Can anyone anaylze this fact pattern in details from the
International Management persepctive?
Examination – Fact Pattern
You have been recently hired as Sr. Vice President (write from
the perspective of international VP), of a soon to be established
International Division(no international experience) for a US based
computer manufacturer(manufacture), Irvine Computer
International. (“IrvComp”)(check back
knowledges about Dell case) , a domestic corporation, based
out of Irvine, California. You have profit and loss responsibility
for all international development, transactions and operations(what
is this knowledge point?), including finance(letter of credit),
sales and marketing(optimal mode of entry, electrical system and
telecommunication system). IrvComp manufactures some of the best,
“all weather”, “rough and tough”, mini-computers for about $200 USD
each. “The Answer”, as it is known, has been a domestic hit with
the highly mobile young crowd(target market) experienced with some
of the more advanced technologies. Domestic revenues have been
excellent and growing and are significant enough(strong financial
backup) to begin a rather ambitious international expansion plan.
IrvComp sees itself as an “innovator”. There is a strong corporate
social responsibility component(what is this knowledge point?) to
all its decision making.
You are now being asked by the CEO and the Board of Directors to
review and comment on the following expansion plan being
developed(still deciding, analysis is important despite of the
decision you make) and that the CEO has identified:
IrvComp is considering expanding into both Europe and
Asia(simultaneously, make your decision, say go to Europe, or
Asian, or both, and analysis it. What type of personnel do we need?
). It believes that the “Answer” is a “born global product” and as
such may be capable of entering either market given its particular
characteristics and price points.(particular characters & price
are advantages) The initial conceptualization of the structure for
the expansion is demonstrated in the attached diagram. As it
currently stands, this bifurcated emphasis presents different
opportunities and risks.
As it relates to Europe, you are being asked to develop a
profitable European operations based in Germany. Specifically,
Frankfurt, Germany whereby you can address your largest market, and
are beginning to address the rest of Europe. In
Frankfurt, you are considering establishing a wholly owned
subsidiary(wholly owned subsidiary knowledge points) that serves as
a secondary manufacturing facility, but essentially a distribution
hub based on a new authorized distributor (“AuthoDis”). (no direct
distribution effort by the company)
AuthoDis provides some valuable services. AuthoDis knows the
local market(local know-how), has tremendous experience in computer
sales and is widely considered the best in Germany. IrvComp is
lucky to have accomplished such a relationship.(maybe Irvcomp is
less powerful in the colleboration) Through the distribution
contract AuthoDis provides consumer services including any updates,
warranty servicing and some of the preliminary advertising and
promotions.(value added to customer) Because of AuthoDis sales are
expected to increase rapidly over the next few years.(long-term
benefit) You suspect that one or more unauthorized distribution
points have successfully penetrated the German market. (is this
asking how to avoid??) You are considering expanding to the rest of
Europe. Your product is available in 102 keyboard configurations,
meaning that you can type using all the European alphabet. The
exchange rate is presently 1 USD = .728 Euros. (Currency exchange
rate, payment risk, currency risk, important to check “all risks”
slide in ppt)
On the other side of the world you have just begun to look at
Asia. In particular, from your previous experience working in Asia,
(you have resource in Asia) you great relationships and feel fairly
confident in being able to establish a strategic alliance in China
with Hangzhou Yellow Dragon Company. (“HYD”) In Hangzhou, Zhejiang
to be precise. (The strategic alliance is governmentally mandated
if IrvComp was to establish operations.) Hangzhou is a very large,
highly prosperous city just south of Shanghai.(close to another big
market in China) With the HYD /IrvComp strategic alliance you are
seeking to establish the most reliable and inexpensive means of
manufacturing some of the key components of several
products.(manufacture oriented) HYD has been known however to take
advantage of new technology. You have not yet determined what those
components will be. Exchange rate is 1 USD = 6. 825 Yuan .
(Currency exchange rate, payment risk, currency risk, important to
check “all risks” slide in ppt)
Tangentially related to the Asia expansion, the CEO of IrvComp
has been approached by a very wealthy Burmese business man who is
looking to establish computer operations in Naypyidaw, the capital
of Myanmar (Myanmar is an extremely impoverished 4th
World Country)(political risks, security risk, exchange risk,
market?) He has very good links to the Military Junta and claims he
can “guarantee” a successful project. . He is also willing to
invest heavily in any transaction. Myanmar ranks very poorly on the
corruption index(do analysis here, why did professor put sentence
here), but does have a good source of Indian software and hardware
engineers that may provide a very inexpensive source of
“manufacturing capability”. Perhaps just as important is the fact
that “The Answer” may provide for people of Myanmar the ability to
enter the “internet age”.(corporate social responsibility comes to
play) Since 2001, the official exchange rate has varied between
5.75 and 6.70 kyats per US dollar (8.20 to 7.00 kyats per euro).
(currency risk, fluctuate too fast)
The CEO values your opinion tremendously, and has asked you to
address the following questions on the basis of your general
international management knowledge and on the attached diagram. She
asked the question without thinking through their implications. She
asks you to answer each but taking into account that there might be
overlap with one or more of the others questions. She expects you
to raise any and all issues and where appropriate make
recommendations.
