978-0134324838 Chapter 5 Solution Manual Part 3

5-19. Ethical Dilemma:

To reduce poverty in Africa, government officials want to increase African exports

to Europe. Africa’s top exports include agricultural products, such as meat,

coffee, peanuts, and fruit, and many Africans depend on food exports for their

livelihood. However, the European Union (EU) imposes high trade barriers on the

import of agricultural products. Among various reasons, Europeans are

concerned about food quality and the EU has adopted rigorous agricultural safety

standards. But the tough regulations hurt African countries, which have

experienced problems with food toxins and bovine diseases in the past. In

addition, the agricultural lobby in Europe is powerful and farmers are heavily

subsidized by the EU. Many European politicians do not want to risk angering

Europe’s farm lobby by supporting free international trade in agricultural

products. Suppose you are part of an EU government task force investigating

trade barriers on African agricultural imports. Using the ethical framework in

Chapter 4, analyze the arguments for and against agricultural trade with Africa.

What should the EU do? Justify your answer.

(LO 5.3; AACSB: Analytical Thinking)

A FRAMEWORK FOR MAKING ETHICAL DECISIONS

1. Identify the problem:

■ The first step is to acknowledge the presence of an ethical problem:

2. Examine the facts:

■ Determine the nature and dimensions of the situation.

Imports to EU from Africa: wine, grapes, oranges, apples, meat, coffee and

peanuts

■ How much weight should be given to the interests of each?

■ Do some parties have a greater stake because they are disadvantaged or have a

special need?

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Yes- Africa has a much greater stake than the EU, which has alternatives. For

Africa, there are few, if any other reasonable alternatives. Although rich in natural

resources, 30 of Africa’s 53 countries are poor enough to be included on the

3. Create alternatives:

■ Initially, consistent with the pyramid of ethical behavior, you should review any

proposed action to ensure it is legal. If it violates host or home country laws, or conflicts

with international treaties, it should be rejected.

Trade liberalization promotes a higher standard of living for all countries

involved.

■ Finally, the manager should evaluate each proposed action to assess its consistency

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4. Implement course of action:

5. Evaluate results.

■ Assess how effective the decision is.

■ If you had it to do again, would you do anything differently?

■ Evaluation should assess whether the intended effect is achieved, and if not, whether

● GlobalEDGE™ INTERNET EXERCISES http://globaledge.msu.edu

5-20. Suppose your company is interested in importing wines from Argentina. In

analyzing this opportunity, you want to identify the strengths and weaknesses of

the Argentine wine industry. What are the conditions that make Argentina a

favorable location for wine cultivation? Provide a short description of the status

of Argentina’s wine exports and a list of the top importing countries of Argentine

wines. In addition to globalEDGE™, some useful Web sites for this research

include www.winesofargentina.org

and www.ita.doc.gov.

(LO 5.1; LO 5.3; AACSB: Analytical Thinking)

Consistent with the comparative advantage view, Argentina has climate, location, and

land conducive to grape growing and wine production. Argentina enjoys the natural

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Argentina has made wine into one of its major tourist attractions. People from all over

the world come to stay at vineyards in the Mendoza Province- one of Argentina’s top

Red wine is overwhelmingly the favorite of most importing countries. Argentina exports

to (biggest first): Brazil, Chile, U.S., China, Spain, Netherlands, Mexico, Germany, Italy

Argentina is seeking to develop its national competitive advantage in wine. As an

agricultural-based industry, Argentina’s wine sector is subjected to seasonal factors,

5-21. Volvo (www.volvo.com) and Pilkington (www. pilkington.com) are major

multinational firms with operations that span the globe. Investigate these firms by

visiting their websites, as well as www.hoovers.com (a site that provides specific

company information) and globalEDGE™. For each company, describe its

ownership-specific advantages, location-specific advantages, and internalization

advantages.

(LO 5.1; LO 5.3; AACSB: Analytical Thinking)

Volvo’s Advantages

Ownership-Specific: Proprietary manufacturing technology, “Vehicle Production

System” emphasizing common production processes company-wide, patented hybrid

technologies, unique managerial skills and capabilities, synergies of a common

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Location-Specific: Manufacturing and R&D facilities on three continents, sells its

Internalization: Volvo recently underwent organization structure changes with the

acquisition of Renault and Mack truck divisions and new production system introduction

Pilkington’s Advantages

Ownership-Specific: Pilkington’s most valuable OSA is its proprietary technological

know-how in float glass manufacturing, laminating and coating, developed via company

R&D activities. Pilkington has developed superior managerial and marketing skills. It

Location-Specific: Pilkington has manufacturing operations in 26 countries on five

continents and sales in 130 countries. This broad global reach affords diversified

sources of raw materials and the ability to capitalize on the best local labor forces

5-22. The World Bank works to alleviate world poverty. The Bank provides

information about conditions in developing countries, which it uses to measure

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progress in economic and social development. World Development Indicators

(www.worldbank.org/data) is the Bank’s premier source for data on international

development. The Bank measures more than 800 indicators of national conditions

regarding people, environment, and economy. Consult the Web site, click on

World Development Indicators or Indicators, and answer the following questions:

(a) In countries with developing economies, what indicators are most associated

with poverty? (b) What types of industries are most typically found in poor

countries? (c) Based on comparing development indicators in poor and affluent

countries, speculate on what types of actions governments in developing

countries can take to help spur economic development and alleviate poverty.

(LO 5.1; LO 5.3; AACSB: Analytical Thinking)

The primary indicators of poverty in developing economies are in the table below.

Poverty in

Developing

Economies

Indicators

Source: World Development Indicators (www.worldbank.org/data/)

The types of industries that most characterize impoverished countries.

Agriculture is the primary industry for at least 70% of the world’s poor in rural areas. It is

Actions governments can take to help spur development and alleviate poverty.

• Spearhead “good” governance and high quality institutions to promote growth, raise

incomes and reduce poverty. Governance is the way public officials and public

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• Invest in infrastructure to raise public citizens’ health, spur economic growth (i.e.,

expand GDP) and increase the country’s national competitiveness. thus developing

countries’ government must invest in their transportation infrastructure (i.e., roads,

CAREER TOOLBOX EXERCISE

PORTER’S DIAMOND MODEL AND MANUFACTURING

Visit MyManagementLab for more information.

MyManagementLab

Go to MyManagementLab.com for Auto-graded writing questions as well as the

following Assisted-graded writing questions.

 5-23. Why do nations engage in international business? That is, what are the

benefits of international trade and investment?

 5-24. Summarize the international product life cycle theory. Use the theory to

explain the international evolution of automobiles and laptop computers.

 5-25. MyManagementLab Only– comprehensive writing assignment for this

chapter.

Visit MyManagementLab for suggested answers.

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