QUESTION: CASE NO.

2
Two Senior executives of worlds largest firms with extensive holdings outside the home country
speak.
Company A : We are a multinational firm. We distribute our products in about 100 countries. We
manufacture in over 17 countries and do research and development in three countries. We look at all
new
investment projects both domestic and overseas using exactly the same criteria. The execution from
company A continues, of course the most of the key ports in our subsidiaries are held by home
country nationals. Whenever replacements for these men are sought, it is the practice, if not the
policy, to look next to you at the lead office and pick some one (usually a home country national) you
know and trust.
Company B : We are multinational firm. Our product division executives have worldwide profit
responsibility. As our organisational chart shows, the united states is just one region on a par with
Europe,
Latin America, Africa etc, in each division.
The executive from Company B goes on to explain, the worldwide Product division concept is rather
difficult to implement. The senior executives in charge of this divisions have little overseas experience.
They have been promoted from domestic ports and tend to view foreign consumers needs as really
basically the same as ours. Also, product division executives tend to focus on domestic market,
because it generates more revenue than foreign market. The rewards are for global performance, but
strategy is to focus on domestic. Most of the senior executives simply do not understand what
happens overseas and really do not trust foreign executives, even those in key portions?
Questions :
1 Which company is truly Multinational ? Why?
2 List three differences between Company , Multi National company and Trans Multi National Company
?

CASE 3 (Strategic R & D by TNCs in Developing Countries)

TNCs have had long units in developing host countries for adopting products and processes to the local
conditions, and in a few cases, to products for local markets. Since the min-1980s, however, they have
also started locating strategic R & D centres in some developing countries, for developing generic
technologies and products for regional or global markets. The main incentives for this are : (a) access
to highly qualified scientists as shortages of research personnel emerge in certain fields in
industrialised countries, (b) Cost differentials in research salaries between developing and
industrialised countries, and (c) rationalisation of operations, assigning particular affiliates the
responsibility for developing, manufacturing, and marketing particular products worldwide. Th new
trends are more visible in industries dealing with new technologies, such as microelectronics,
biotechnology, and new materials. In these technologies, the location of R & D can be geographically
de-linked more easily from the location of manufacturing. It is also possible to separate R & D in core
activities from that in non-core activities. Consequently, countries like India, Israel, Singapore,
Malaysia or Brazil serve TNCs as good locations for strategic R & D. For instance, Sony Corporation of
Japan has around nine R & D units in Asian developing countries. It has three units in Singapore
conducting R & D on core components such as optical data shortage devices, integrated chip design
for audio products and CD-ROM drives, and multimedia and microchip software. It has three units in
Malaysia working on video design, derivative models and circuit blocks for new TV chases, radio
cassettes, discman and hi-fi receiver designs. It has one unit in Republic of Korea focusing on the
design of compact discs, radio cassettes, tape recorders, and car stereos. It has one in Taiwan
designing and developing video tape-recorders, minidisk players, video CDs, and duplicator. Finally, it
has one unit in Indonesia focusing on the design of audio products.

Such units often work in collaboration with science and technology institutes in the host country. For
instance, Daimler Benz has established such a unit in Bangalore, India, in collaboration with the Indian
Institute of Science to work on projects related to its vehicles and avionics business. Current work
includes interface design of avionics landing systems and smart GPS sensors for use by the groups
business worldwide. Source: World Investment Report 1999.
Questions:
(a) Explain why MNCs have located R & D centres in developing countries?
(b) Mention the areas where R & D activities can easily be decentralised.
and
\
case 4
VK Ltd a multi-product Company, furnishes you the following data relating to the year 2000
-First Half of the year
sales rs.45000
total cost rs.40000

Second Half of the yearSales

rs.50000
rs.43000

Assuming that there is no change

are incurred equally in t he two
ANSWER: Question:

in prices and variable costs and that the fixed expenses

half years
periods
calculate
for the year2000.

