1. What industry characteristics and trends will influence the development of the industry over the next five years?
A couple of the characteristics that will influence the development of the industry over the next five years are the political uncertainty and inflation. Additionally, there is a hesitance towards investing in foreign markets.
2. How are markets growing and what does this mean for production capacity?
The markets grew so quickly that the MNCs were having trouble keeping up with the demand from customers. Of the three, Megatronics made up the bulk of the industry, besting the next two MNCs put together.
3. How do the costs of production compare across countries for finished products and subassemblies?
The costs of production depend largely on the type of plant in which the product is assembled. For example, in a Maxi Plant, there is a total cost of $2,400. A Mini Plant, meanwhile, has a cost of $3,700.
4. What is the role of transport costs and tariffs?
Transport costs and tariffs impacted the global sequence of production and global trade, creating a 15-50 percent price increase in microanalyzers.
5. What are the economics of serving each market from different locations?
There are many economic factors that affect different countries across the market platform. First, the allowance of foreign company entrance into competition with local companies. Secondly, the taxes in a particular region as well as the political climate. Finally, the impact of emerging markets that impact pre-existing markets, such as Tropicalia and Paradiso.
6. What are the implications of this for your negotiating strategy?
It is important to look at all the facets of a country and a particular market. For example, a company has to consider the extra costs of tariffs and transport costs. Also, the current and future political climates need to be assessed because governments can impact the profitability of business.
7. How do countries vary on relative attractiveness in this industry?
Relative attractiveness varies across all countries in terms of the political climate, governmental restrictions, opportunity for expansion and the amount of time needed to provide sizeable investment returns.
8. What are the implications of market size, political risks, govt. policy towards FDI and trade for your negotiating strategy?
The larger the market size, the more flexible negotiations will have to be. If there are higher political risks and more governmental restrictions, negotiations will be less between companies because of a loss of appeal.
9. What are the strengths and weaknesses of MNCs and local companies?
For MNCs, one strength is their financial stance but a weakness is governmental conflict. For local companies, there is strength of quality and lower prices but a weakness in terms of technological development.
10. What resources does each company bring to the negotiations?
Megatronics, Inc. (global dominance), Eurodata, S.A. (strong management) and Tanaka Company (quality products).
11. What factors might constrain their actions?
A few factors are government restrictions, the risk of emerging markets and competition from other companies.
12. Importantly, what strategy will each company follow? What are the implications of these issues for your negotiating strategy?
Megatronics, Inc. will focus on improving its technological advances as whereas a company like Tanaka will focus on becoming the main provider in the local markets (Japan). If negotiating for Megatronics Inc. the tasks are more extensive. For Tanaka, negotiations will be easier to navigate.