Course: International Business

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Case Study-1

In 1990s Nestlé faced significant challenges in its market growth. Despite of the stagnant population in western countries the balance of power was increasing from large scale manufacturers like Nestlé, toward supermarkets and discounted chain stores. In result, Nestlé decided to lessen its focus on developed markets like North America and its home based market in Switzerland to emerging market like India and China. The driving force behind the decision of expanding its market share in emerging market is simple, as the population grows and government decisions favoring market economies brings attractive business opportunities for public living at intermediate income.

Although many of the counties are still living under poverty line, even living on $1 per day shows optimistic signs for the future markets. For example: as the current economic forecasts continues, there will be 9 billion people living on this planet as compare to today’s population of $7 billion today, and coincidently the increase in population is all in developing countries. Nestlé uses the strategy which correlates the ratio of increase in income to use of branded food products, which means as a person earns more and has less time for making food in his/her home, they will automatically substitute for branded products.

In general the company’s strategy has been to enter emerging markets early before its competitors and build a substantial customer base by selling products which suit the local population such as infant formula, milk, and noodles. Nestlé narrows down its market share to many small niche markets, as opposed to general or one for all strategies. Nestlé keeps the goal of commanding the niche markets by gaining at least 85% of market share in every food product it launches. For example, by pursuing such a strategy, Nestlé has taken as much as 85 percent of the market for instant coffee in Mexico, 66 percent of the market for powdered milk in the Philippines, and 70 percent of the market for soups in Chile. As the income level rises in each niche market, Nestlé introduces an upscale version of the same brand to increase its profit level. Although Nestlé has become a global brand, it uses local identity to gain exposure in local markets. The company owns 8500 brands but only 750 of them are known internationally.

Customization is the key to Nestlé’s global brand identity rather than universalism, which means Nestlé, uses global brand identity but, from the internal point of view, it uses local ingredients and other technologies that resonate with the local environment and brand name that is known globally. The customization of Nestlé’s products causes many hindrances in carrying out its distribution of products from local farmers to factories. For example, in Nigeria the infrastructure placed is crumbling, trucks are old and political conditions are not suitable to carry out the processes successfully, so Nestlé adopted a new strategy to deliver its products to local warehouses which are Loco convenient to local farmers for milk production. Although this might

seem as an expensive solution, the local farmers have tripled their milk production and the supply of milk, which Nestlé has calculated as beneficent for the long term growth.

The execution of the strategy matches the planning of the strategy which is to plan globally and implement locally. Nestlé gives autonomy to its local branches based in different countries to make pricing decisions, and distribution decisions. Nestlé has expanded its growth by diversifying its product base to tomato ketchup and wheat base products such as noodle and tofu. Nestlé has expanded into 5 countries and expects to supply all food products throughout the regions namely, Turkey, Egypt, Syria, Dubai and Saudi Arabia.

Nestlé is also buying local companies in China and adapting its own portfolio for the Chinese market. Since many Chinese find coffee too bitter for their liking, Nestlé is working on a new “formula” to offer Smoovlatte, a coffee drink that tastes like melted ice cream. The company wants to be seen as a company that makes healthy food. As Janet Voûte, Nestlé’s global head of public affairs, said “it is a core business strategy”.

Nestlé has used its brand name as strength to generate sales and to expand its market share, which includes it customization of products to fit its target market’s profile. Although Nestlé has not always started from scratch, the company has used acquisition as a penetration strategy to expand and penetrate new international markets, which eliminates any local barriers to its competition. A few weaknesses which are related to the company’s quality measure resulting in product recalls. The company has decentralized its strategy units into 7 subunits in charge for different product lines, for instance, one – for coffee and beverages; another one focuses on ice cream and milk products. Nestlé brings its management level employees all around the world for 2-3 week training in its headquarters in Switzerland to familiarize them with their global culture, strategy and given them access to the company’s top management.

Answer the below questions:

                                                                                                 

Question 1: Explain the modes of entry adopted by Nestle to enter the international market

How does a company utilize stocks and bonds in financing growth? Identify the major sources of external financing for companies.

