GLOBAL BUSINESS MANAGEMENT

ASSIGNMENT
Case 1 - Hyundai: leading the way in the global auto industry

ANALYSIS
1. Hyundai motor company
2. Founded by chung ju yung in 1947
3. No 1 car marker in south Korea and 10th largest in the world.
4. Sales nearly in 190 countries
5. Products – car, minivan, trucks, bus and other commercial vehicles
6. Hardest to sustain as indigenous automaker like Hyundai & kia in south Korea
7. Korean customer was demanding
8. Major benefits for Hyundai was through Korean currency
9. Hyundai R&D centre in Europe, Japan, north America
10. Competitive advantage
 Inexpensive high-quality labour
 Key input (tire, engines) from low cost suppliers
 Intelligent market diversification compared to Toyota and Honda who focus
on US sales
 Collaboration venter and market innovation – assurance program

THEORIES OF GOLBAL BUSINESS AND ITS MANAGEMENT

1. competitive advantage – refers to assets and capabilities of a company that are different for
competitors to imitate.
 customer loyalty
 warranty programs
 production facilities and geographic diversification
 input resources low cost high quality
 diversified sales and collaboration ventures R&D
 marketing innovations and assurance
2. comparative advantage – describes superior features of a nation that provide unique
benefits of global competition.
 Favourable exchange rate
 Korean government cooperation with the business
 High saving rate and high FDI
 Cost effective and skilled workers
 Consumers are demanding
3.factor proportion theory
 Application – input low cost and high quality -> collaboration ventures -> supply
chain management
 Abundant factors – technology, cost effective workers, excess supportive suppliers
 Contradicts – raw material and required technology
 Internationalization of Hyundai has relied on exports rather than imports
4.production theory
 Countries differ in types and quantity of production they possess (labour, capital and
natural resources)
 Korean has a saving rate which considerably inward FDI and Korea is a world of new
technology development and cost-effective knowledge
5. dunning's eclectic paradigm
 Ownership specific advantage
Famous brand and marketing of the Hyundai assurance program and 10-year
warranty
Korea’s high inward FDI lots of capital
 Location specific advantage
Access to market currently active in
Lower cost of operation
 Internalization advantage
Operation and production knowledge kept in the market
Quality control in each market

Government role
Done To support Hyundai
 Strict accounting control over the industries
 Cooperate with business to protect the industry
 Ensure continuous flow of funds
 Sponsor the industry
Can be done for future support of Hyundai
 Provide better technology
 Provide more capital for R&D purpose
 Introduce and train more cost-effective labour
To develop and maintain strong auto industry
 Freeze of insurance of new manufacturing license will be lifted
 Tax exemption in the statutory income for manufactures will be enhanced
 Continuous of automotive development fund and industrial adjustment fund
Case 2 – Government intervention at Airbus and Boeing

ANALYSIS
1. Government of France, Germany, Spain and United Kingdom formed an alliance in
1970s to create airbus SAS.
2. By 1992, airbus had captured roughly one third of the global commercial aircraft
markets.
3. In 1960s Boeing and McDonnell Douglas were the dominant players in global aircraft
manufacturing.
4. Airbus has benefited enormously from government support. The firm has received
many subsidies and soft loans from government and EU.
5. European governments have forgiven Airbus’s debt, provided huge equity infusions,
dedicated infrastructure support and financed R&D for civil aircraft projects.
6. Boeing has argued the airbus never would have gotten this far without government
support.
7. In 2011, the WTO ruled that EU aid to Airbus had caused Boeing to lose market share
in Asia and other markets
8. The U.S. government gave Boeing more than $23 billion in indirect government
subsidies.
9. EU has also had a case at the WTO regarding Boeing relations with Japanese business
partners.
10. Boeing launched the 787 Dreamliner in 2007 and is ahead Airbus in launching
innovative and fuel-efficient aircrafts.

THEORIES
1. protectionism – national economic policies designed to restrict the trade and protect
domestic industries from foreign competition.
2. nontariff trade barrier – a government policy, regulation or procedure that implies trade
through means other than explicit tariffs.

