Analysis of International Trade and Business Strategies

This case study analyzes two distinct scenarios in international business. The first examines the impact of China's export quotas on rare earth metals, exploring which groups benefited, the potential for countries like the US, Canada, and Australia to reconsider environmental restrictions, and the responses of companies like Renault, Toyota, and Tesla. The second case focuses on Ford's international strategy, contrasting its approach before and after Alan Mulally's 'One Ford' initiative. It discusses the strategic changes, the implications of the 'One Ford' initiative, and the challenges of balancing global standardization with regional demand differences. The analysis covers topics such as international trade regulations, environmental standards, business strategy, and organizational structure, providing insights into the complexities of global business operations.

CASE DISCUSSION
QUESTIONS

Table of Contents
INTRODUCTION...........................................................................................................................1
CASE 1............................................................................................................................................1
1. Which groups benefited the most from China imposing an export quota on rare earth
metals?.........................................................................................................................................1
2. Do you think countries such as Australia, Canada, and the United States should reconsider
their environmental restrictions on product of such metals? ......................................................2
3. The restrictions imposed by China on rare earth metals has resulted in some companies......2
CASE 2............................................................................................................................................3
1. How would you characterize the strategy for competing internationally that Ford was
pursuing prior to the arrival of Alan Mulally in 2006.................................................................3
2. What strategy is Mulally trying to get Ford to pursue with his One Ford initiative................4
3. Does the One Ford initiative imply that Ford will now ignore national and regional
differences in demand?................................................................................................................4
CASE 2 ...........................................................................................................................................5
Analyse the organization .............................................................................................................5
CONCLUSION................................................................................................................................6
REFERENCES ...............................................................................................................................8

INTRODUCTION
For the international trade government is responsible to make policies and it involves
various legal regulations and compliances which are required to be follow by the companies. As
international monetary system refers to the operating system of financial environment that
consist of financial institutions, multinational organisations & investors and it determines the
institutional framework which is associated with the rules and regulations. In this report there are
various topics has covered such as: to analyse which groups are benefited the most from China
imposing an export quota on rare earth metals, environmental restrictions on the production of
earth metals. Along with this it also discuss about benefits of cost strategy and national &
regional differences in demand, characteristics and benefits of making strategy for competing
internationally and research to analyse the organisation.
CASE 1
1. Which groups benefited the most from China imposing an export quota on rare earth metals?
According to the case scenario rare metals are very useful ingredients in context to the
manufacture of high technology products which involves industrial magnets, wind turbines &
batteries which are used in hybrid cars. As there are environmental restrictions which are
imposed by government in order to extract rare earth metals. Where is Chain is the biggest
producer & exporter of rare earth metals as compare to other nations such as: US, Australia etc
(Büthe & Milner, 2008).
As Chain is the leading manufacture & producer of rate earth metals and its production
has raises from 27% to 97& in the year 1990 to 2010. By exporting it generates the huge revenue
because this country has monopoly in the international market. In the year 2010, China sent
shock waves through the high-tech manufacturing community when it imposed tight quotas on
the export of rare earths.
As the reason offered by China for imposing export quota is that there are various mining
companies did not follow the environmental standards so that they have to close their businesses.
Due to this other groups benefited which involves: Australia, US & Canada as because China can
not make export beyond a certain limit and due to this other countries have scope to increase its
export in internation market. Due to this impact, prices of rare earth metals has increased outside
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China which is a significant cost advantage for domestic manufactures. It shows that quality &
environmental standards has been increased.
As it is important to protect the environment and by imposing an export quota on rare
earth metals other group can be benefited because they will emphasis to follow the
environmental standards.
2. Do you think countries such as Australia, Canada, and the United States should reconsider
their environmental restrictions on product of such metals?
According to the case study, it has considered that China has enjoy the monopoly in the
market in context to the production as well as in exports also. As because production of rare
earth metal has been increased from 27% to 97% percent in between the year 1990 to 2010. Due
to this it is earning huge revenue because it taking the advantage of low cost of production. As
most of market share has been captured by the China across the world. But due to the
environmental restrictions other countries such as: Australia, US and Canada can not extract rare
earth metals beyond a specific limit and there are various legal compliances which are associated
with this and it is require to be follow (Dunning & Narula, 2003).
