Ch 11 and Ch 13 Research Tasks

Chapter 11The criteria used by Fortune to rank the top global companies were revenues. These companies were not ranked by profit. In fact, Fannie Mae, ranked internationally as Global 500’s 26th company should a profit loss.

The US holds 7 positions of the top 25 companies while China only holds 3 positions and Japan only 2 positions. I was surprised by this because media causes us to believe that China and Japan are taking over US industry and profits. Not surprisingly, 14 of the top 25 companies are in the oil/gas/utility business and 4 are vehicle manufacturers. Fortune: Global 500

Rank CompanyRevenues($ millions)Profits($ millions)1NetherlandsRoyal Dutch Shell484,48930,9182US: TexasExxon Mobil452,92641,0603US: ArkansasWal-Mart Stores446,95015,6994Britain: LondonBP386,46325,7005China: BejingSinopec Group375,2149,4536China: BejingChina National Petroleum352,33816,3177China: BejingState Grid259,1425,6788US: CaliforniaChevron245,62126,8959US: TexasConocoPhillips237,27212,43610JapanToyota Motor235,3643,59111FranceTotal231,58017,06912GermanyVolkswagen221,55121,42613Japan: TokyoJapan Post Holdings211,0195,93914SwitzerlandGlencore International186,1524,04815Russia: MoscowGazprom157,83144,46016Germany: DusseldorfE.ON157,057-3,08517Italy: RomeENI153,6769,53918Netherlands: AmsterdamING Group150,5716,59119US: MichiganGeneral Motors150,2769,19020South KoreaSamsung Electronics148,94412,05921Germany: StuttgartDaimler148,1397,88022US: ConnecticutGeneral Electric147,61614,15123Brazil: Rio de JaneiroPetrobras145,91520,12124US: NebraskaBerkshire Hathaway143,68810,25425France: ParisAXA142,7126,01226US: Washington D.C.Fannie Mae137,451-16,85527US: MichiganFord Motor136,26420,213

EXECUTIVE SUMMARY

This report was commissioned to examine the pursuit of international expansion opportunities in Poland. To achieve economies of scale, our marketing and manufacturing division is aiming toward a strategy of minimum local adaption and we believe that Poland is the best place to achieve that. We have determined that we can produce laptop computers more efficiently in Poland.

Poland has a mixed economic system in which the economy includes a variety of private freedom, combined with centralized economic planning and some government regulation. Poland has been a member of the European Union (EU) since 2004 and foreign direct investment (FDI) has played a significant role in supporting Poland’s labor-intensive and medium-technology sectors. Strong economic growth potential, a large domestic market, tariff-free access to the EU, and political stability will allow our company to develop a lucrative relationship with this central European country.

Poland is the only EU country that was not a part of the 2009 recession. Dell has a manufacturing facility in Poland which will give us access to a highly trained work force. The unemployment rate for the country is 12.5% which gives us the opportunity to enter this democratic and fast-developing country.

In developing this relationship, it will be essential to consider their local culture. Periods of silence during negotiations are not unusual. We should not try to fill the silence with unnecessary talk. We will have to be patient throughout negotiations. In Poland, the decision-making process is slower than in the United States. So we must be prepared to have several meetings before clinching the deal.

Building relationships and face-to-face contact is imperative for business and cooperation for their culture. They don’t do much business over the phone or through email. They DO NOT work on Sundays and we must take this into consideration when hiring and scheduling our workforce.

To begin our pursuit of international expansion, our research shows that Poland is the best country to achieve economies of scale by lowering the average cost per unit through increased production. This strong domestic market will give us the advantages we are looking for to expand and grow our company.

Ch 13Exercise 1CORE is a self-assessment tool that will allow you to determine your company’s readiness to expand its operations internationally and ascertain its ability to export a particular product. Upon completion of the questionnaire you will be able to identify your company’s strengths and weaknesses concerning exporting.

CORE generates answers (based on your responses) and then places them on two independent dimensions of readiness; “Organizational Readiness” and “Product Readiness.” At the end of each session, results are presented in a comprehensive, easy to read format and can be compared with past work sessions.

Export.gov offers many tools to help a company become export ready. Export basics home and Export University 101 provides webinars, questionnaires, step-by-step guides and information for companies wishing to expand.

Tariffs, Quotas and Non-Tariff Barriers training module at globalEDGE outlines the following components of international trade law: Basics behind tariffs and quotas, including under what circumstances the WTO/GATT prohibits tariffs and quotas Types of non-tariff barriers that countries use to restrict imports The impact of the General Agreement on Tariffs and Trade (GATT) on the creation of non-tariff barriers Different types of subsidies and countervailing duties

The purpose and importance of the Harmonized Tariff Schedule Basics of U.S. customs law Methods used by customs to determine an imported good’s value when assessing tariffs A case study on the recent disagreement between the U.S. and the EU over bananas

Exercise 2Liberalization of Indian regulatory framework has enhanced its attractiveness as a destination for foreign investors. •India is the world’s largest democracy and the second fastest growing economy •India is the fourth largest economy in the world by GDP PPP •Government agencies work closely with the business sector to promote economic growth •India offers a very competitive tax regime and comprehensive network of Tax Treaties •India has a highly skilled competitive workforce

•Its financial system is well regulated with a wide range of products and services and investment friendly policies •The legal and judicial system has a pro-business legislation that will enforce business law •Ranked the second most favored destination for FDI over 2010-2012 (World Investments Prospect Survey 2010-2012 UNCTADI) •No government approval is required for FDI

•The government has formulated ‘Sector-Specific Guidelines for FDI’ where investments for specified sector caps are covered automatically • Foreign Investment Promotion Board considers proposals that do not qualify for automatic approval •Decision on all proposals are made within 30 days of submission •Special investment and tax incentives are given for many different exports •Political institutions have fostered an open society with strong collective and individual rights supportive of free economic enterprise •The official language in court proceedings is English

•Indian law is modeled on English law; English case law is often referred to and relied on •Setting up a liaison is a common practice for foreign companies entering Indian market. This liaison will collect information about market and provide it to prospective Indian customers •Reserve Bank of India (RBI) allows a foreign entity of set up a project office after providing a report giving the particulars of a project •RBI will allow branch offices to be set up for import and export with approval through a jurisdictional Regional office

•Double Tax Avoidance Agreements exist to protect the import/export businesses in India •Special Economic Zone (SEZ) scheme provides an internationally competitive and unproblematic environment for exports. SEZ’s are duty-free •India has strict banking secrecy laws and RBI administers the financial sector •No restrictions imposed on financial non-resident companies in holding bank accounts •There is a large range of available credit facilities in India regulated by the RBI, including inport-export financing options with little to no red tape