International Business Issues, Case Study Example

As far as political issues are concerned, Bob should consider the political stability of the country. In addition, it is also important to note how a government in a particularly country treats the agreements entered into by previous governments. Bob should also research whether there is a history of nationalization of local and/or international companies by the national government in the country. It will also be helpful to look at the policies of national government towards international companies in the last few years. Sometimes it may happen that the governments introduce attractive incentives to attract foreign direct investments (FDI) but later impose additional restrictions which put international companies at a disadvantage due to high costs of exit. Bob should also research whether national government creates a fair ground for competition or unfairly provides advantages to local companies.

In case of economic issues, Bob should look at national economy indicators such as GDP growth rate and inflation rates. It will also be beneficial to examine the policies of the central bank as well as the government’s monetary policies. Bob should also research the trend of labor costs. Another useful information will be the tax rates that have been historically levied on international companies. Bob may also research how the production costs have historically changed in digital camera industry or similar industries. Bob should also look into currency exchanges rates as well as the expected future relationship between the Chinese Yuan and the U.S. Dollar. Bob should also research whether China will continue to offer cost advantage for a reasonable period of time into the future or the cost-advantage may disappear soon due to rising labor and raw material costs. It may also be possible that some other countries may offer a better cost-quality mix as well as investment incentives.

As far as legal issues are concerned, the state of intellectual property is important because Chinese Government wants Hot-Shot to set up a design lab which will likely product intellectual capital. Bob should also investigate how the issues will be resolved should a conflict occur with the Chinese partner. In addition, how the assets will be divided should the company decide to break up with its Chinese partner and decides to exit the Chinese market. Bob should also study all current and investigate potential future laws that could have materialistic impact on the company’s performance. The company should also investigate if there are legal requirements that only apply to international companies. Similarly, Bob should investigate all Chinese laws that will be applicable to the venture and what their legal compliance costs will be.

Social/cultural issues that may be of importance are the organizational cultures that are dominant in China. Similarly, Bob should also look into leadership styles as well as work habits usually find in Chinese companies. This will help Bob choose better candidates that may be sent to lead Chinese venture. Bob should also look into family/work balance in China and how it may be different from other countries. Similarly, Bob may also investigate the leader-follower relationship that usually exists in China. It will also be beneficial to learn about the cultural composition of Chinese workers. Even though China may not be as diverse as America in terms of international composition of workers, the workplaces may still be ethnically diverse since China has numerous ethnic groups residing within its frontiers. The company could also learn about business traditions in China that are vastly different from the U.S. and other western countries. Similarly, cultural etiquette values should also be investigated to avoid embarrassment.

As far as technological issues are concerned, Bob should look into the state of technology in China as compared to other countries. The company should also determine as to which extent it may be willing to share its expertise and intellectual capital with Chinese partners. In addition, Bob should also research whether all required research capabilities could be obtained in China or some might have to be imported. The company will need design and engineering talent so Bob should also study the quality of graduates produced by Chinese companies. Bob should also investigate the technological expertise of the Chinese partner to determine whether the partnership will be mutually beneficial or Chinese partner merely seeks to accumulate intellectual capital and cannot be trusted in the long term.

Other factors that Bob might be interested in are the experience of other electronic companies in China. Bob may want to learn about the sources of funds available to international ventures. In addition, Bob could investigate the level of monitoring and corporate control over Chinese operation that will be possible. Bob should also research whether Chinese operation will result in level of quality necessary to protect the image of the brand.