CRITICAL THINKING AND DISCUSSION QUESTIONS
QUESTION 1: Describe the shifts in the world economy over the last 30 years. What
are the implications of these shifts for international businesses based in Great Britain?
North America? Hong Kong?
ANSWER 1: Over the last 30 years, there has been a shift away from a world in which
national economies are relatively self-contained entities, isolated by barriers to trade and
QUESTION 2: “The study of international business is fine if you are going to work in a
large multinational enterprise, but it has no relevance for individuals who are going to
work in small firms.” Evaluate this statement.
ANSWER 2: Globalization is changing the world economy. Firms, even small ones, can
no longer ignore events going on outside their borders because what occurs in one
QUESTION 3: How have changes in technology contributed towards the globalization
of markets and of production? Would the globalization of production and markets have
been possible without these technological changes?
ANSWER 3: Technological change has made globalization a reality. Major advances in
communication, information processing, and transportation have brought the world closer
QUESTION 4: “Ultimately, the study of international business is no different from the
study of domestic business. Thus, there is no point in having a separate course on
international business.” Evaluate this statement.
ANSWER 4: There are at least four reasons why studying international business is
important. First, countries are different; and managers must understand the reasons for
QUESTION 5: How does the Internet affect international business activity and the
globalization of the world economy?
ANSWER 5: Internet usage has exploded over the last two decades. In 1990, there were
fewer than 1 million people connected to the Internet. Today, that figure has risen to
QUESTION 6: If current trends continue, China may emerge as the world’s largest
economy by 2020. Discuss the possible implications for such a development for (a) the
world trading system; (b) the world monetary system; (c) the business strategy of today’s
European and U.S.-based global corporations; and (d) global commodity prices.
ANSWER 6: China is continuing to move toward greater free market reforms, and if it
stays on its present track, could become an industrial superpower in the near future.
QUESTION 7: Reread the Management Focus on Vizio and answer the following
questions:
a. Why is the manufacturing of flat-panel TVs migrating to different locations around the
world?
b. Who benefits from the globalization of the flat-panel display industry? Who are the
losers?
c. What would happen if the U.S. government required that flat-panel displays sold in the
United States had to also be made in the United States? On balance, would this be a good
or a bad thing?
d. What does the example of Vizio tell you about the future of production in an
increasingly integrated economy? What does it tell you about the strategies that
enterprises must adopt to thrive in highly competitive global markets?
ANSWER
a: The market for flat-panel televisions is huge. U.S. consumers spend more than $35
billion annually on flat-panel televisions. However, competition is intense forcing
b: Consumers are clearly benefiting from the globalization of the flat-panel television
market. Thanks to the intense competition in the industry, prices have fallen
c: If the U.S. government required flat-panel displays to be manufactured in the United
States, prices would almost surely rise. While such a requirement could bring new jobs
d: Vizio could be considered a model of how to conduct business in a highly competitive
CLOSING CASE: Building the Boeing 787
Summary
The closing case explores Boeing’s decision to outsource the manufacture of many
components of the 787 Dreamliner. Components for the jet aircraft were manufactured
around the globe and final assembly takes place in Boeing’s Everett plant north of
Seattle, Washington. A discussion of the case can revolve around the following questions:
QUESTION 1: What are the benefits to Boeing of outsourcing manufacturing of
components of the Boeing 787 to firms based in other countries?
ANSWER: There are several reasons that Boeing decided to outsource manufacturing to
QUESTION 2: What are the potential costs and risks to Boeing of outsourcing?
ANSWER: Many of the costs and risks associated with outsourcing were underscored by
QUESTION 3: In addition to foreign subcontractors and Boeing, who else benefits from
Boeing’s decision to outsource component part manufacturing assembly to other nations?
Who are the potential losers?
ANSWER: By awarding many manufacturing contracts to overseas suppliers, Boeing
QUESTION 4: If Boeing’s management decided to keep all production in America, what
do you think the effect would be on the company, its employees, and the communities
that depend on it?