CASE NO. 2

Two Senior executives of worlds largest firms with extensive holdings outside the home country
speak.
Company A : We are a multinational firm. We distribute our products in about 100 countries. We
manufacture in over 17 countries and do research and development in three countries. We look at all
new investment projects both domestic and overseas using exactly the same criteria. The execution
from company A continues, of course the most of the key ports in our subsidiaries are held by home
country nationals. Whenever replacements for these men are sought, it is the practice, if not the
policy, to look next to you at the lead office and pick some one (usually a home country national) you
know and trust.
Company B : We are multinational firm. Our product division executives have worldwide profit
responsibility. As our organisational chart shows, the united states is just one region on a par with
Europe,Latin America, Africa etc, in each division.
The executive from Company B goes on to explain, the worldwide Product division concept is rather
difficult to implement. The senior executives in charge of this divisions have little overseas experience.
They have been promoted from domestic ports and tend to view foreign consumers needs as really
basically the same as ours. Also, product division executives tend to focus on domestic market,
because it generates more revenue than foreign market. The rewards are for global performance, but
strategy is to focus on domestic. Most of the senior executives simply do not understand what
happens overseas and really do not trust foreign executives, even those in key portions?
Questions :
1 Which company is truly Multinational ? Why?
COMPANY A IS--Geocentrism ORIENTATION [GLOBAL MULTI ORIENTED]
Integrated global outlook

More powerful total company throughout

Better quality of products and services
Worldwide utilization of best reaources
Improved local country management
Greater commitment to global objectives
Higher global profits
COMPANY B-- IS ETHOCENTRIC
Ethnocentric Orientation
domestic market extension concept:
Domestic strategies, techniques, and personnel are perceived as superior
International customers, considered secondary
International markets regarded as
o outlets for surplus domestic production
International marketing plans
o developed in-house by international division
=====================================
2 List three differences between Company , Multi National company and Trans Multi National Company
?
Content of the Four Basic Multinational Strategies
#########################

CASE 3 (Strategic R & D by TNCs in Developing Countries)

TNCs have had long units in developing host countries for adopting products and processes to the local
conditions, and in a few cases, to products for local markets. Since the min-1980s, however, they have
also started locating strategic R & D centres in some developing countries, for developing generic
technologies and products for regional or global markets. The main incentives for this are : (a) access
to highly qualified scientists as shortages of research personnel emerge in certain fields in
industrialised countries, (b) Cost differentials in research salaries between developing and
industrialised countries, and (c) rationalisation of operations, assigning particular affiliates the
responsibility for developing, manufacturing, and marketing particular products worldwide. Th new
trends are more visible in industries dealing with new technologies, such as microelectronics,
biotechnology, and new materials. In these technologies, the location of R & D can be geographically
de-linked more easily from the location of manufacturing. It is also possible to separate R & D in core
activities from that in non-core activities. Consequently, countries like India, Israel, Singapore,
Malaysia or Brazil serve TNCs as good locations for strategic R & D. For instance, Sony Corporation of
Japan has around nine R & D units in Asian developing countries. It has three units in Singapore
conducting R & D on core components such as optical data shortage devices, integrated chip design
for audio products and CD-ROM drives, and multimedia and microchip software. It has three units in
Malaysia working on video design, derivative models and circuit blocks for new TV chases, radio
cassettes, discman and hi-fi receiver designs. It has one unit in Republic of Korea focusing on the
design of compact discs, radio cassettes, tape recorders, and car stereos. It has one in Taiwan
designing and developing video tape-recorders, minidisk players, video CDs, and duplicator. Finally, it
has one unit in Indonesia focusing on the design of audio products.
Such units often work in collaboration with science and technology institutes in the host country. For
instance, Daimler Benz has established such a unit in Bangalore, India, in collaboration with the Indian
Institute of Science to work on projects related to its vehicles and avionics business. Current work
includes interface design of avionics landing systems and smart GPS sensors for use by the groups
business worldwide. Source: World Investment Report 1999.
Questions:

(a) Explain why MNCs have located R & D centres in developing countries?
SOME OF THE DEVELOPING COUNTRIES OFFER
(a) access to highly qualified scientists as shortages of research personnel emerge in certain fields in
industrialised countries, (b) Cost differentials in research salaries between developing and
industrialised countries, and (c) rationalisation of operations, assigning particular affiliates the
responsibility for developing, manufacturing, and marketing particular products worldwide.
@@@@@@@@@@@@@@@@@@@
(b) Mention the areas where R & D activities can easily be decentralised.
1.INTEGRATED