STRATEGIES FOR MANAGERS

1. research to gather knowledge and intelligence
2. choose the most appropriate entry strategy
3. take advantage of foreign trade zone
4. seek favourable customs classifications for exported products
5. take advantage of investment incentives and other governments
6. lobby for freer trade and investment
Case 3 - Asian IFCs – Singapore and Hong Kong

ANALYSIS
International Financial Centres (IFCs).
1. Their historical growth paths have thus far been largely complementary, with each tending
to specialize in different asset markets and financial services, and each focusing on different
parts of Asia.
2. These complementary evolutionary paths, if maintained, may also carry significant benefits
for regional and global financial stability.
3. Hosting large financial institutions with complex, fluid business models in both economies
calls for the maintenance of strong regulatory and supervisory cooperation between Hong
Kong SAR and Singapore.
Such cooperation could also play a significant role in enhancing Asian financial integration—
both regionally and globally.
1. Centrality. While Hong Kong SAR and Singapore still are mid-sized international financial
centres, they have increased in size and interconnectedness over the past decade, and, based
on our WEO projections, they are set to become even more interconnected in the future.
3. Credibility. Looking ahead, for these centres to continue to play their stabilizing role, they
need to preserve sound financial systems. This requires effective regulation, intensive
supervision, and strong fiscal and external buffers.
4. Expanding markets. Deepening various markets, raising their liquidity and tradability,
broadening the investor base are appropriate strategies of both Hong Kong SAR and
Singapore.
Both are stepping up outreach efforts to raise their profile among the international
community, and are engaging in bilateral and multilateral initiatives to set up cooperation
links on multiple platforms.
5. Financial infrastructure. In particular, the two jurisdictions have proven keen to build-up
top notch trading, investment, clearing and processing platforms. To stay competitive an IFC
must have a robust financial infrastructure to support increasingly sophisticated and cross-
border activities. HKMA has proved active in fostering the development of multi-currency,
multi-dimensional platforms. By becoming a robust payment and settlement hub for the
region, and by cultivating strong links with other IFCs, Hong Kong SAR and Singapore aim
to consolidate their role as a regional node connected to international ones.
6. Strategic challenges. These factors make both cities attractive locations for financial sector
institutions, but each faces its own strategic challenges. Hong Kong SAR’s financial depth,
intensive social and professional networks and the sheer depth of its soft- institutional
structures create comparative advantages, but require Hong Kong SAR to strike a balance
between servicing the financial needs of Mainland China and reaping the opportunities that
they provide, while preserving and further growing its international
THORIES
Complementarity. Using network analysis tools, we posited that financial system stability
would be enhanced if Hong Kong SAR and Singapore both existed as financial
centres and acted in a complementary fashion to one another across geographic clientele and
asset markets. Indeed, this framework closely matches how they have developed thus far. The
main insight we seek to convey is that excessive competition may engender destabilizing
levels of complexity and inter-connectedness in the network, and the presence of two
“specialized” Asian financial centres may better balance the micro benefits from economies
of scale with the macro benefits of stability.

Credibility. If Hong Kong SAR and Singapore are to continue playing their stabilizing roles,
they will need to preserve sound financial systems. Doing so will require effective regulation,
intensive supervision, and strong fiscal and external buffers. It would benefit both centres,
and Asia at large, if the two jurisdictions were to collaborate on enhancing Asia’s
connectivity and address infrastructure regulations affecting Asia and identify common
themes and solutions for financial markets.

Strategic challenges. Hong Kong SAR’s financial depth, intensive social and professional
networks, and sheer depth of soft institutional structures create comparative advantages. At
the same time, these advantages require the jurisdiction to strike a balance between servicing
the financial needs of China and reaping the related opportunities, while preserving and
further growing its international character and ability to define its policies to support its own
financial services sector for a broader clientele. Singapore is characterized by a small
domestic market, which is dominated by a few large banks. Without a base similar to the one
that Hong Kong SAR has with China; Singapore’s banks need to continue to develop long-
term, risk-based regional strategies. To attract foreign interest and continue to benefit from
further innovation, Singapore needs to deepen its debt and stock markets as well as its
insurance and asset management sectors. Singapore is expected to continue to be considered a
“safe haven” in South and Southeast Asia. However, Singapore may also have to venture
beyond this region, to new geographic and product growth drivers.

