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NOTE:  You may want to highlight all the text in this file and then "copy" and "paste" it to a word processing file.  You can then type in your answers below each question or insert spaces for a handwritten answer.

Part I: Short Answers (Please answer ANY 6 of the following 8 questions. If you answer more than six, only the first six questions will count toward your grade. If you start on an answer and decide to abandon it, please make sure that your answer is crossed out.

1. Please discuss how Islamic law differs from either the common law or code law, emphasizing implications for doing business.

Islamic law is based on the dictates of the Koran and is intended to create social justice.  The main purpose of the law is to please God.  Because the Koran sets specific standards on certain issues--e.g., the charging of interest--the law creates some rather rigid standards for what can and what cannot be done, and the law, since it is believed to be handed down from God, cannot easily change to accommodate new business needs.  Unlike the common law, where it is OK to attempt to find loopholes, this is not acceptable in Islamic law, since this would involve subverting the wishes of God.

  2.    According to the text, what is the significance of "linguistic distance?"

Linguistic distance refers to the extent of dissimilarity of the forms, content, and structure of language (e.g., Spanish and French are more similar to each other than either one is to English or Japanese).  It has been found that linguistic distance tends to predict similarities in culture--e.g., the farther away from English a language is, the less likely it is to embrace individualism.

  3.    Reliable Riffles, Inc., sells very specialized weapons and targets jealous spouses that would like to do something about individuals with whom they suspect their spouse is having (or has had) an affair. So far, RR has sold its product exclusively in the U.S., but management is now looking to go abroad and thus wants to do marketing research in potential countries. Please discuss advantages and disadvantages of primary, relative to secondary, market research, for RR's situation.

Primary research has the benefit that it offers the opportunity to gather more specific information than what has already been gathered.  In this case, for example, there may be some research already collected about attitudes toward adultery in different countries, but no one may specifically have looked at the extent of interest in being able to "ice" the outside offender.  It may also be that existing published research does not address consumers' preferences for specific features of weapons.  Disadvantages of primary research include the time it takes to collect (perhaps Aggressive Armers might a head start in the countries of interest) and the higher cost.

  4.    Protectionism generally hurts most consumers in the country that imposes it. Yet, as we saw on the video tape on the sugar industry, it persists. Why?

Protectionism persists because of the concentration of interests.  The average citizen loses only a few dollars a year on this, but the sugar industry benefits to the tune of many millions.  Thus, it is worthwhile for the industry to lobby for the sugar program and make large campaign contributions, while it is not for the individual consumer.

  5.Rap singer Scoop "Catty" Cat is interested in marketing her new album Rappurrrring! in different countries and is intrigued by the concept of high vs. low context cultures. She has asked you to consult on how this issue might relate to the acceptance of her lyrics in different cultures.

In low context cultures, such as the United States, it is necessary to spell out one's message in some detail so that others, who may not share the same background, may understand it.  On the other hand, in high context cultures such as Japan, expressions tend to be more indirect, and more information is implied through the tone of voice and other non-verbal communication.  Thus, some of the more explicit lyrics may be less popular in high context cultures, especially if they lack non-verbal signs.

  6.    According to the text, what were the findings of a recent study of effects of consumers in twenty-one protected industries?

The study found that American consumers pay an estimated $70 billion extra per year in higher prices for goods.  On the average, this amounts to $170,000 for each job protected, which is many times the average manufacturing wages.

  7.  According to the text, how does explicit and implicit business communication differ, and what are the implications of this?

Explicit business communication, which is more common in the United States, involves spelling out most of the details and leaving less to an "unspoken understanding"--in some countries such as Japan, for example, it is more likely that there is an established way things should be done and thus, communication can be more implicit, depending on these understandings to fill in the gap. This means that those who travel to a higher context culture will need to rely on translators to "read "between the lines" and must make a greater effort to understand the culture and non-verbal behavior of other negotiators.

