Question Tag: Globalization

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  • 5 Marks

AFM – May 2016 – L3 – Q4b – International investment and financing decisions, Economic environment for multinational organizations

Describe five strategic reasons that might motivate a company to undertake foreign direct investment. —------------------------------------------------------------------ Question: b) At the last meeting of the Board of Directors of Greenwich Ghana Limited, the Board resolved to establish a manufacturing facility in Asia and Europe. Briefly describe FIVE strategic reasons that might have informed management's decision to undertake the Foreign Direct Investment (FDI). (5 marks) Answer: Strategic Reasons for Foreign Direct Investment (FDI) Access to New Markets By establishing a manufacturing facility in foreign countries, the company gains access to new markets, enabling it to expand its customer base and increase market share. This helps diversify the company’s revenue sources and reduces dependency on the domestic market. (1 mark) Cost Reduction Manufacturing in regions with lower production and labor costs can significantly reduce operational expenses. Asia and Europe might offer cost advantages such as cheaper raw materials, lower wages, or favorable tax policies, making FDI a cost-effective decision. (1 mark) Proximity to Resources Setting up operations closer to key resources (such as raw materials or skilled labor) reduces transportation costs and ensures a more efficient supply chain. This proximity can also lead to better quality control and faster production cycles. (1 mark) Government Incentives Many countries offer incentives such as tax holidays, grants, or subsidies to attract foreign investments. These incentives can lower the company’s overall costs and improve profitability, making FDI an attractive option. (1 mark) Strategic Positioning Against Competitors Establishing a presence in key international markets can be a defensive move to counter competitors who are already operating in those regions. By entering these markets, the company can strengthen its competitive position and ensure it does not lose out on potential opportunities. (1 mark) ========== Let me know if you'd like to proceed with the next part or have any further modifications! Describe five strategic reasons that might motivate a company to undertake foreign direct investment. —------------------------------------------------------------------ Question: b) At the last meeting of the Board of Directors of Greenwich Ghana Limited, the Board resolved to establish a manufacturing facility in Asia and Europe. Briefly describe FIVE strategic reasons that might have informed management's decision to undertake the Foreign Direct Investment (FDI). (5 marks) Answer: Strategic Reasons for Foreign Direct Investment (FDI) Access to New Markets By establishing a manufacturing facility in foreign countries, the company gains access to new markets, enabling it to expand its customer base and increase market share. This helps diversify the company’s revenue sources and reduces dependency on the domestic market. (1 mark) Cost Reduction Manufacturing in regions with lower production and labor costs can significantly reduce operational expenses. Asia and Europe might offer cost advantages such as cheaper raw materials, lower wages, or favorable tax policies, making FDI a cost-effective decision. (1 mark) Proximity to Resources Setting up operations closer to key resources (such as raw materials or skilled labor) reduces transportation costs and ensures a more efficient supply chain. This proximity can also lead to better quality control and faster production cycles. (1 mark) Government Incentives Many countries offer incentives such as tax holidays, grants, or subsidies to attract foreign investments. These incentives can lower the company’s overall costs and improve profitability, making FDI an attractive option. (1 mark) Strategic Positioning Against Competitors Establishing a presence in key international markets can be a defensive move to counter competitors who are already operating in those regions. By entering these markets, the company can strengthen its competitive position and ensure it does not lose out on potential opportunities. (1 mark) ========== Let me know if you'd like to proceed with the next part or have any further modifications! Describe five strategic reasons that might motivate a company to undertake foreign direct investment.

b) At the last meeting of the Board of Directors of Greenwich Ghana Limited, the Board resolved to establish a manufacturing facility in Asia and Europe. Briefly describe FIVE strategic reasons that might have informed management’s decision to undertake the Foreign Direct Investment (FDI). (5 marks)

Strategic Reasons for Foreign Direct Investment (FDI)

  1. Access to New Markets
    • By establishing a manufacturing facility in foreign countries, the company gains access to new markets, enabling it to expand its customer base and increase market share. This helps diversify the company’s revenue sources and reduces dependency on the domestic market.
      (1 mark)
  2. Cost Reduction
    • Manufacturing in regions with lower production and labor costs can significantly reduce operational expenses. Asia and Europe might offer cost advantages such as cheaper raw materials, lower wages, or favorable tax policies, making FDI a cost-effective decision.
      (1 mark)
  3. Proximity to Resources
    • Setting up operations closer to key resources (such as raw materials or skilled labor) reduces transportation costs and ensures a more efficient supply chain. This proximity can also lead to better quality control and faster production cycles.
      (1 mark)
  4. Government Incentives
    • Many countries offer incentives such as tax holidays, grants, or subsidies to attract foreign investments. These incentives can lower the company’s overall costs and improve profitability, making FDI an attractive option.
      (1 mark)
  5. Strategic Positioning Against Competitors
    • Establishing a presence in key international markets can be a defensive move to counter competitors who are already operating in those regions. By entering these markets, the company can strengthen its competitive position and ensure it does not lose out on potential opportunities.
      (1 mark)
  • 10 Marks

CSEG – Nov 2017 – L2 – Q6b – Strategic management in the globalized workplace

Advise on the most suitable foreign market entry strategies for Wuudin’s new business lines.