Meeting the region’s needs more effectively. Many emerging Asian economies appear to
have low degrees of financial integration, both with the world and with other Asian countries.
A low degree of financial integration or openness tends to be mirrored by a lack of financial
sector depth. This is where Hong Kong SAR and Singapore could help boost financial
integration. For instance, the two jurisdictions could help link Asia and niche regional centres
to global financial centres, which could improve economic growth and financial resilience in
Asia. Finally, the prospective development of pan-Asian banking groups may mitigate some
of the volatility associated with hosting groups from the United States and Europe, and
further enhance the voice of Asia in the global regulatory and policy agenda.
Case 4 - Political legal and ethical dilemmas in global pharmaceutical industry

ANALYSIS
Political and legal systems:
A political system is a set of formal institutions that constitutes a government where as a legal
system is a system for interpreting and enforcing laws.
Each country’s both of these systems are continuously evolving in response to constituent
demands and the evolution of the national and international environments.
The major type of risk prevailing in these systems is the Country risk.

One of the major risks they face is their limited protection for intellectual property. This kind
of practice is found inadequate in developing countries and thus discourages research and
development for the pharmaceutical companies. Government fails to provide protection for
the property rights in these countries. In the case example of India is giving where India’s
generic drug manufacturers have flourished due to less patent practices.
Also, there is risk for public scrutiny in different countries due to high prices charged by the
pharmaceutical companies for the medicines they provide for the rare diseases. This might
force the Pharmaceutical forms to indulge less in the research and development and they
might target attractive markets to earn profits instead of focusing on big diseases.
The key analysis driven out from this case is that a pharmaceutical company has to face
various types of country risks to survive in the global economy where they can come up with
the new and effective medicines as well as maintaining a decent amount of profits to indulge
in more research and development processes. For this they have to deal and prepare for each
and every type of country risk and effectively manage it.

THEORIES
Country risk – every country is characteristic by diverse political and legal systems that pose
significant challenges for company strategy and performance as managers must adhere to
business laws and regulations.
Example of country risk dimension affecting the pharmaceutical industry are:
 Government intervention\barriers to trade and investment
 Harmful or unstable political system
 Corruption and other ethical bunders
 Laws and regulations unfavourable to foreign firms
 Bureaucracy and red tape
 Mismanagement or failure of national economy
MANAGERIAL IMPLICATIONS
 Proactive environmental scanning
 Strict adherence to ethical standards
 Alliances with qualified local partners
 Protection through legal contracts
Case 5 - Qatar welcomes new foreign investment

ANALYSIS
Support liberalization and Structural reforms:
In the case of “Qatar welcomes new foreign investment” the main concept highlighted was
how to improve the external competitiveness. To improve external competitiveness, it is very
important for a country to understand the importance of trade and investment liberalization.
• Trade liberalization is the removal or reduction of restrictions or barriers on free exchange
of goods between nations.
• Trade liberalization claims that the policy can cost jobs because cheaper goods flood the
domestic market.
• Mainly it ultimately lowers consumer costs, increase efficiency and foster economic growth

THEORIES
These implications were analysed in this case and this strategy of imposing liberalization
made Qatar to reduce dependency on crude oil by raising production and exports of liquefied
natural gas, as well as promoting gas intensive industries.
The next concept was about the structural reforms and this strategy was to improve the
investment environment in the country. This reform was important to liberalize labour,
product and service market thereby encouraging job creation and investment and improving
productivity.
To help attract foreign investment inflows Qatar strongly favoured trade liberalisation
through the multilateral framework, the rule based multilateral system to further integrate the
world economy.