Student Name: Monil Chheda (N01343893)

Global Business Strategy 2

BUS 5571
Midterm Exam – Short Answers
Total Marks: 25

Part A

Question 1
You are the marketing manager of a food products company that is considering entering the
South Korean market. The retail system in South Korea tends to be very fragmented. Also,
retailers and wholesalers tend to have long-term ties with South Korean food companies,
which makes access to distribution channels difficult. What distribution strategy would you
advise the company to pursue? Why?

Solution - As the retail system is fragmented in South Korea and retailers or wholesalers
have a long-term relationship with food companies in South Korea, I would prefer whether
to be the wholesaler or middle-seller who imparts the agents, as there is no market share in
the fragmented retail system where there is a majority and it is also very difficult and costly
for the majority of consumers to influence the industry. In comparison with retailers and
wholesalers, it will be easy to find a wholesaler who can buy the commodity of our kind,
who has long-term ties between them and their retailers who are their direct customers. In
the near future, a wholesaler or distributor would allow a business to achieve greater
market access and would need to create a major market in the South Korean competitive
market retail sector. It will be the best chain for the distribution process.

Question 2
What are the three aspects of Strategic pricing? Explain all three.

Solution - Strategic pricing is a competitive strategy where the prices of the products are set
in a way that they will be fair in the market over those being offered by the competitors. It
aims at increasing the sales of the product and acquiring of a huge market share.
The three aspects of Strategic pricing are:
a. Penetrating: This is where the product is offered in the market at a lower price as
compared to those of the competitors. It is aimed at reaching a larger market and attracting
new customers. It also helps in beating the competition. This is because customers switch
from buying the products of the competitors to your products. This helps the organization
to make high sales that generate high revenue.
b. Skimming: This is where the product is initially offered at a high price then this price is
lowered after a certain duration. It is a temporary strategy that is aimed at helping the
business attract new customers. The initial prices that were higher helps the business to
recoup the innovation costs and helps it to cover the product development costs which
include its marketing.
c. Following: This is where the organization sets the price of its products based on the price
of the largest competitor. It aims at influencing the customers to switch from the
competitor to the organization's products. This applies where the organization does not
have the capability of being more innovative to produce differentiated products.

Question 4
What are the main advantages and disadvantages of the ethnocentric, polycentric, and
geocentric approaches to staffing policy? When is each approach appropriate?

Solution - Staffing policies in corporate are all about choosing the right individuals with the
right skills to be assigned to a particular job. Additionally, they can be used for human
resource development in already existing personnel. Ethnocentric, polycentric and
geocentric are the three main practices and procedures used while employing workforce for
numerous stations. Each human resource department in different corporate office may use
one or a combination of these 3 to hire staff.
Ethnocentric staffing policy is usually used by multinational companies while filling positions
in their subsidiaries by sourcing from the headquarters instead of hiring locally within the
subsidiary. The advantage of this approach includes: One there is synchronized values and
interests form the head-office to the subsidiary since the staff are already aligned to the
corporate way of operation. Two there is usually no communication barrier between the
subsidiary and head-office since the staff hired to the former are known to the latter. Three
the staff assigned to join subsidiary already have a known performance record with those in
the headquarters thus it is easier to know what to expect. The main disadvantages with this
approach are possible loss of crucial local information privy to the locals, the cost of hiring
locally might be cheaper than sourcing from headquarters and finally the expatriates
obtained from the head office may generate a hostile scene in holdings owned abroad
which might hurt the optimism of the staff especially if they are many in number.
The second approach of staffing which is polycentric the HR internationally recruits
individuals who are locals to hold positions at the subsidiary. This method is referred to as
the 'international recruitment method '. In this method all positions including executive
positions are filled by local individuals. This process is only feasible where the host country
has trained individuals to fill such positions. It is good in that the residents are able to help
the parent company navigate host country dynamics such as politics, markets among others.
Further it assures citizens and the government of the multinational commitment to working
in the country. Three local staff are usually cheaper than relocating expatriates to
subsidiaries. However, key among the disadvantage is that the locals may tend to advance
their agendas rather than the interests of the corporate.
The third staffing policy, geocentric, refers to the decision by multinationals to hire
individuals irrespective of their ethnic group. Staff could be hired from the parent company
country, the host country or from other countries where there is no subsidiary. The
rationale behind this method is to seek whichever individual best suites the position
globally. One of the advantages for using this method is that it makes a business competitive
wherever you are. Two, in case you need to open a subsidiary anywhere else it is easier
since the business is used to dealing with different ways of steering business. Three in case
of staffing you are assured of getting the best individuals with the required skills globally. On
the flip side this approach may prove to be expensive in terms of relocation costs and the
engagement procedures especially for small companies. Two there is a risk of tempering
with the culture in different subsidiary or parent company.
Part B

Question 1
Was it ethical of the Ohio Art Company to move production to China? What were the
economic and social costs and benefits of this decision? What would have happened if
production had not been moved?