  8.  Please discuss laws of interest to U.S. firms doing business abroad.

The Foreign Corrupt Practices Act prohibits paying bribes to foreign government officials or executives.  It is sometimes permissible to pay employees such as customs dock workers small "tips" (facilitating payments) to do things that they would eventually get around to doing anyway (e.g., so that a shipment would be processed today rather than in five days), but the payment must not influence any decisions made (such as to classify a vehicle as a "car" rather than a "pickup truck" when this would result in a lower tariff).  It is illegal to participate in boycotts against Israel, or even to certify that one's firm does not do business with Israel when it actually doesn't.  It is illegal to trade with certain enemy nations (such as Iraq), and U.S. antitrust laws are frequently enforced abroad.

Part II: Case. Part II. "Issue spotter" case Please apply course concepts to one of the two cases below. You must (1) identify which course issues are relevant and important to the firm and then (2) apply those concepts to the specific situation of the firm. Grading will be based on:

PLEASE BE SURE THAT YOU RELATE YOUR ANSWERS TO THE SPECIFICS OF THE FIRM—GENERAL ANSWERS ARE NOT OF INTEREST!

There will be no credit for:

1. Dole Fruits is interested in expanding its sales of fruits in Japan. Currently, fruits in Japan cost several times what they cost in the United States, but there has been a strong desire in Japan to have as much as possible of the food consumed produced there. Despite the current economic crisis, Japanese incomes are quite high by international standards, and the Japanese per capita gross domestic product is approximately $41,000, compared to $32,000 in the U.S. Nevertheless, with the economy not as strong as it has been in the past, consumers have been seeking cheaper goods and have become more receptive to imports.

Since there is a strong desire to limit foreign food imports, one needs to worry about non-tariff barriers--e.g., fruits might be take so long to clear in customs that they may spoil. Thus, it will be necessary to negotiate with government officials to ensure that the goods will be allowed and will not be held back.  Since Americans do not tend to have close contacts, it may be necessary to hire a local consultant.  It may also be difficult to find distributors, who may have been preempted by domestic growers who do not like to see foreign competition.

Now may be a good time to export since consumers, in bad economic times, are more likely to be budget conscious.  Since costs of production in Japan are higher, foods produced there will be much more expensive.  On the other hand, given the high nominal per capita GDP, the Japanese should be able to pay for imports.

It may be necessary to do some research to find out about the market.  Secondary research can be used to find trends in fruit consumption in different categories and local wholesale costs and demand elasticity.  Primary research might address local perception of American fruits and characteristics desired by local consumers.  Because of social influence, written, anonymous surveys may be more effective than focus groups.

  B.  Starbuck’s, which has been very successful in getting American consumes to "fork out" three dollars or more for a fancy cup of coffee, fears that it is running out of growth opportunities in the home market, and would like to expand into Europe and Asia. Although Europeans and Asians are not used to paying these exorbitant prices for coffee, an executive pointed out that Americans were not used to these prices when the chain began, but have been willing to pay for the upscale experience and high quality service.

Starbucks needs to research interest in its products in different countries.  From the French cultural purity video, we know that people in some countries are often fascinated with things American, but at the same time feel insulted by the onslaught of American culture.  Therefore, we need to find out the net effect.  Secondary research might address coffee consumption levels (which are likely to be high in Europe and relatively low in Asia) and trends.  In terms of primary research, focus groups, which may awake national pride and other feelings of needing to say "the right thing" may not gauge a realistic picture, so individual interviews or focus groups may be more effective.  The cultural purpose of going out for coffee should also be investigated to see if this would be well served with a Starbucks' like setting relative to the traditional coffee houses.  One must also do research on the product itself--what kinds of coffee, if any, would be perceived as of high quality?

In looking at the demand, one must consider incomes and costs.  Costs will be incurred mostly locally, with the exception of coffee imports (a small part of the price of the cups of coffee), so the purchase parity adjusted measure of income is most relevant.  One must also look at the distribution of income in the different countries.  In Asia, there are often very large differences, while in Europe, incomes are less variable than they are in the U.S.  Thus, in Europe, one might look at average income, while in Asia, the income of the upper 20% or so may be more relevant. 

Government policy and attitudes should also be considered.  Some countries may impose high duties and taxes and may limit the ability to take money out of the country.  Non-tariff barriers--such as long application processes and inspection procedures--may also be imposed.