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Questions
15-1. After reading the chapter, explain the advantages for Meliá to own its hotels versus
managing them for other organizations.
15-2. After reading the chapter, discuss the advantages and risks for Meliá in its non-equity joint
venture with Jin Jiang.
TEACHING TIPS: Review the PowerPoint slides for Chapter Fifteen and select those you
find most useful for enhancing your lecture and class discussion. For additional visual
summaries of key chapter points, review the figures in the text.
Questions
15-3. Companies within the oneworld, Star, and Sky Team alliances have also engaged in major
mergers and acquisitions (M&A): American and US Air (oneworld), Delta and Northwest (Sky
Team), and Continental and United (Star). What are the advantages
and disadvantages of M&A versus non-equity alliances in this industry?
15-4. Some airlines, such as Southwest, have survived as niche players without extensive
international connections. Can they continue this strategy?
15-5. Why should an airline not be able to establish service anywhere in the world simply by
demonstrating that it can and will comply with the local labor and business laws of the
host country?
15-6. The U.S. law limiting foreign ownership of U.S. airlines to no more than 25 percent of
voting shares was enacted in 1938. Is this law an anachronism, or are there valid reasons for
having it today?
15-7. Many airlines have sometimes been no more than marginally profitable. Is this such a vital
industry that governments should intervene to guarantee survival? If so, how?
ADDITIONAL EXERCISES: Collaborative Strategies
Exercise 15.1. Ask the students to identify several foreign-owned companies with
operations in their local area. Are these companies viewed as good corporate citizens and
contributors to the local community? Do they employ mostly local people or do they have a
large number of expatriates? How do the wages paid by these companies compare to those
of other companies in the same industry? (LO: 1, Learning Outcome: To clarify why
companies may need to use modes other than exporting to operate effectively in
international business, AACSB: Multicultural and Diversity Understanding.)
Exercise 15.2. Assume that a company near you wanted to expand into foreign markets.
What issues should that company explore before deciding whether to export or to engage in
foreign direct investment? (LO: 2, Learning Outcome: To comprehend why and how
companies make foreign direct investments, AACSB: Analytical Skills.)
Exercise 15.3. Ask students to name companies, both domestic and foreign, that operate
internationally. Then ask them to discuss the potential types of collaborative arrangements
they feel would be appropriate for the various firms. Conclude the discussion by examining
the list of firms and asking students if there are particular industries that seem to lend
themselves to particular types of collaborative arrangements more readily than others. Be
sure the students discuss why this might be so. (LO: 4, Learning Outcome: To define the
major types of collaborative arrangements, AACSB: Dynamics of the Global Economy.)
Exercise 15.4. Identify the various home countries of students in your class. Then lead the
class in a discussion of the likely types of collaborative arrangements foreign firms might
pursue in those countries. Be sure students cite the various economic, political, and cultural
factors that would influence decisions regarding viable collaborative strategies. (LO: 5,
Learning Outcome: To describe what companies should consider when entering into
arrangements with other companies, AACSB: Analytical Skills.)
Exercise 15.5. While offering desirable advantages, licensing agreements also limit the
amount of control a licensor can exercise over a foreign production process. Engage the
students in a discussion of the type of firm that would most likely be willing to allow a
licensee to use its established brand name and the type of firm that would not be willing to
do so. Explore the reasons for each position as well as the reasons a licensee would be
willing to accept a license that did not include rights to the use of the associated brand name.
(LO: 4, Learning Outcome: To define the major types of collaborative arrangements,
AACSB: Dynamics of the Global Economy.)