CHIPS/OPTICAL DATA DEVICES

For instance, Sony Corporation of Japan has around nine R & D units in Asian developing countries. It
has three units in Singapore conducting R & D on core components such as optical data shortage
devices, integrated chip design for audio products and CD-ROM drives, and multimedia and microchip
software.
2. VIDEO/ DESIGN/DERIVATIVE MODELS
It has three units in Malaysia working on video design, derivative models and circuit blocks for new TV
chases, radio cassettes, discman and hi-fi receiver designs.
3.DESIGN UNIT FOR COMPACT DISCS/RADIO CASSETTES ETC
It has one unit in Republic of Korea focusing on the design of compact discs, radio cassettes, tape
recorders, and car stereos.
4.DESIGNING/DEVELOPING RECORDERS
It has one in Taiwan designing and developing video tape-recorders, minidisk players, video CDs, and
duplicator. Finally, it has one unit in Indonesia focusing on the design of audio products.
Such units often work in collaboration with science and technology institutes in the host country. For
instance, Daimler Benz has established such a unit in Bangalore, India, in collaboration with the Indian
Institute of Science to work on projects related to its vehicles and avionics business. Current work
includes interface design of avionics landing systems and smart GPS sensors for use by the groups
business worldwide. ######################
case 4
VK Ltd a multi-product Company, furnishes you the following data relating to the year 2000
-First Half of the year Second Half of the yearSales
sales rs.45000 rs.50000
total cost rs.40000 rs.43000
Assuming that there is no change in prices and variable costs and that the fixed expenses are incurred
equally in t he two half years periods calculate for the year2000.

---------- FOLLOW-UP ---------QUESTION: case 4

VK Ltd a multi-product Company, furnishes you the following data relating to the year 2000
--

First Half of the year

Second Half of the yearSales

sales rs.45000
total cost rs.40000

rs.50000
rs.43000

Assuming that there is no change in prices and variable costs and that the fixed expenses are incurred
equally in t he two half years periods calculate for the year2000.
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Answer
Question:

CASE NO. 2

Two Senior executives of worlds largest firms with extensive holdings outside the home country
speak.
Company A : We are a multinational firm. We distribute our products in about 100 countries. We
manufacture in over 17 countries and do research and development in three countries. We look at all
new investment projects both domestic and overseas using exactly the same criteria. The execution
from company A continues, of course the most of the key ports in our subsidiaries are held by home
country nationals. Whenever replacements for these men are sought, it is the practice, if not the
policy, to look next to you at the lead office and pick some one (usually a home country national) you
know and trust.
Company B : We are multinational firm. Our product division executives have worldwide profit
responsibility. As our organisational chart shows, the united states is just one region on a par with
Europe,Latin America, Africa etc, in each division.
The executive from Company B goes on to explain, the worldwide Product division concept is rather
difficult to implement. The senior executives in charge of this divisions have little overseas experience.
They have been promoted from domestic ports and tend to view foreign consumers needs as really
basically the same as ours. Also, product division executives tend to focus on domestic market,
because it generates more revenue than foreign market. The rewards are for global performance, but
strategy is to focus on domestic. Most of the senior executives simply do not understand what
happens overseas and really do not trust foreign executives, even those in key portions?
Questions :
1 Which company is truly Multinational ? Why?
COMPANY A IS--Geocentrism ORIENTATION [GLOBAL MULTI ORIENTED]
Integrated global outlook

More powerful total company throughout

Better quality of products and services
Worldwide utilization of best reaources
Improved local country management
Greater commitment to global objectives
Higher global profits

COMPANY B-- IS ETHOCENTRIC

Ethnocentric Orientation
domestic market extension concept:
Domestic strategies, techniques, and personnel are perceived as superior
International customers, considered secondary
International markets regarded as
o outlets for surplus domestic production
International marketing plans
o developed in-house by international division
=====================================
2 List three differences between Company , Multi National company and Trans Multi National Company
?
Content of the Four Basic Multinational Strategies
#########################

CASE 3 (Strategic R & D by TNCs in Developing Countries)

