Question

For questions 1 and 2 below, using what you have learned in class, analyze and discuss the best move(s) from home-to-host in each situation. Present the following in your submissions:

1. An opening one or two sentence summary of your planned move(s) from home-to-host; and
2. A complete statement of your planned move(s);

Explain: the intent(s) and purpose(s) for your plan and related decisions.

Address the following whenever appropriate: Profitability, institutions, resources, economic integration, opportunity, trading internationally, protectionism, access vs. acquire, FDI, FOREX, entry modes, OLI, strategy and structure, the 4P’s of marketing, and any other factors you feel are important.

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1. Your business is located in Australia where you produce and sell wildlife photos of Koala bears and manufacture toy stuffed animals resembling Koala bears. You do so to support a regional Koala bear preserve and foundation, but your business is a for profit business. You have [own] several design patents in the USA covering the products you sell, but nowhere else (i.e., no patents anywhere else). You wish to sell your products in a developed economy, and establish a WOS in the region. You also wish to cut costs related to manufacturing and shipping, and are always concerned about taxes.

Your value chain is as follows:

Engineering/Design--Manufacturing—Assembly—Marketing---Sales—Customer Service.

How should you proceed?

2. You are located in Cuba. You now have the opportunity to trade with the U.S.A. and wish to export cigars into the U.S.A. The laws of the USA are clear. U.S.A. laws do not allow Cuban cigars to be sold in the USA absent significant tariffs.

How should you proceed?

Hint: Product - strategy and structure, the 4P’s of marketing,

Answer 1

1)

In relation to the background, I need to set up a wholly owned subsidiary in the field of my preference. It's a popular way for a company to reach overseas markets. It provides wholly owned subsidiary which means that a corporation acquires another foreign company's 100 percent stake and takes complete control of its activities and becomes the sole decision maker. In this case, I will slash production and shipping prices, because I own 100 percent stake in the business of my choosing of a fully functional company with similar items.

Remember that in this situation I may always go for a green field initiative which would allow me to create a business from scratch in the international market and then buy its full stake. The approach would incur advertisement and promotional expenses to develop the name of the company in the local market, which will not be the case if I buy a fully established company's interest.

Sure the value of the pre-established company will be higher cost, but there will be no or very little obligation to build loyal customers and it will help me achieve the desired sales goal, because I rely only on the manufacture and promotion of my goods and not on the company's branding.The main challenge is to pick the foreign company's appropriate size, based on the financial strategy and business growth I've anticipated before joining the international market.

2)

The possession and selling of Cuban Cigars in the USA is absolutely illegal. There is a loophole where visitors can carry Cuban Cigars back to the U.S. but it's only for personal use or a present to somebody. Only after getting certified in the Habanos authenticity program can this chance to trade with USA on Cuban Cigars be possible. For ease of sale I can also launch my own website where I can list the Cuban Cigars varieties to be sold, while at the same time I work as a dealer.

I have to remember that there is a cap on the amount of tobacco that an individual can bring to the USA, especially Cuban cigars. But my deals also need to be compelling so I can develop customer loyalty. For instance, a gift box consisting of a pack of 3 cigars will be given to the customer when he purchases cigar for the fifth time.I will also need a very clear packing, return and customs policy when selling over the website. So the client doesn't feel overwhelmed, and starts to consider alternatives.

Since Cuban cigars are coveted and the embargo signed added more competition for the same, consumers will always choose quality over costs. All I need is to keep up with the quality and competitive prices with additional service, such as on time delivery and help, and I will be able to successfully develop my company.