Question 1. Jim Logans business, the Sports Exports Company, continues to grow. His primary product is the footballs he produces and exports to a distributor in the United Kingdom. However, his recent joint venture with a British firm has also been successful. Under this arrangement, a British firm produces other sporting goods for Logans firm; these goods are then delivered to that distributor. Logan intentionally started his international business by exporting because it was easier and cheaper to export than to establish a place of business in the United Kingdom. However, he is considering establishing a firm in the United Kingdom to produce the footballs there instead of in his garage (in the United States). This firm would also produce the other sporting goods that he now sells, so he would no longer have to rely on another British firm (through the joint venture) to produce those goods. Given the information provided here, what are the advantages to Logan of establishing a firm in the United Kingdom? Given the information provided here, what are the disadvantages to Logan of establishing a firm in the United Kingdom?

Question 2

DFI STRATEGY Friendly Stores, a U.S. retailer, has recognized numerous opportunities to expand in foreign countries and has assessed many foreign markets, including Brazil, Greece, Mexico, Portugal, Singapore, and Thailand. It has opened new stores in Europe, Asia, and Latin America. In each case, the firm was aware that it did not have sufficient understanding of the culture of each country that it had targeted. Consequently, it engaged in joint ventures with local partners who knew the preferences of the local customers. What comparative advantage does Friendly Stores have when establishing a store in a foreign country, relative to an independent retailer? Why might the overall risk of Friendly Stores decrease or increase as a result of its recent global expansion? Friendly Stores has been more cautious about entering China. Explain the potential obstacles associated with entering China.

Question 3

FOREIGN INVESTMENT DECISION Trak Co. (of the United States) presently serves as a distributor of products by purchasing them from other U.S. firms and selling them in Japan. It wants to purchase a manufacturer in India that could produce similar products at a low cost (due to low labor costs in India) and export the products to Japan. The operating expenses would be denominated in Indian rupees. The products would be invoiced in Japanese yen. If Trak Co. can acquire a manufacturer, it will discontinue its existing distributor business. If the yen is expected to appreciate against the dollar and the rupee is expected to depreciate against the dollar, how would these trends affect Traks DFI?