TNCs have had long units in developing host countries for adopting products and processes to the local
conditions, and in a few cases, to products for local markets. Since the min-1980s, however, they have
also started locating strategic R & D centres in some developing countries, for developing generic
technologies and products for regional or global markets. The main incentives for this are : (a) access
to highly qualified scientists as shortages of research personnel emerge in certain fields in
industrialised countries, (b) Cost differentials in research salaries between developing and
industrialised countries, and (c) rationalisation of operations, assigning particular affiliates the
responsibility for developing, manufacturing, and marketing particular products worldwide. Th new
trends are more visible in industries dealing with new technologies, such as microelectronics,
biotechnology, and new materials. In these technologies, the location of R & D can be geographically
de-linked more easily from the location of manufacturing. It is also possible to separate R & D in core
activities from that in non-core activities. Consequently, countries like India, Israel, Singapore,
Malaysia or Brazil serve TNCs as good locations for strategic R & D. For instance, Sony Corporation of
Japan has around nine R & D units in Asian developing countries. It has three units in Singapore
conducting R & D on core components such as optical data shortage devices, integrated chip design
for audio products and CD-ROM drives, and multimedia and microchip software. It has three units in
Malaysia working on video design, derivative models and circuit blocks for new TV chases, radio
cassettes, discman and hi-fi receiver designs. It has one unit in Republic of Korea focusing on the
design of compact discs, radio cassettes, tape recorders, and car stereos. It has one in Taiwan
designing and developing video tape-recorders, minidisk players, video CDs, and duplicator. Finally, it
has one unit in Indonesia focusing on the design of audio products.

Such units often work in collaboration with science and technology institutes in the host country. For
instance, Daimler Benz has established such a unit in Bangalore, India, in collaboration with the Indian
Institute of Science to work on projects related to its vehicles and avionics business. Current work
includes interface design of avionics landing systems and smart GPS sensors for use by the groups
business worldwide. Source: World Investment Report 1999.
Questions:
(a) Explain why MNCs have located R & D centres in developing countries?
SOME OF THE DEVELOPING COUNTRIES OFFER
(a) access to highly qualified scientists as shortages of research personnel emerge in certain fields in
industrialised countries, (b) Cost differentials in research salaries between developing and
industrialised countries, and (c) rationalisation of operations, assigning particular affiliates the
responsibility for developing, manufacturing, and marketing particular products worldwide.
@@@@@@@@@@@@@@@@@@@
(b) Mention the areas where R & D activities can easily be decentralised.
1.INTEGRATED

CHIPS/OPTICAL DATA DEVICES

For instance, Sony Corporation of Japan has around nine R & D units in Asian developing countries. It
has three units in Singapore conducting R & D on core components such as optical data shortage
devices, integrated chip design for audio products and CD-ROM drives, and multimedia and microchip
software.

2. VIDEO/ DESIGN/DERIVATIVE MODELS

It has three units in Malaysia working on video design, derivative models and circuit blocks for new TV
chases, radio cassettes, discman and hi-fi receiver designs.
3.DESIGN UNIT FOR COMPACT DISCS/RADIO CASSETTES ETC
It has one unit in Republic of Korea focusing on the design of compact discs, radio cassettes, tape
recorders, and car stereos.
4.DESIGNING/DEVELOPING RECORDERS
It has one in Taiwan designing and developing video tape-recorders, minidisk players, video CDs, and
duplicator. Finally, it has one unit in Indonesia focusing on the design of audio products.
Such units often work in collaboration with science and technology institutes in the host country. For
instance, Daimler Benz has established such a unit in Bangalore, India, in collaboration with the Indian
Institute of Science to work on projects related to its vehicles and avionics business. Current work
includes interface design of avionics landing systems and smart GPS sensors for use by the groups
business worldwide. ######################
case 4
VK Ltd a multi-product Company, furnishes you the following data relating to the year 2000
--

First Half of the year Second Half of the yearSales

sales rs.45000 rs.50000
total cost rs.40000 rs.43000
Assuming that there is no change in prices and variable costs and that the fixed expenses are incurred
equally in t he two half years periods calculate for the year2000.

FIRST HALF
SALES

SECOND HALF

45000

50000

95000

TOTAL COST

40000

NO CHANGE

IN UNIT PRICES

NO CHANGE IN UNIT
FIXED

TOTAL

43000

83000

VARIABLE COSTS

EXPENSES ARE THE SAME IN BOTH HALVES

HENCE
VARIABEL COST
FIXED COST
40000

27000

13000
43000

30000
13000

83000

57000
26000