So it is important for other countries such as: US, Australia and Canada to think on it and
to reconsider about environmental restrictions on products of rare earth metals. In this context,
these countries can introduce an innovative technology which is useful in extracting and mining
so that environment does not get much polluted. Due to this, they can increase their production
as well as exports. It is helpful to maximize sales and these nations can capture more market
share. So, it is required for these nations to reconsider their environmental restrictions on product
of rare metals. For these countries it is a huge scope to expand its business and generate more
profits but it should be consider that environment does not get affected through the production of
rare earth metals.
3. The restrictions imposed by China on rare earth metals has resulted in some companies
As per the case study, it has been analysed that China leads the production and export of
rare metal and it produce 97 percent rare metal in the year 2010. But there was a restriction
imposed in context to the export quota because there are various companies in the country which
does not following the environmental standards so that they have to close their business. In
response to the high prices for rare earth metals, many organisations are thinking to redesign its
products by using substitute material. These companies are Renault, Toyota & Tesla and they
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think that form now onwards they will not use rare earth elements for the production of cars. It is
a good decision because there was an export quota has been imposed in China in context to the
environmental standards and due to it prices of rare earth metals has been increased so it is
important for auto mobile manufactures to find any alternative source so that they can get
material at lower price and better quality and it does not create any issue related to environmental
standards (Rare metals. 2013).
As the restrictions imposed by China on rare earth metals has resulted in some countries
such as: Toyota, Renault, Tesla starts looking for alternatives because they does not have any
other option. So they plan to use parts which does not include rare earth metals and it is a good
solution because it may happen that cost of other alternative would be less as compare to the rare
earth metals. It will also follow the environment standard norms.
CASE 2
1. How would you characterize the strategy for competing internationally that Ford was pursuing
prior to the arrival of Alan Mulally in 2006.
As before the arrival of Alan Mulally in 2006, Ford produced one Ford Focus for Europe
& totally different one for US. This strategy of company was based on assumption that clients of
different of regions has distinct taste & preferences that required considerable local
customization. As people of United States loves Their trucks & SUVs, where as the consumers
of Europe has preferred small cars which should be fuel efficient. So this specific strategy has
been used by the corporation to compete internationally before the arrival of Alan Mulally. As
the benefits of this strategy is that company was able to satisfy the demands of consumers who
lives in different countries and due to it people prefer to purchase the cars of Ford because it is
customized as per the regions. As the cost was high because organisation can not purchase
common parts for the vehicles and through it development cost does not share and car
manufacturing plants of United States cam not make vehicles for European consumers and vice
versa. Through it company can not achieve economies of scale that is important to minimize the
cost. This strategy has been pursued by Ford so that it can produce the products as per the need
of consumers who lives in different countries so that their sales can be maximize and corporation
can survive for a long term in the market (Hill, 2008).
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2. What strategy is Mulally trying to get Ford to pursue with his One Ford initiative
As the CEO Mulally trying to get Ford to pursue with his One Ford Initiative as because
it want to make same cars on the same platforms across the globe. There are various benefits of
this strategy which are as: cost in research & development and tooling can be minimise and it
also helpful to achieve the economies of scale in the production of component parts. It will take
around one third out of $1 billion cost of developing a new car model and due to this
organisation has minimize $50 billion annual budget for the components parts. Along with this
distinct factories making these cars are similar in all aspects, useful knowledge gain via
experience in one factory can quickly be transferred to other factories and it is helpful for the
purpose of cost saving. Through this initiative cost of production will reduce as a result profit
margin will increase and it is beneficial for the Ford. As the drawback is that this strategy will
not effective in Europe or Asia as because car market is still stronger than SUV market & there is
a need for compact everyday vehicles. Along with this company can not manufacture the car as
per the requirement of distinct regions and preferences of different individuals. As because
Americans prefer trucks & SUVs where as European prefer fuel efficient and small cars
(Hallbäckand & Gabrielsson, 2013).
3. Does the One Ford initiative imply that Ford will now ignore national and regional differences
in demand?
Prior 2006, Ford was producing different types of cars as per the different regions and
taste & preferences of consumers who lives in distinct nations. So company has emphasis
towards local customization because it want to satisfy the demand of different consumers of
distinct nations. As the Europeans are more emphasis towards fuel efficient & small cars where
as people of America prefer trucks & SUVs. But due to this strategy organisation is having more
cost of production and cars were not built on same platform and did not share common parts. But
after the year 2006, company has take the initiative that is One Ford and in this initiative
organisation has emphasis to build same cars on the same platforms around the world. Through
this strategy cost in research & development and tooling can be minimise and it will also help the
corporation to gain the benefit of economies of scale. So it is beneficial for the company to
maximise the profit margin so that profitability can be increase. So one Ford initiative can ignore
the national and regional differences in demand because people of Europe and America has
different likes and preferences in context to the selection of car. Due to this demand of cars can
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be reduce for some time in future demand of Ford cars can be increase when people of America
will use fuel efficient cars (Ford & Leonidou, 2013).