Asamoah Wuudin is a Ghanaian private company owned mainly by the Wuudin family. Most of its clothing and accessories are produced and marketed by the company (some are manufactured by outside contractors). For other products, notably fragrances, cosmetics, and eyewear, Wuudin licenses its brand names to other companies. The Board of Directors of Wuudin is considering expanding into new foreign markets with athletic clothing, hotels, and bridal shops.

Required:

Advise Wuudin on the most suitable foreign market entry strategy for each of the new lines of business. (10 marks)

In advising Wuudin on the most suitable foreign market entry strategy for each of the new lines of business, the key criterion is likely to be the opportunities for sharing or transferring Wuudin’s other resources and capabilities with or to the new businesses.

1. Athletic Clothing:

Recommended Strategy: Joint Venture

  • Rationale: Entering into a joint venture with an established foreign partner in the athletic clothing market is advisable. Wuudin may need to access technical capabilities for designing products for different sports. A joint venture allows Wuudin to combine its branding and production strengths with the local market knowledge and expertise of a partner. This collaboration can help Wuudin quickly establish a foothold in the new market while sharing risks and benefits with the partner.

2. Hotels:

Recommended Strategy: Licensing

  • Rationale: Licensing is the most suitable entry strategy for Wuudin in the hotel industry. Since Wuudin’s core capabilities do not directly relate to the design and operation of luxury hotels, licensing the Wuudin brand to an experienced hotel operator can allow the company to enter the market without having to develop the expertise needed to manage hotels. This strategy leverages the brand’s reputation while outsourcing the operational complexities to a partner with industry knowledge.

3. Bridal Shops:

Recommended Strategy: In-House Expansion

  • Rationale: Wuudin can utilize its existing design, manufacturing, marketing, and distribution capabilities to develop and expand the bridal shop business in-house. Since Wuudin already has expertise in clothing and accessories, this line of business aligns closely with its current operations. Expanding this business in-house allows Wuudin to maintain control over product quality, brand identity, and customer experience, while capitalizing on existing synergies.
  • 12 Marks

BMIS – May 2017 – L1 – Q7a – The external environment

Explain the concept of globalization, its key features, and the factors encouraging its spread in world trade.

The concept of globalization has become a major discussion theme in both professional and business environments. A number of factors have been identified as encouraging globalization of world trade.

Required:

i) Explain globalization. (2 marks)

ii) Identify any FOUR features of globalization.     (4 marks)

iii) Explain any FOUR factors encouraging the globalization of world trade. (6 marks)

(Total: 12 marks)

i) Globalization:
Globalization refers to the growing convergence of national cultures, economies, and political systems, and the growing interdependence of countries worldwide. It is characterized by increased trade, capital flows, and the rapid diffusion of technology, leading to a more interconnected global economy.
(2 marks)

ii) Features of Globalization:

  1. The ability of individuals to enter into transactions with individuals and organizations based in other countries.
  2. The increased importance of global economic policy relative to domestic policy.
  3. The rise of globally linked and dependent financial markets.
  4. The reduction in the importance of local manufacturing due to global supply chains.
  5. Reduced transaction costs through developments in communications and transport.
  6. The rise of emerging, newly industrialized nations.
    (4 marks)

iii) Factors Encouraging the Globalization of World Trade:

  1. Financial Factors: Developing world debt often leads to economic reforms required by lenders, promoting globalization.
  2. Country/Continent Alliances: Alliances like ECOWAS and AU foster trade and tourism among member countries.
  3. Government Policy: Policies that seek to control the balance of payments by discouraging imports can encourage globalization.
  4. Legal Factors: Patents and trademarks encourage the development and global spread of technology and design.
  5. International Commodity Markets: Efficient systems of trading and communication facilitate global transactions in commodities.
    (6 marks)
  • 10 Marks

BMIS – Dec 2023 – L1 – Q1b – Business and organisational structure

Explains the nature of virtual organizations and the benefits associated with them.

The emergence of globalization has resulted in some small and large businesses operating as virtual organizations.

Required:

Explain to your study mates the nature of this organizational type and state FOUR (4) benefits associated with it.

Nature of Virtual Organizations:

A virtual organization is any organization that outsources most of the key functions performed in the organization while maintaining a small core activity. Most virtual organizations conduct their operations electronically, with the organization’s website containing the database of information about suppliers, customers, and other stakeholders.
(2 marks)

Advantages of a Virtual Organization:

  1. Reduced Costs:
    A virtual organization has reduced operational expenses because it incurs minimal administrative expenses.
    (2 marks)
  2. Fewer Employees:
    A virtual organization requires fewer employees, leading to minimal salaries and fewer human resource problems to manage.
    (2 marks)
  3. Access to Specialists:
    A virtual organization can access people with the needed expertise from around the globe, offering superior and better services to its clients.
    (2 marks)
  4. Instant and Effective Communication:
    The development of strong Internet connectivity provides an effective communication network for the virtual organization, enabling it to offer excellent services to customers.
    (2 marks)

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