Solution - In my opinion, I don’t believe that they were unethical to move production to
China. I don't believe they broke any rules. They had financial difficulties and had to take
some kind of move. Regardless of the decision made to sell the Etch-A-Sketch product for
$10 or less to compete with Wal-Mart-style companies, their workers lost their jobs. They
may have shut down their doors entirely, which would have further hurt the community if
the owners had no income from tax, but they opted in ethical terms to save the business
given the tragic costs to local workers. They also gave some of China’s citizens paying jobs
and people were able to pay less for the Etch-A-Sketch. It was good to offer Chinese workers
jobs on one hand, but it was not really a nice and ethnic aspect of the decision that if one
was told about unfair practice in Kin Ki was right. As for the social cost – it was a disaster
when people lost their employment and could not find other work immediately and then
lost their homes, and the article says the society collapsed. As I said, if manufacturing had
not been relocated, I think it would have gone down and people would not just lose their
jobs, but it would also hurt the economy of the city more, as the company closes its sales. I
think it's an ethical change overall.

Question 2
Assuming that the description of working conditions given in The New York Times is correct,
is it ethical for the Ohio Art Company to continue using Kin Ki to manufacture Etch-A-Sketch
toys?

Solution - As to whether or not it is ethical for the Ohio Art Company to continue using Kin Ki
to manufacture Etch-A-Sketch toys assuming The New York Times article was correct, they
may want to look at Cultural Relativism to help determine if it is ethical or not. Justified
moralist assumptions that the norms of home-country ethics of a company are the correct
ones to be practiced by businesses outside the countries, and naïve immoralist arguments
that if Chinese society allows the existence of sweat shops and child labor rules, etc. I
personally assume that the Ohio Art Company would produce the same outcomes if it used
one of these viewpoints to look at this situation. They should examine this situation and,
even if it might be OK for them to handle their children in some ways according to China's
"laws," it is not morally acceptable. In the US this is socially unethical, I believe this trump
cultural relativism. They must cease to have relations with Kin Ki until Kin Ki agrees to meet
certain requirements and standards required by Ohio Art Company to meet home country
standards.

Question 3
What steps can executives at the Ohio Art Company take to make sure they do not find the
company profiled in The New York Times again as an enterprise that benefits from
sweatshop labour?
Solution - Ohio Art Company needs to make many changes in order to not get profiled again
in the New York Times. The first one being that they need to make sure that labor laws are
being followed by the country where the workers are employed. As reported, staff, mostly
teenagers, work eighty-four hours a week, well above the 40-hour week set by Shenzhen
authorities. Just 1.3 times the regular pay overtime is charged rather than 1.5 times
charged, and no more than 32 hours of extra time are permitted by local law. However, they
are charged just 24 cents an hour, less than the standard of 33 cents an hour. Ohio Art
Company must ensure that each of these laws is complied with and followed. They must
also examine the entire employee contract and identify what is fair, including lunch breaks,
food they provide, dorm rooms provided and workers' overall treatment. Ohio Art Company
wants its HR workers and the Chinese as well as its managers to work together to reach a
written agreement so that everyone knows what's planned, carries out regular inspections
at the premises and, maybe, even random checks to ensure things go accordingly. This is to
be followed by Ohio Art Company which should have been done at the beginning.

Part C (Bonus)

Question
Explain the newer concepts for creating lean systems and processes focused on quality and
speed as discussed in class that are popular nowadays especially in-service industry?
Delineate the anticipated progression of Total Quality Management from Six Sigma to
Artificial Intelligence (AI).

Solution - Lean manufacturing is an opportunity that is based on minimizing waste with

manufacturing system while maximizing productivity. Lean manufacturing focuses on
principles such as gradual improvement. However, many organizations see the process as a
temporary event to solve giant systematic gaps. The key to lean process improvement
includes:
a. Purpose - the purpose of lean management is to convey value to the customer. When the
value is broken down, work can begin together for a targeted goal. The lean team should
have a shared vision and a clear purpose to the organization thin.
b. People - everybody in processes should actively be involved, a constant think of
improvement. a lean organization is made possible with the goal, idea, and altitude that
make the business viable and efficient
c. Process - every process in manufacturing should have value, be purposeful and
intentional. Every step of production should be liked to each other to flow. Any broken flow
of construction will distract the mission in term of product waste, time and labour waste.
The anticipated progression from six sigma is an approach to data-driven management
which is similar to lean. It seeks to improve quality by measuring fault available in a process
and eliminating them to a minimal defect as possible. When lean hold that waste that is
caused by additional step in manufacture where a customer does not believe it add any
value and is not willing to pay for it. The six-sigma come in place by holding the results from
process variation.