CASE STUDY 1.
Greece is located in Southern Europe, positioned geographically between the Aegean and Mediterranean Seas, Albania, and Turkey. Major national resources include lignite, petroleum, iron ore, lead, nickel, salt and hydro-power potential.
Greece has a population of 10.78 million people, with Athens, the capital, home to 3 million people. Population growth has stabilized at zero in recent years. Greece is a fairly homogeneous country, with close to 95% of the population with Greek ethnicity. With a median age of 44 years, Greece has older population than most countries in the world. In recent years, the country has struggled economically, leading to the third highest unemployment rate in the world.
The country’s GDP is estimated at US$238 billion. After years of negative economic growth, and declines of 9.1% in 2011 and 7.3% in 2012, Greece’s GDP finally grew in 2014 by 0.7%. GDP per capita in Greece is estimated at $26,000. Greece has a capitalist economy, but the public sector accounts for approximately 40% of GDP. Greece was significantly impacted by the financial crisis of 2008. Greece’s poor financial management of the country’s budget and its failure to report massive deficits in a timely fashion to its borrowers amplified the impact of the crisis, causing the economy to spiral downward. As a consequence, Greece was no longer able to borrow in global markets. Ultimately, Greece was required to take a US$316 billion bailout from the European Union. In return for the bailout, the Greek government was required to implement dramatic spending cuts and tax increases to reduce its budget deficits. In total, aid from the European Union has amounted to approximately 3% of the country’s GDP.
The country has started to show some limited signs of progress and has recently agreed to further economic reforms in return for liquidity from its lenders. Greece is not out of the woods, however. The bailout money has largely gone to the country’s lenders and has not yet been able to support the restructuring of the economy.
In 2015, Greece received its third bailout in five years. Relations between Greece and its creditors remain strained and contentious. On several occasions, Greece has threatened to defaults on its loans and has even contemplated exiting the European Union. The 2015 bailout allowed creditors to demand harsh austerity programs and require deep economic and structural reforms. These measures included raising the retirement age, cutting pensions, liberalizing the energy market, opening up protected professions, enlarging a property tax that Greeks already despise, and moving ahead with a program to sell state-owned enterprises and other assets.
Answer the questions below and ensure that:
a. You address ALL parts of the questions.
b. Provide sufficient details and rationale behind your opinions, or recommendations.
c. Refer to International Management theories and concepts when answering the questions.
d. Plagiarism and referencing requirements fully apply.
e. Conduct necessary research to support your answers.
1. If you are a consultant for a business looking to expand in southern Europe, will Greece be an option for you? Why yes/no? What concerns would you have about entering the Greek market?
2. If the government does, in fact, implement the agreed-upon measures, would that be a sign that the country is on the right track?
Text and questions retrieved from: Doh, J. and Luthans F. (2018). International Management, McGrawHill Education, New York, NY
CASE STUDY 2.
Comprised of more than 3,000 islands, Japan is located off the eastern cost of mainland Asia. Japan’s total land mass is slightly less than that of California. The country is largely mountainous and contains very few natural resources. In fact, Japan is the largest importer of coal and liquefied natural gas in the world.
Japan is among the densest large countries in the world. More than 90% of the county’s population, estimated at nearly 130 million in total, lives in urban areas. Approximately 38 million people live in Tokyo alone. Japan’s population is much older than many other countries with close to 80% of its people at 25 years old or older and a median age of 46.5 years. The population is expected to continue to slowly decline in the foreseeable future.
Japan’s 2014 GDP was estimated at US$4.601 trillion, making it the third largest economy in the world. Previously second to only the United States, the country’s flat and sometimes declining economic growth rate has allowed the fast-growing Chinese economy to overtake it in total size. Japan’s economy has been struggling to gain traction since the 1980s. This issue might be tied to its public debt, which, in 2014, equaled more than 200% of its annual GDP.
Japan has a parliamentary government with a constitutional monarchy. Its legal system is largely based on the Western model with some elements of traditional Japanese culture. The country’s corporate culture is often criticized for the close business-government relationship that many large companies have, leading many outsiders to call the relationship “Japan Inc.” This culture is also very resistant to change and strives for stability, often leading to substantial losses. For-example, many experts cite the close business-government relationships as a cause of the Olympus scandal in 2011, in which the company, with the help of the government auditors, hid more than US$1 billion in losses for two decades. The Japanese government also has been criticized for blocking private sector solutions to economic underperformance. For-example, rather than allowing foreign investors to acquire failing or underperforming Japanese businesses, the government instead seeks to support those domestic businesses in the form of cash loans.
One of Japan’s biggest companies is looking for a foreign buyer. Sharp, Incorporated is a manufacturer of consumer electronics, but it, along with Toshiba, Hitachi, and Sony, has experiences significant difficulties in recent years. In fact, sales have been so bad for these Japanese companies that the Japanese government has had to provide financial support. Sharp is suffering from its own high manufacturing costs and lower-cost competition from China. Following the government’s unsuccessful search for a Japanese buyer, Sharp is now looking outside of the country for help. Although Sharp is a major player in consumer electronics, foreign investors have found it difficult to complete purchases of Japanese companies. Challenges include cultural concerns, as well as more specific issues regarding reluctant management and a protective government. Sharp has received some offers from outside investors, but it has also received offers from Japanese government-backed companies.
Answer the questions below and ensure that:
a. You address ALL parts of the questions.
b. Provide sufficient details and rationale behind your opinions, or recommendations.
c. Refer to International Management theories and concepts when answering the questions.
d. Plagiarism and referencing requirements fully apply.
e. Conduct necessary research to support your answers.
1. If you were a foreign investor, would you want to invest in a consumer electronics company in Japan? Why yes/no? Does the fact that the company has had past problems requiring government interventions affect your decision? Why yes/no?
2. How does it impact your decision that you would be competing with a government-backed company during the bid process?
Text and questions retrieved from: Doh, J. and Luthans F. (2018). International Management, McGrawHill Education, New York, NY