Please provide your responses for the following pricing strategy scenarios as practiced in corporate world. Make sure your analysis is well grounded in theories and concepts related to pricing decision making. (150 to 200 words each) Answers should be unique and correct

--The Subway sandwich chain was not fully satisfied with the initial performance of its line of healthful fast foods, which were more expensive than alternatives offered by McDonald's and other competitors. But the company was able to boost sales by obtaining an American Heart Association endorsement for its products. Explain this move in terms of perceived value (PV).

--Traditional newspapers have lost millions of subscribers for free news websites. Instead of providing its own content at no charge, the New York Times and Company erected a pay wall-in other words, readers must pay to access most of its newspaper's stories. Explain this issue as a price customization strategy.

--Many consumers are willing to pay a significantly higher price for Perdue chicken for no-name supermarket poultry. This is a testament to the company's success in differentiating its product as being of higher quality than generic brands. Which general price indicators of price sensitivity are illustrated by Perdue's ability to command a high price?

The following account balances are for the Agee Company as of January 1, 2017, and December 31, 2017. All amounts are denominated in kroner (Kr).

	January 1, 2017			December 31, 2017
Accounts payable		(15,000	)		(25,000	)
Accounts receivable		54,000			104,000
Accumulated depreciation—buildings		(45,000	)		(50,000	)
Accumulated depreciation—equipment		0			(7,500	)
Bonds payable—due 2020		(64,000	)		(64,000	)
Buildings		134,000			105,000
Cash		60,000			10,500
Common stock		(69,000	)		(82,000	)
Depreciation expense		0			40,000
Dividends (10/1/17)		0			57,000
Equipment		0			64,000
Gain on sale of building		0			(8,500	)
Rent expense		0			21,500
Retained earnings		(55,000	)		(55,000	)
Salary expense		0			45,000
Sales		0			(162,000	)
Utilities expense		0			7,000

Additional Information

• Agee issued additional shares of common stock during the year on April 1, 2017. Common stock at January 1, 2017, was sold at the start of operations in 2010.

• Agee purchased buildings in 2011 and sold one building with a book value of Kr 1,500 on July 1 of the current year.

• Equipment was acquired on April 1, 2017.

Relevant exchange rates for 1 Kr were as follows:

2010	$	2.90
2011		2.70
January 1, 2017		3.00
April 1, 2017		3.10
July 1, 2017		3.30
October 1, 2017		3.40
December 31, 2017		3.50
Average for 2017		3.20

1. Assuming the U.S. dollar is the functional currency, what is the remeasurement gain or loss for 2017? The December 31, 2016, U.S. dollar-translated balance sheet reported retained earnings of $145,200, which included a remeasurement loss of $28,300.

2. Assuming the foreign currency is the functional currency, what is the translation adjustment for 2017? The December 31, 2016, U.S. dollar-translated balance sheet reported retained earnings of $162,250, and a cumulative translation adjustment of $9,650 (credit balance).

(Input all answers as positive.)

Remeasurment -------------------------?

Translation Adjustment ------------------------?

A new market opportunity has opened, and you expect that you will be able to double your sales in 2019. Assume that COGS, operating expenses, current assets and current liabilities maintain the same PERCENTAGE OF SALES as in 2018. Assume no new fixed assets, nothing from 2018 was fully depreciated, and you will have the same dividend policy in 2019 as you did in 2018.

Use the financial statements below to determine if additional funds will be needed, and if so, how much.

Income Statement
	2018	2019
Sales	10000
COGS	4000
Gross Profit
Operating Expenses	2000
Depreciation	250
Interest	750
Pre Tax Profit	3000
Tax at 33.33 % (round to nearest $1)
Net Profit
Dividends	0
BalanceSheet
Current Assets	25000
Fixed Assets	15000
Total Assets
Current Liabilities	17000
LongTerm Debt	3000
Common Stock	7000
Retained Earnings	13000
Total Liabilities & Equity (round to nearest $1)

a- No Additional Funds Needed

b- $3,333

c- $65,000

d- $8,000

11. Repeated exposure to hot environments when combined with exercise improves exercise capacity, with less discomfort upon subsequent heat exposure. One thing that changes is that a person begins sweating sooner and they sweat more (nearly double). Sweating sooner represents what type of change?

a) decreased threshold

b) increased threshold

c) decreased set point.

d) increased set point

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12.Which statement(s) about control strategies is/are incorrect? Choose any that apply.

a) An advantage of a feedforward system is that it allows the body to anticipate a change, or prepare for something to happen.

b) A disadvantage of a feedforward system is it doesn’t allow you to respond to an unexpected change.

c) An advantage of a positive feedback system is allows for rapid changes to a regulated variable.

d) A disadvantage of a positive feedback system is that it is not homeostatic. e) A disadvantage of a negative feedback system is it requires some outside event to stop the response.

f) All of the above are correct.