CASE 3
Analyse the organization
Importance of analysis: To make analysis is an important part of the case study and for
the purpose it is require to analyse the organisation and it is helpful examine the elements or
structure of something (Coccia & Bozeman, 2016).
About the case: The topic of the case study is “GE moves manufacturing from China to
United States”. According to the case scenario, General Electric was producing its products in
China due to less production cost. Over the period wages rates has been increased in China and it
becomes five times higher in 2012 than they were in 2000 and still raising. Along with this oil
prices has also increased and due to his cost of shipping products has increased. So GE has
decided to manufactured the products in United States and for that purpose it redesign the
products and it makes ease of assembly, eliminating one out of every five parts & cutting
material cost by 25 %. So the time required to assemble the product from 10 hours in China to 2
hours in Louisville. It makes positive impact on the company as because material and labour cost
has been reduced and due to this price of Geo Spring reduced by 20%. This strategy was
beneficial for the organisation to increase the production of other appliances at Lovisville. Due to
this General Electric has hired 500 new designer for the purpose of ease of production and this
policy was beneficial for the corporation to increase the profits as well as quality of products.
Sort out the factual data: As General Electric was producing its products at China due
to less production cost. But in the year 2012 wages rates has been increased by 5 times as
compare to the year 2000 and also oil price has been increased so GM decide to manufacture the
products at US. In this regard, organisation has change the design so that it can be easy to make
assemble the products and it takes only 2 hours and to reduce unnecessary cost. So it is beneficial
for the firm to reduce the material cost by 25 %. In this regard General Electric has doubled the
workforce there to 3700 & has also hired 500 new designers & engineers to redesign the
products for ease of manufacture. As also organisation has plans to have 75% of revenue of the
appliances business to come from American products (Banyai & Glover, 2012).
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Identify problems: As the main problems which are faced by General Electric is high
cost of production because wages rates and price of oil has increased so that price of products
has been raised. Along with the, assemble time of product was more and it takes 10 hours and
products design was not good. As company, manufacture the products at China and get it to the
United States for sale and due to this cost of products has been increased and profits has been
reduced (Lambert & Davidson, 2013).
Analysis short term and long-term consequences: As per the case, General Electric
was producing the products at China but due to change in wages rate, the cost of production has
risen. As the short term impact of this, the prices of finished products will increase and due to
this profitability has been reduce. In this regard, the long-term consequences are company cannot
survive in the market for a long run because at recent time it is earning low profits due to more
cost. As the market share of corporation can be, reduce because the competitors will provide the
same product at lower price and due to these sales of Geo Spring water heater can reduce and it
affects the profitability of company. So short term and long-term consequences are not
favourable for the growth and success of organisation.
Own experience and recommendation: As the experience is good as because the case
study is very useful for the business point of view. It learns that how to make effective business
strategies in order to survive international market so that business can grow and get success. As
it is very useful to reduce the cost of production so that overall profit margin can be maximize so
that business can sustain for a long run and beat the competition. So overall experience is better
which learn lot of new things. As recommendations, it can be said that General Electric should
increase economy of scale so that it can take cost advantage. Along with this innovative
technology can use so that quality and efficiency can be enhanced and it is helpful to reduce cost
and increase profits. Apart from this market, conditions and demand of consumers are required to
be analysed so that products can be produce as per the desires of consumers and it is helpful for
GE to maximize the sales of Geo Spring water heater. As a result, profits will also enhanced and
it is beneficial in context to the growth of corporation (Kumar & Dureja, 2012).
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Ethical and Social Responsibility
In any kind of business, it is essential for the management to maintain a healthy ethical
working environment that support to increase overall performance of business. Business ethics is
a part of professional ethics that helps to examine valuable principle and moral or any other
ethical problem that arise in business environment. Thus, it is stated that In GE the ethical issues
reflects the cross connection between maximising profit behaviour and non-economic concerns.
So the main branches that are employ by company to overcome the different ethical issue such
as:
Normative Ethics: It is mainly related to identifying the moral course of action for performing
needed task within company in most profitable and economical manner. This help GE to
complete their production process and maintain a desirable profitability.
Descriptive Ethics: This is related to the moral values to the people actually abide by which
help to maintain a strong network among the higher level and other employees in Respective
company.
