1、41002072 李民权1Exam Questions (50% each)1) Gili, a Chinese car maker, is spending a very large amount of money buying another foreign car producer. According to the theories in this course, do you think this is a good deal?Take Chinese Geely close to Volvo acquisition for example, I dont believe its i
2、n the best interest for Chinese carmakers.Chinese carmaker Geely is said to be in the final spurt to acquire Sweden -based Volvo Cars from Ford-but analysts are already criticizing the deal.1. Mergers and acquisitions (abbreviated M Physical asset specificity, e.g. a specialized machine tool or comp
3、lex computer system designed for a single purpose; Human asset specificity, i.e., highly specialized human skills, arising in a learning by doing fashion; and Dedicated assets, i.e. a discrete investment in a plant that cannot readily be put to work for other purposes.Malone et al. (1987) made an im
4、portant addition to the above list: Time specificity, an asset is time specific if its value is highly dependent on its reaching the user within a specified, relatively limited period of time.Joskow (1988) pointed out that these different categories point to essentially the same phenomenon, but that
5、 it is instructive in empirical analyses to treat each category distinctly. Joskows series of papers have looked at contract structuring in order to examine how contracts mitigate transaction costs inherent in a market based relationshipZaheer and Venkatraman (1994) acknowledge four asset specificit
6、y dimensions: site, human, physical, and dedicated assets. In addition, they define two dimensions of asset specificity in their study: human asset specificity and the newly-developed “procedural asset specificity“, where Human asset specificity deals with the degree to which skills, knowledge and e
7、xperience of the agencys personnel are specific to the business process. Procedural asset specificity incorporates notions of human asset specificity and refers to the degree that an agencys workflows and processes are customized to exploit the other partys capabilities.Most theoretical work focus o
8、n the relationships between asset specificity and sunk cost effects, transaction costs, vertical integration, and uncertainties.3.Compare with outsourcingOutsourcing is the process of contracting an existing business process which an organization previously performed internally to an independent org
9、anization, where the process is purchased as a service. Though this practice of purchasing a business function - instead of providing it internally - is a common feature of any modern economy, the term outsourcing became popular in America near the turn of the 21st century. An outsourcing deal may a
10、lso involve transfer of the employees involved to the outsourcing business partner.Although the definition of outsourcing includes both foreign or domestic contracting, the term is sometimes used exclusively referring to the former. The more clear term for this is offshoring, which is described as “
11、a company taking a function out of their business and relocating it to another country,” whether the external country is physically offshore or not.The opposite of outsourcing is called insourcing, and is sometimes accomplished via vertical integration.The most common reasons why companies decide to
12、 outsource include cost reduction and cost savings, the ability to focus its core business, access to more knowledge, talent and experience, and increased profits.Many companies decide to outsource because it cut costs such as labor costs, regulatory costs, and training costs. Foreign countries tend
13、 to have workers who will complete the 41002072 李民权3same amount of work as in the United States, but for less than half the salary that an American employee will make . This motivates companies to outsource overseas to find foreign workers who are willing to work for these lower wages. The company c
14、an spend up to half the usual cost to train these workers to become experts in a different country . Lower regulatory costs are an addition to companies saving money when outsourcing. Comparing the costs to employing a worker in the United States to a worker in China, it is noticed that an employer
15、in the U.S. has to pay higher taxes (social security, Medicare, safety protection (OSHA regulations) and also FICA (taxes).Companies are able to focus their money and resources more towards improving the core aspects of its business when outsourced. For example an insurance company may outsource its
16、 landscaping functions to a service provider that specializes in landscaping since it is irrelevant to the core operations of insurance. The landscaping is performed by an expert outsourced organization and the insurance company can focus on doing what it specializes in. This allows the outsourcing
17、company to build onto its core functions that keep the business running smoothly. Another example is that companies and public entities such as a public school district that outsources functions, such as their payroll offices to companies like ADP or Ceridian, which specialize in payroll functions.I
18、n the case of outsourcing, firms may find that workers in other countries can provide better customer support than their domestic counterparts. For example, an online coffee shop owner who moved his calling center to the Philippines found that his customers received better customer support from work
19、ers in this country.Revenue and profit plays a large role in the reason for a company outsourcing. Since the costs are cheaper in different countries for a corporation to run it, as well as to train the employees, this saves the company a large sum of money. More profit comes in when the vendors are
20、 able to purchase products at a less expensive rate and continue to sell them at a reasonable price for consumers. The prices are reduced for services as well as products when purchased at a cheaper price.RisksWhen companies offshore services, even though it may not be the core parts of the business
21、, those jobs leave the home country for foreign countries. . Outsourcing may increase the risk of leakage, reduce confidentiality, as well as introduce additional privacy and security concerns.AdvantagesCompanies are able to provide services and products to consumers at a cheaper price while still h
22、aving a large margin for profit. This profit margin benefits both the company as well as the consumer. The cheaper prices lead to an increase a companys economy. Although losing jobs hurts the economy because more citizens become unemployed, the cheaper prices allows customers to purchase more produ
23、cts and services which helps to rebuild an economy41002072 李民权42) As CEO of large Chinese firm, you are developing a strategy to establish branches in all major oversea markets. Now the issue is how to select an appropriate cultural management orientation for your international ventures. Please show
24、 us how you will make the selection by providing a detailed discussion with consideration of all the significant factors. Culture management orientation can be defined as the general philosophy or approach taken by top management of the MNC in the design of its overall international management strat
25、egy, including those to be adopted in all overseas affiliates.There are three CM orientations, adaptive, exportive, and integrative ones.1.Adaptive CM orientation is one in which top management tries to create management systems for affiliates that reflect the local environment (low internal consist
26、ency with the 41002072 李民权5rest of the firm and high external consistency with the local environment). With this orientation, there is almost no transfer of management philosophy,polices or practices either from the parent firm to its overseas affiliates or between overseas affiliates.2.Exportive CM
27、 orientation is one in which top management prefers a wholesales transfer of the parent firms management system to its overseas affiliates(high internal consistency and low external consistency ), replicating in its overseas affiliates the management policies and practices used by the MNCs in its ho
28、me country.3.Integrative CM orientation is one in which top management takes “the best “of the above orientations and use them throughout the organization in the creation of the worldwide system (high internal consistency and moderate external consistency). It represents a global integration with an
29、 allowance for some local differentiation and transfer of good management knowledge from other affiliates.1. Ethnocentric: A national philosophy of management whereby the values and interests of the parent company guide strategic decisions.2. Polycentric: A philosophy of management whereby strategic
30、 decisions are tailored to suit the cultures of host countries.3. Regiocentric: A philosophy of management whereby the company tries to blend its own interests with those of its subsidiaries on a regional basis.4. Geocentric: A philosophy of management whereby the company tries to integrate a global systems approach to decision making.5. Parochialism: The tendency to view the world through ones eyes and perspective.6. Simplification: The process of exhibiting the same orientation toward different cultural groups.
