IBM FINAL ASSIGNMENT INSTRUCTIONS
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1. (2đ) In a world of zero transportation cost, no trade barriers, and nontrivial differences
between nations with regard to factor endowments, firms must expand internationally if
they are to survive. Discuss
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Trong một thế giới không có chi phí vận chuyển, không có rào cản thương mại và sự
khác biệt phi lợi nhuận giữa các quốc gia liên quan đến các khoản tài trợ yếu tố, các công
ty phải mở rộng ra quốc tế nếu họ muốn tồn tại.
Q1: chap 1 6 12. Differences between nations, globalization reaches the max level to blur
the differences and trade barriers. Look at keywords in questions.
Discuss => different possibilities and critical evaluations (relevant examples)
Comparative advantage.
This is an economic term which refers to a firms' or a country's ability to produce one
unit of a good more efficiently as compared to another's ability to produce the same unit
of that goods.This is because different countries have different factor endowment.
Answer 1 : The theory of comparative advantage suggests that activities should take
place in the countries that can perform them most efficiently, given that different
countries are endowed with different factors of production. If there are no barriers or
costs to trade, then it is likely that many industries will be based out of the countries that
provide the best set of factor endowments. Given location economies, a company can
develop a global web value-creation activities to take advantage of differing factor
endowments in differing locations.
For firms already located in the countries with the most favorable factor endowments for
their industry, however, there may not be a need to expand internationally at a certain
point in time. As factor endowments evolve, the firm may want to disperse its value-
creating activities to those markets that offer comparative advantages. If the firm is in the
competitive market, it will benefit from international expansion that includes its value-
creating activities because of the cost position and product differentiation opportunities
such expansion can confer. A firm may be able to survive in a local market without
international expansion, as long as the local market is not targeted by competitors who
have taken advantage of the economies offered by dispersing their value-creation
activities internationally. An example is an inefficient, high-priced locally-owned
supermarket that has not yet faced the entry of Wal-Mart in its market
Answer 2: It is true that different countries have different factor conditions. According to
the theory of comparative advantage, different activities should occur in the counties that
perform them most efficiently, given that different countries are endowed with different
factors of production. In a world of zero transportation costs, no trade barriers, it seems
that many giant companies are likely to suffer from the pressure to expand for
international businesses that offer the best set of factor endowments if they are to survive.
I agree that small firms will have a little pressure but giant companies must expand their
global web of value-creation activities in order to take the benefits of differing factor
endowments in different locations.
However, the situations in which the firms are operating in the counties with the most
favorable factor endowment, it is not necessary for the firms to expand internationally at
that moment. Most firms want to expand their business activities in order to take the
comparative advantages because by so doing, they can easily achieve economies of scale,
lower cost advantage, and product differentiation opportunities etc. Those firms which
want to expand internationally have to adopt one of different entry modes such licensing,
exporting, franchising, merger & acquisition, green field investment, joint venture, and
turnkey projects. Having said this, therefore, both theory and practice suggest that many
small firms are able to survive quite well but giant companies have a much pressure to
survive locally so that they must go internationally if there are no transportation costs, no
trade barrier, and nontrivial differences between different countries with regard to factor
conditions.
ANSWER: It is true that different countries have different factor conditions. According
to the theory of comparative advantage, different activities should occur in the countris
that perform them most efficiently, given that different countries are endowed with
different factors of production.
If there are no barriers or costs to trade, then it is likely that many industries will be based
out of the countries that provide the best set of factor endowments. It would be
considered as perfect circumstances for international trade for firms create products or
produce services that may be sold abroad – to cater to the needs of international
consumers – zero transportation costs, no trade barriers and nontrivial differences
between nations with regard to factor conditions. Removing such barriers would expand
the market for goods from the developing world, increase investment in labor-intensive
sectors and thus enable more people to improve their lives and escape from poverty.
The situations in which the firms are operating in the countris with the most favorable
factor endowment (such as fruit grown in the tropics), it is not necessary for the firms to
expand internationally at that moment (because tropical fruits cannot be grown in
temperate regions, so businesses need intermediaries to be able to export tropical fruits,
no need expand). In addition, zero-cost transportation affects the (possibly lower) prices
of a particular country's goods (such as tropical fruit). As factor endowments evolve, the
firm may want to disperse its value-creating activities to those markets that offer
comparative advantages. If the firm is in the competitive market, it will benefit from
international expansion that includes its value-creating activities because of the cost
position and product differentiation opportunities such expansion can confer. A firm may
be able to survive in a local market without international expansion, as long as the local
market is not targeted by competitors who have taken advantage of the economies offered
by dispersing their value-creation activities internationally. The larger the country, the
less likely it is to be open to trade with other nations. Because the larger countries already
have access to more capital and customers, “they don’t need to be as open,”
says.Businesses in these countries will only focus on production for their own citizens,
both have abundant resources and wide consumption, so I don't think they need to expand
to survive.
However, if no trade barriers existed then matters would be worse simply because
countries would export unsafe, toxic and counterfeit goods. The criminal profit motive
would reign supreme because exporters are immune from foreign legal prosecution.
Patent rights for instance need to be protected globally.
Trade barriers for goods and services are relatively low already so the world overall
would only be slightly better off with no trade barriers.
2. (3đ) Read the case : “ANTI-DUMPING CASE OF VIETNAM CATFISH IN THE US
MARKET”
Who gains most from the antidumping duties levied by the US on imports of catfish from
Vietnam? Who are the losers? Are these duties in the best national interests of the United
States?
Q2: Based on chap 7. Read the case with the link. who gained, who lost from anti-
dumping, which was exposed? Refer to the case and all the things, Suffer from the case
3. (5đ) International business involves managing in multiple countries with variation in
socio-cultural and political-legal environments. These differences in many cases create
significant barriers to international business management. Apart from case studies
learned in class, please choose an article from the media discussing a case ( in the last 5
years) of a multinational company who has been plagued by socio-cultural or political-
legal barriers; and it leads to failure or lower than expected revenue when operating in a
different market. Identify the reasons causing difficulities in the focal firm international
business and propose recommendations to help them overcome those ostacles.
Q3: Cover all the chapters, break down all the requirements, U1-4 (differences among
nations => create barriers when entering markets),
Need to analyse one realistic case, not appear in textbooks and lectures, mention the case
that failed because of the trade barriers (reasons caused difficulties, methods to overcome
all obstacles => IB related reasons, if not, low mark). Choose reliable sources only, such
as Google Scholar, UEH smart lib, etc.
Political terms: system, barriers, obstacles? Culture: factors that led to that failure?
folklore, norms and mores? Which exact factors (internal and external)?
To understand culture, the market is important, but how? Convey detailed actions and
plans to solve problems, as much as possible.
Recommendations must be realistic that can be applied to real life situations, show the
details to do so, must research thoughtfully, do not say those irrationally.