Social Responsibility of business is related to the obligation which support in decision
making process and benefits to perform crucial action of business that help to attain the desirable
objective and grow values of community. Important role of SR that are beneficial for General
Electric while performing operation activities are listed below:
 Helps to grow, develop and existence of company.
 Support in converting problems into opportunity so that profit can be maximised.
 Mainly holding the business responsible for social problems
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Analyse of acceptable risk, value creation and opportunity.
The General Electric is planning to improve their production process by producing units
in home country that will help them in variety of manner to increase overall profitability, reduce
risk factors, creates values and moreover grab more opportunities that helps to increase profit
margin.
Acceptable risk: As company is planning to produce new unites within home country
than any kind of issues and problems with operation and product are acceptable by the GE. This
is because there is no involvement of any other party like in case of chine manufacture. Thus it is
essential for manager of respective company to make sure that risk factors must be minimise
before starting production process and in case if there is any problem in future effective planning
will reduces the risk.
Value creation: As company is producing 500 Designer Units in home country, thus it
help to create the value for customer. As they can put more efforts to develop extra features that
will satisfy the needs of buyer.
Opportunities: GE plans to produces goods within home country this help them to
reduces the international cost, improve quality of services and support them to grab other
possible opportunities that increase overall profitability.
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Communication and Human relation theory
Communication is defined as the systematic way of transferring meaningful information
from one person to another so that there is less chances of conflicts and issues. It is helpful to
share crucial knowledge, beliefs, ideas between large number of people within organisation so
that valuable operation of GE can be performed with maximum benefits for company. There are
crucial theories of communication that help to improve the execution of project within an
organisation at global and local level. This is discussed below:
Modernisation theory:
This theory is relate with developing of modern ways for improving communication
system such as mass media that would be beneficial in transformation of traditional ideas and
values of business form country to country. This also support in free flow of information and
improve the global management of GE that increase the understanding of doing a specific job
role by valuable employees that support to maximise profit margin.
Human relation:
In every organisation it is very much essential for company to make sure that there must
be effective relation among the workforce that help in easy flows of ides and performing of
valuable operation. In GE, manage use different tactics that aid to complete the production
process in more profitable manner. As per the human relations management theory, few positive
management actions that central to worker inspiration and improved performance are these:
 Providing the major objective of business with them so they work with more motive and
efforts.
 Giving essential training and developing lessons that help to increase their knowledge
and responsibility.
CONCLUSION
As from the above report, it has been concluded that to follow the government policy is
important for the companies so that it can sustain for in the international market. The
environment standard norms are essential to be follow in order to continue the business
operations. For an organisation it is important to make effective strategies so that company can
continue its business in international markets. The people of different nations have distinct
demand and preferences so it is important for firm to analyse it so that product can be develop on
the basis of it. To analyse the market conditions are important so that better decisions can be
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taken for the growth of business. To minimize the cost is required in order to maximize the profit
margin and it is beneficial for the corporation in order to get success and beat the competition.
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REFERENCES
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countries: increasing FDI through international trade agreements?. American journal of
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Coccia, M., & Bozeman, B. (2016). Allometric models to measure and analyze the evolution of
international research collaboration. Scientometrics.108(3). 1065-1084.
Dunning, J. & Narula, R., (2003). Foreign direct investment and governments: catalysts for
economic restructuring. Routledge.
Ford, I. D. & Leonidou, L. C., (2013). Research developments in international marketing. New
Perspectives on International Market-ing, edited by SJ Paliwoda, pp.3-32.
Hallbäck, J. & Gabrielsson, P., (2013). Entrepreneurial marketing strategies during the growth of
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Hill, C., (2008). International business: Competing in the global market place. Strategic
Direction.24(9).
Kumar, R., Singh, H., & Dureja, J. S. (2012). An approach to analyze logistic outsourcing
problem in medium-scale organization by CFPR and VIKOR. Journal of Manufacturing
Technology Management.23(7). 885-898.
Lambert, S. C., & Davidson, R. A. (2013). Applications of the business model in studies of
enterprise success, innovation and classification: An analysis of empirical research from
1996 to 2010. European management journal.31(6). 668-681.
Sparrow, P., (2012). Globalising the international mobility function: The role of emerging
markets, flexibility and strategic delivery models. The International Journal of Human
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Online
Rare metals. 2013. [Online]. Available Through:
<https://archive.intereconomics.eu/year/2013/4/chinas-growing-conflict-with-the-wto-
the-case-of-export-restrictions-on-rare-earth-resources/.>
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