariff barriers. It will relieve EU exporters of industrial and agricultural goods to South Korea from paying tariffs. Once the duties are fully eliminated, EU exporters will save € 1.6 billion annually. Half of these savings will be applicable already on the day of the entry into force of the Agreement. The FTA will also create new market access in services and investment and will make major advances in areas such as intellectual property, procurement, competition policy and trade and sustainable development.

Answer the following question.

Q1. What are the objectives and contents of the recent free trade agreement signed between the European Union and South Korea?

Q2. What are the economic underlying principles of this agreement?

Q3. Why has the agreement been questioned both in the EU and South Korea?

Q4. Why are Japanese businessmen worried about the agreement? Why are Japanese policy­makers trying to sign a similar deal with the EU?

CASE STUDY (20 Marks)

The cases discusses, UK based home improvement retailer, B&Q’s foray into China. B&Q entered the Chinese market in the year 1999 by opening a store in Shanghai through a joint venture with Home Decorative Building Materials Limited, a Shanghai based property developer. At that time, the Do­it­Yourself (DIY) concept had not gained popularity in China. Overcoming the initial challenges, B&Q was able to establish itself firmly in the Chinese market. B&Q modified its stores to suit the Chinese consumers and introduced the concept of ‘Buy­it­Yourself.’ The company’s growth coincided with the rapid infrastructural development in the country, and increased activity in the housing sector. The rapid growth of the Chinese home improvement industry led several leading international companies like IKEA to expand their operations in the country. By late 2006, B&Q faced stiff competition from foreign as well as local companies like Orient Home. The case examines the entry and expansion strategies of B&Q in China and how the company is positioned to face increasing competition in the Chinese home improvement industry.

Answer the following question.

Q1. Analyze the entry and expansion strategies of B&Q in China.

 

Discuss the business and regulatory problems faced by multinational 

 

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