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13. Which of the following compounds is a carbohydrate? Choose any that apply. a) C5H10O5 b) C6H12O6NS c) C3H6O314. 14. Water is polar; organic solvents (for ex., gasoline, ether, carbon tetrachloride and benzene) are nonpolar. A substance is found to dissolve in organic solvents but not in the water. Is this substance most likely polar or nonpolar, or both?

a) both

b) nonpolar

c) polar

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15. An 18-year-old girl presents with a lack of secondary sexual characteristics, such as age-appropriate pubic hair growth and breast development. Her history reveals she has never started menses. She is diagnosed with a deficiency. The levels of various steroid hormones in her serum are found to be abnormal. Which of the following is she most likely lacking or does she most likely have very low levels of?

a) acetyl CoA

b) cholesterol

c) fatty acids

d) glucose

e) oleic acid

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18. There is an amino acid transporter that only transports acidic amino acids, another that transports basic amino acids, and a third that transports neutral amino acids. This is an example of which protein characteristic?

a) affinity

b) saturation

c) specificity

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20. Many people die each year from ingesting antifreeze solutions. Antifreeze contains ethylene glycol, which the human body converts to oxalic acid in the presence of the enzyme alcohol dehydrogenase. Oxalic acid exists in crystalline form and these crystals can severely damage kidneys. Ethanol is administered to victims with ethylene glycol poisoning because ethanol binds to the active site of alcohol dehydrogenase, inhibiting the formation of oxalate crystals. How would you classify ethanol in this scenario?

a) allometric inhibitor of ethylene glycol

b) allosteric inhibitor of ethylene glycol

c) cofactor of ethylene glycol

d) competitive inhibitor of ethylene glycol

e) covalent inhibitor of ethylene glycol

Briefly outline the history of HSBC plc. How would you describe its business model?

Parker Corporation has issued 1,700 shares of common stock and 340 shares of preferred stock for a lump sum of $62,000 cash.

Give the entry for the issuance assuming the par value of the common stock was $5 and the fair value $30, and the par value of the preferred stock was $40 and the fair value $50. (Each valuation is on a per share basis and there are ready markets for each stock.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit

List of Accounts

Give the entry for the issuance assuming the same facts as the par value of the common stock was $5 and the fair value of $25 per share, and the par value of the preferred stock was $40 and has no ready market. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit

RedOx reaction: In      Fe        +          3O₂      →        2Fe₂O₃ reaction, which one is oxidized and which one is reduced? What are the definition of oxidation and reduction?

read GATT 1994 article 20 carefully and make a study of the cases which cited article 20, list at least 5 cases and specific section the parties used as defence

Question 1
Refer to the operations below:
Add (10 + 5)
Add (4+8)
Add (7*2)
Add (90 – 3)
Print list
Print peek
Remove an item from the list
Print list
1.1 Implement the operations above into a Queue structure called q1.	(10)
1.2 Implement the operations above into a Stack structure called s1.	(10

Guidelines: Please take note!

(a) Name your program Question1_1 for the queue structure and Question1_2 for the stack structure

(b) The Java Programmer is required to include screenshots from a JGrasp IDE which displays their commented code and the output and also indicates their laptop date and time of code execution, the screenshot of the code needs to be error-free and must not produce any logic errors!

How does wholesale banking differ from retail banking in terms of: (a) product range; (b) client coverage; (c) marketing; (4) risk management; (5) pricing.

Licensure of physicians means that to some extent, the supply of physicians can be viewed as a vertical line. Explain what this means for the price of physician services. Which factors might change the shape and position of the supply curve for physicians over time? What is the difference between a doctor, a physician’s assistant, a nurse practitioner and an RN? How has the creation of these new healthcare providers affected the demand and supply for health care?

Explain diversification and benefit of a diversified portfolio.

1. Discuss the relationship between the Enlightenment and the Scientific Revolution. Could one have occurred without the other?