Question

In: Operations Management

1. McDonnell-Douglas Corp. has struck a deal with a company in China to build aircraft there....

1. McDonnell-Douglas Corp. has struck a deal with a company in China to build aircraft there. What kinds of strategies should be employed by this or other firms doing business internationally? What are the benefits and problems associated with international business?

Expert Solution

(A) What kinds of strategies should be employed by this or other firms doing business internationally?

strategies should be followed-

1)Investment-Investment can be done via FDI or FII

2)Providing technical knowhow

3)Providing training to local populace

4)Helping authorities to set up less developed natural resources based industries

5)Meeting local demands with higly qualitative methods

Like many points can be added.These can be broadly classified into the following

Mulitidomestic Strategy-Here a multinational making customized products than their core products. Eg:Nestle

Global strategy-Here international company selling core product among different regions but local tastes and preferences added to the product. Eg: Dassault selling Raffale aircraft to India,but Dassault is making some chages as demanded by India.

Transnational strategy-It is a middle ground between both Multidomestic and Global. Eg: When a multi national fastfood giant sells product in a country,they might adopt local cooking methods or local food among the core product.

(B)What are the benefits and problems associated with international business?

Benefits

1)Better price discovery-Qualitative products can be marketted in rich countries and get profit

2)Local labour might be of low cost hence cost of production can be decreased.

3)Raw material mobility can be decreased hence timely and speedy delevery of products can be done

4)Reaping demographic dividend and advantage vast population. Eg-India and China

Problems-

1)Capital fly-Capital can be brought back to home countries unless strict regulatory laws prevails

2)Natural resources' depletion

3)Adverse effect on cultural practices-Some product may adversely affect customs and beliefs of local population.

4)Environmental damage and climage change

5)Frictional unemployment-When multi national company withdraws investment,frictional employment might worsen the people ie.,unemployment between the period of old job and new job.

keosha answered 2 years ago

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