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Chapter 1: Introduction to International Business
gifts or stories about you and your family or your business. Most foreigners like to take their time
4. Answer: Pro Golf was entitled to terminate its agency relationship with FFA, but it
5. Answer: First, the court will attempt to discern what the reasonable understanding
6. Answer: Planning and commitment are essential because (1) poor planning fails
7. Answer: This answer will depend on your location. Leading export firms can be
8. Answer: This question calls for general discussion among students. It might help
Chapter 1: Introduction to International Business
9. Answer: The U.S. Commercial Service is the trade promotion unit of the
MANAGERIAL IMPLICATIONS
Derived from an actual business situation, this case has several objectives: To illustrate the
interrelationship of our three forms of international business – trade, IP licensing, and FDI, to
show that they are not mutually exclusive market entry methods, to examine the advantages and
disadvantages of each method to this firm, and perhaps most importantly, to give students their
first opportunity in this book to participate in strategic global planning for their firm. The latter may
be best accomplished if the class is broken into small groups, each given the role of exploring a
different strategy, and then returning to make their presentations and arguments. Because of the
breadth nature of this chapter, the instructor and students should think beyond the purely legal
issues.
Key facts: Quiet-Maid has valuable, patented technology (we do not know how or where patents
were obtained). It is currently manufacturing in the United States, and is successful in the U.S.
market. Products are large and heavy. We do not know the size or sophistication of the firm, but
students can make assumptions.
Part 1. Exporting.
1. Why a manufacturing joint venture? Answer. The CEO is probably thinking that Quiet-Maid is
not yet ready to “go it alone” in Europe and that it’s safer to do it with a local partner. His plan is
to leverage his intellectual property rights in exchange for minority interest share of profits with a
Spanish manufacturer. This would provide a European partner who brings to the table what
2. Why not start a new subsidiary, presumably one that is “wholly owned?” Answer. Some of this
has already been covered. As compared to the alternatives, this would assume that Quiet-Maid
has the human and capital requirements necessary to make such a large foreign investment.
Does it have people capable of leading its entrance into Europe, including overseeing site
Part 3. Quiet-Maid reevaluates its joint venture strategy.
1. What Quiet-Maid discovered. Answer: Quiet-Maid discovered that the CEO’s chosen partner
2. Risks of this investment with this firm. Answer: Quiet-Maid learned that its future partner might
Chapter 1: Introduction to International Business
Quiet Maid would be entitled to share? Obviously the risks are too great to proceed with this firm
as partner.
3. No joint venture, no wholly-owned subsidiary. Now what? Answer. Students should see this as
an opportunity for Quiet-Maid to look for some safer alternative, in other words, to “back up and
accounting.
ETHICAL
CONSIDERATIONS___________________________________________________
Although students will study ethical considerations in more detail in the next chapter, this may be
an opportune time to introduce ethical frameworks to the class. Such frameworks may be
generally divided into teleological and deontological frameworks. Teleological frameworks focus
on the ramifications resulting from the actions and conduct of individuals. Deontological
frameworks focus on duties or obligations in determining whether a given action is right or wrong.
There are several ethical theories based upon teleology. Ethical egoism is defined as a theory of
ethics recognizing that people act in their own self-interest. A person should act in a manner that
There are also several theories within the deontological framework. Divine command theory is
defined as a theory of ethics in which resolution of dilemmas is based upon tenets of faith within
religious beliefs. Examples include the Ten Commandments in the Jewish and Christian faiths
Chapter 1: Introduction to International Business
thinking is contractarianism. This theory holds that membership in society is imbued with certain
duties and responsibilities. Individuals agree to the norms governing society by establishing a
contract with other members of society. It is assumed that people will develop social contracts
through rational consideration of the results and consequences if there were no rules. These
norms should be fair to everyone. This once again assumes rational people will always select
that which is the fairest and most equitable resolution of a dilemma without regard for personal
consequences. Inequalities in rights and duties are only acceptable if they generate benefits for
everyone in society.
Students’ opinions should reflect some understanding and consideration of these concepts.
SUPPLEMENTAL ACTIVITY: CASE BRIEF ASSIGNMENT
Instructors who want to hone the writing and analytical skills of students may wish to require
students to write a case brief on a supplemental case and answer a series of questions. This
first example is relatively simple, while later examples become more complex. For briefing a
case, you may suggest a style of your own, borrowing one from a legal writing text, or hand out
the example here.
Briefing a Case
A case brief reduces a case to its essential components: what it is about and what it means in
terms of the law. Case briefs generally comply with the following format:
Case Name and Citation: include the name of the case, the year decided, the court that
decided the case
Facts: a brief recitation of the relevant facts giving rise to the dispute (this may also include a
relevant statute or legal rule and a lower court’s decision)
Plaintiff and Defendant Arguments: outline the complaint of the plaintiff and defendant and
any defenses raised
Issue: what is the essential issue before the court (the question the court must answer); phrase
in the form of a question (e.g. does U.S. anti-discrimination law apply to U.S.-based businesses
operating outside the U.S.?)