ANSWER: Boeing faced extensive criticism in the United States for its decision to
QUESTION 5: On balance, do you think that the kind of outsourcing undertaken by
Boeing is a good thing or a bad thing for the American economy? Explain your
reasoning.
ANSWER: Student answers will vary. In some respects, outsourcing to overseas
Another Perspective: Students can find out about the Reshoring Initiative, an organization
MHE International Business Video Library
Please click here to visit our International Business Video Library on Pinterest, which is
updated on a monthly basis. While there, be sure to “like” the clips that work well for
you, and add notes that might be helpful to your colleagues.
INCORPORATING globalEDGE™ EXERCISES
Use the globalEDGE™ site {globaledge.msu.edu/} to complete the following exercises:
Exercise 1
Your company has developed a new product that has universal appeal across countries
and cultures. In fact, it is expected to achieve high penetration rates in all the countries
where it is introduced, regardless of the average income of the local populace.
Considering the costs of the product launch, the management team has decided to initially
introduce the product only in countries that have a sizeable population base. You are
required to prepare a preliminary report with the top ten countries in terms of population
size. A member of management has indicated that a resource called the “World
Population Data Sheet” may be useful for the report. Since growth opportunities are
another major concern, the average population growth rates should be listed also for
management’s consideration.
Exercise 2
You are working for a company that is considering investing in a foreign country.
Investing in countries with different traditions is an important element of your company’s
long-term strategic goals. As such, management has requested a report regarding the
attractiveness of alternative countries based on the potential return of FDI. Accordingly,
the ranking of the top 25 countries in terms of FDI attractiveness is a crucial ingredient
for your report. A colleague mentioned a potentially useful tool called the “FDI
Confidence Index” which is updated periodically. Find this index and provide additional
information regarding how the index is constructed.
Answers to Exercise Questions
Exercise 1
Numerous statistical databases and websites provide population information. The student
Exercise 2
The report can be accessed by searching for the term “FDI Confidence Index” at
http://globaledge.msu.edu/ResourceDesk/. The FDI Confidence Index is the only source
OPENING CASE: Medical Tourism and the Globalization of Health Care
Summary
The opening case explores the rise of medical tourism over the past 20 years, as rising
costs and a shortage of qualified specialists in the United States have led providers and
patients alike to take advantage of lower-cost alternatives in the emerging global health
care marketplace. For example, MRI images from patients in the United States may now
be analyzed by radiologists in India, reducing both cost and turnaround time. Each year
some 150,000 patients from the West receive medical treatment in Indian hospitals, where
services on average cost 10-20% less than in the United States. In addition, patients from
China and other countries with a developing economy have also begun to engage in
medical tourism by seeking advanced medical treatments in South Korea, India,
Singapore, and even the United States. Discussion of the case can begin with the
following questions:
Suggested Discussion Questions
1. Discuss the factors that led to the emergence of the global health care marketplace.
Beyond rising costs and a shortage of physicians in the United States, how have changes
in technology or the broader economy driven U.S. patients and providers to seek services
outside of the country?
Answer: Health care costs in the United States increased from approximately 5 percent
of the gross domestic product (GDP) in the 1960s to more than 17 percent in 2013, and
2. What effect will the globalization of health care have on the quality of medical services
in developing economies? Will a few countries with advanced facilities become
international health care destinations, while services in developing countries continue to
lag? Or will the loss of potential revenues provide an incentive for governments in
developing countries to improve the quality of their domestic health care systems?
Answer: Student responses to this question may vary. Some experts believe that the
ability of affluent individuals to purchase world class health care in foreign countries
3. The rise of medical tourism means that hospitals are facing a growing number of
patients from different linguistic and cultural backgrounds. How might health care
practices change to accommodate these differences?
Answer: The globalization of health care means that medical professionals must be
aware of cultural differences that may affect their ability to communicate with patients or