International Business Strategy: Financial Crisis Case Study

This case study delves into the impact of the 2007-2008 global financial crisis on international business strategies. It examines the economic downturn, the actions of central banks, and methods to mitigate future crises. The study further analyzes the Subaru case, exploring its export production strategy from Japan, currency risks, and the company's sales and profit surges in response to the weakening Yen. It concludes by evaluating the effectiveness of Subaru's decision to expand operations and the importance of maintaining a strategic approach to navigate economic challenges. The analysis covers topics such as the Heckscher-Ohlin Theory, currency depreciation, and the importance of global expansion strategies.

Running head: INTERNATIONAL BUSINESS STRATEGY
INTERNATIONAL BUSINESS STRATEGY
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Case Study 1 - Introduction
The global financial crisis that had taken place in the year 2007-2008 had a major
impact on the major global organizations all over the world. The flow of investments has
been able to influence the ways by which cross border based operations of the organizations
have taken place. The cross border operations of different organizations had started
increasing from the 1980s to the year 2007. The analysis will be mainly based on the
discussion based on the financial crisis that had taken in the years 2007-2008 (Balakrishnan,
Watts & Zuo, 2016).
Analysis of the financial crisis that had taken place in 2007-2008
The World Economic Situation and the Prospects have been affected in a huge
manner by the improved economic performance of global economy. The economy has been
affected in a huge manner by the increasing levels of risks and the humanitarian concerns as
well. The conflicts had a major impact on the progress based on effective sustainable
development of the global economy. The polices that have been implemented by the
organizations all over the world are mainly based on the proper resolution of conflicts
(Beuselinck et al., 2017). The global growth had reached at around 3.1% in the year 2017,
that is considered to be the fastest in the last few years. In around two thirds of the countries
the levels of worldwide growth had been strengthened in a huge manner in comparison to the
year 2016 (Bremus & Fratzscher, 2015).
Justification of the activities that were performed by the central banks
The steps that had been taken by the financial organizations were mainly based on the
reduction of short term loans. The central banks had mainly tried to stock up the capital in
order to maintain the growth of the economy on a global basis. The lack of proper returns that

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can be provided by the mortgage securities had been a major reason behind the steps that had
been implemented by the central banks. The increase in rates of Dollars had been able to play
a major role in the development of the steps that had been implemented by the banks
(Claessens & Van Horen, 2015).
Ways by which financial crisis based issues can be mitigated
The banks that operate in the US and Europe need to develop major levels of
understanding based on the ways by which insolvency based issues had a major impact on the
operations of different organizations that operate on a global basis. The current bank
standards thereby need to be adjusted in an effective manner and they also required high
levels of adjustments (Futurity.org 2019). The trade-off that had taken place between the
levels of economic growth and financial stability had been overblown and levels of stability
related to capital requirements have started increasing in a huge manner. The economic
growth on a global basis had been affected in a negative manner by the liquidity based
requirements of the global organizations. The risks that can further take place in the future
can be mitigated in an effective manner by increasing the levels of liquidity in the economic
growth (Dijkstra, Garcilazo & McCann, 2015).
Reasons behind the lack of capital flows after 10 years of global financial crisis
The rates of growth of the global economy had slowed down after the year 2008. The
lack of proper growth is mainly based on the reset that had taken place after the global
financial crisis had hit in the year 2007. The crisis that had taken place in the global economy
had a long lasting impact on the growth that had been depicted by different sectors or
countries. The ability of the countries to deal with high levels of economic crisis had reduced
due to the ways by which the organizations have tried to maintain their positions in the
industry (Un.org. 2019).

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Actions implemented by a multinational firm to limit the impact of future crisis
The levels of global expansion have plateaued in the last few years, however, the easy
monetary policies have been able to support the growth of the economy on a global basis.
The levels of trade based tensions in different countries have however escalated in the last
few years (Lane & Milesi-Ferretti, 2017). However, the organizations have started
implementing some major steps based on proper elevation of the risks. The reform in the
economy has a major positive impact on the ways by which organizations are able to
maintain their operations. The Heckscher- Ohlin Theory or the classical country based theory
can be implemented by the countries in order to gain a comparative advantage based on the
export and production of goods that require resources (Bremus & Fratzscher, 2015).
Conclusion
The essay can be concluded by stating that different organizations that are currently
operating on a global basis can implement different steps in order to mitigate the risks that are
related to the slow growth of the economy. The levels of improvement of resilience of the
organizations can affect the global economic growth in a huge manner.
Case Study 2 – Introduction
The analysis will be based on the case study related to the sales boom of an
organization named Subaru due to the weakness of Yen. The fall of Yen that had been
experienced due to the lack of proper levels of US production. Subaru can be considered as a
niche player in global automobile industry (Bénétrix, Lane & Shambaugh, 2015).
Reasons behind the choice of export production from Japan
Subaru can be considered to be a niche player in the automobile industry of Japan.
The organization has not expanded its operations in the North American market like the other

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organizations in the automobile industry. The strategy had been viewed as a major liability by
the other organizations that are a part of the country. However, lack of strength of Yen had an
impact on the sales of the organization (Brunn et al., 2016). The company had aimed at
reducing the levels of production costs with the help of its operations in its home country.
Although the Japanese organizations like, Toyota and Honda had developed their
manufacturing units in the US, Subaru has been operating in an effective manner in its home
country itself. The selling of Yen and purchasing the US Dollars has been able to affect the
ways by which levels of fall that has been experienced in Dollars. The fall in currency levels
has been able to provide growth opportunities to Subaru (Dijkstra, Garcilazo & McCann,
2015).
Currency risks based on Subaru’s strategy
The major risks that can be associated with the strategy that has been implemented by
Subaru is mainly based on the ways by which the organization can maintain its operations in
automobile industry. The organization has however some major levels of currency risks
based on the development of its manufacture based operations in the US. The currency fall
that had taken place in the country, however, this activity is considered to be temporary in
nature. The company can thereby develop the operations only with the support that is offered
by its production facilities (Kenourgios & Dimitriou, 2015).
Sales and profits surge in 2014 and 2015
The profits and sales of Subaru had increased in the years 2014 and 2015 with the
help of depreciation that has been experienced in the value of Yen. The fall in currency levels
has been able to play a major role in the ways by which different operations of the
organization can be developed. The sales boom and price advantage is considered to be an
important part of the ways by which the organizations are able to develop the levels of

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profitability. The lack of high levels of costs has been a major advantage on the ways by
which the organization can maintain its operations (Kerlin et al., 2016).
Effectiveness of decision based on Subaru to expand the operations
Subaru had later taken the decision based on the proper implementation and
development of the production capacity in the US. The strategies that have been implemented
by the organization in order to maintain its operations in the automobile industry are based on
the reduction of costs. The development of a strategy will be effective in the ways by which
the organization can expand its operations in the home country itself instead of the
development of its international production based plant (Lane & Milesi-Ferretti, 2017).
Conclusion
The essay can be concluded by stating that the organization named Subaru needs to
maintain its strategy in an effective manner with the help of development of its production
facilities in its home country itself. This will support the operations of the organization at low
costs.

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