International Business — Winter 2021

Write a note on types of foreign exchange risk and how its exposure can be managed?

Write a note on International Monetary Fund.

What is cultural environment for an international business and what are the strategies to deal with cultural differences?

What are the various methods of payment available for settlement of international trade?

Explain the concept of E-commerce and its impact on international trade.

Explain the working of a letter of credit and list all the types of L/Cs.

Write a note on points to be considered in deciding the Global Marketing mix

Write a note on the International Accounting issues faced by the MNCs.

Explain the Tools for Country Evaluation and Selection for International business.

What are the Key Points of Consideration while choosing an International Payment Method?

Write a note on GATT and WTO.

What are the dangers to Gillette of targeting emerging markets?

Why do companies such as Gillette target emerging markets? Do you agree with this strategy?

CASE STUDY: Gillette Targets Emerging Markets’ As it entered the twenty-first century, Gillette faced a difficult choice. Should it continue targeting emerging markets or not? Its strategy to move aggressively into markets in the developing world and the former Soviet bloc had been hailed as a success only a few years before. Recent poor earnings, however, had management considering whether this choice had been a wise one. The Boston-based firm was founded in 1895 and is still best known for its original products, razors and razor blades. By the end of the twentieth century, Gillette had grown into a global corporation that marketed. its products in 200 countries and employed 44,000 people worldwide. About 1.2 billion people use Gillette Page 1 of products every day. Its sales are about equally distributed among the United States (30 per cent), Western Europe (35 per cent), and the rest of the world (35 per cent). As markets matured in developing countries, Gillette sought growth through product diversification, moving into lines such as home permanents, disposable lighters, ballpoint pens, and batteries. In the mid-1990s, Gillette targeted several key emerging markets for growth. Among them were Russia, China, India and Poland. Russia was already a success story. Gillette had formed a Russian joint venture in St.Petersburg and within 3 years Russia had become Gillette’s third-largest blade market. Gillette’s move into the Czech Republic had prospered as well and in 1995 Gillette bought Astra, a 10caI; privately-owned razor blade company. Astra gave Gillette expanded brand presence in the Czech market. Astra’s relatively strong position in export markets in East Europe, Africa and Southeast Asia proved a boon to Gillette in those markets as well. Just as in other markets in the developing world, 70 per cent of East European blade .consumers used the older, lower-tech double-edge blade. In more developed markets, consumers appreciated product innovation and the shaving market had moved to more high-tech systems such as Gillettes Sensor.)Then disaster struck. Afinancial crisis that began in Thailand quickly spread across Asia. Many wary investors responded by pulling money out of other emerging markets as well as depressing economies across the globe. Bad economies meant slower sales for Gillette, especially in Asia, Russia and Latin America. In Russia, wholesalers could not afford to buy Gillette products. Consequently, these products disappeared from retail stores and Gillette’s Russian sales plummeted 80 per cent in a single month.Gillette found it could not meet its projected annual profit growth of 15-20 per cent. To save money, Gillette planned to close 14 factories and layoff 10 per cent of its workforce. Despite its recent bad experience in developing countries and in the former Soviet bloc, Gillette was still moving ahead with plant expansion plans in Russia and Argentina that would total $64 million. Some even suggested that this was a good time to expand in the emerging markets by buying up smaller competitors that had been hurt even worse by the crises. Meanwhile, back in the developed world, another large global consumer products firm, Unilever, announced that it would be entering the razor market.

What global strategy would you suggest for a company such as Gillette? Explain your choice. Page 2 of

Why would local, privately-owned companies like Astra want to sell out to companies like Gillette Why are such companies attractive acquisitions to multinational firms?