International Management

Lincoln Electric case
Lincoln Electric intended to exploit the global market through expansion
of its operations. Initially, the company had five manufacturing plants
located in the United States, Canada, Australia and France. However, it
undertook immense expansion efforts from 1986 to 1992 through possession
of 22 manufacturing plants scattered in 15 countries. First, it expanded
into Australia through the purchase of Air Liquide, before moving to
Venezuela through acquisition of minority shares in another existing
plant (Siegel, 2006). This expansion was complemented by other
acquisitions in different countries including Germany, Mexico, Norway,
Brazil, Scotland, Netherlands, United Kingdom and Spain. In spite of its
increasing losses in late 80s, the company continued its expansion and
acquisition spree in the 90s upon regaining profitability. Indeed, it
acquired a firm in Italy in 1996 before forming a joint venture in 1997
in Indonesia. The construction of new manufacturing plants in Shanghai
China completed the picture, with other acquisitions in Germany and
Canada being completed. The early 21st century saw the company acquire
other companies in Venezuela (Messer Soldaduras de Venezuela) and expand
into Poland through acquisition (Siegel, 2006). The early 21st century
expansion efforts of the company may have been sealed by the acquisition
of the Chinese company Shanghai Kuang Tai Meta Industry Co in 2004, and
a 70% stake in Rui Tai Welding and Metal Co, in Northern China.
It is evident that the company was motivated by the economic conditions
in the countries where it was initially located. For instance, the
losses suffered in late 80s propelled the company to seek joint-ventures
rather than acquisitions (Siegel, 2006). In addition, the company hoped
to exploit market opportunities such as the ones in China and Latin
America.
CEMEX case
CEMEX, one of the largest cement manufacturers, was primarily
established in Mexico and, indeed, grew to be a key player in the
industry while producing in that country. However, it recognized the
need to expand its reach to other markets as a way of increasing its
competitiveness in the industry (Ghemawat, 2004). One of the key
factors that influenced the sequence by which the company entered
foreign markets and regions is the economic conditions of the countries.
For instance, its expansion into the United States in the 70s was
hampered by the lawsuits filed by existing cement companies that aimed
at prohibiting the importation of cheap cement products from Mexico
(Ghemawat, 2004). In addition, the company had kept away from Latin
America in general and Venezuela in particular thanks to the economic
instabilities from which the region suffered.
Nevertheless, the markets that CEMEX recently entered had some
similarities with others that it had previously exploited. Indeed, in
making a decision on whether the company would invest in a certain
country, CEMEX had to determine that that country had a large
population, as well as considerably high rate of population growth
(Ghemawat, 2004). In addition, the current consumption of the countries
had to be considerably low, a situation that would have meant that a
large proportion of its income was saved or invested. In addition,
qualitative and quantitative factors determined the countries in which
it invested. For instance, it is evident that the countries in which it
invested recently and in the past were politically and economically
stable even in instances where they were undergoing economic downturns.
This allowed the company to exploit its strength so as to stay afloat
and expand.
Google, Inc. in China case
The expansionary activities of a company always come as extremely
crucial especially considering the prospects of increased market base,
which, consequently, results in increased profitability and
sustainability in the long-term and the short-term. The Chinese market
forms one of the most attractive markets for a large number of
companies, thanks to its immense population. Indeed, the opening of its
trade policies and relations with the outside world allowed for the
entry of varied companies all striving to exploit the new and viable
market. Such was the case for Yahoo!, Google, Microsoft and Cisco
(Martin, 2008). However, the Chinese government imposed laws that
limited the types of websites and topics that could be accessed through
the search engines. This forced the four companies to react in different
ways to ensure their competitiveness in the Chinese market.
In my opinion, Google Inc acted in the most responsible manner as far as
dealing with the requirements is concerned. This is because it was
primarily concerned with safeguarding the privacy and confidentiality of
its clients rather than entirely being concerned with profit making. Of
particular note is the fact that it came up with the idea of
establishing Google.cn only after being censored by the government and
having its speed drastically reduced against that of its competitors
such as Yahoo!, Cisco and Microsoft (Martin, 2008). Even then, it
censored certain pages that violated the rules laid down by the
government but provided its Chinese users with access to these pages and
protecting their private information by keeping it at Gmail, which is
not under the Chinese authority.
Yahoo!, on the other hand, acted most irresponsibly by providing
personal information of journalists to Chinese authorities leading to
their incarceration. Business entities are supposed to protect personal
information of their clients as much as possible unless it is clear they
are a threat to security and stability.
Intel Case Study
The expansionary forces of companies across their boundaries are
triggered by varied issues. As a large player in the world (or rather
market) of technology, Intel had previously undertaken expansionary
efforts to countries such as inland China, Malaysia, Philippines, Israel
and even Ireland. However, its decision to expand to Latin America was
based on two issues. First, it acknowledged the importance of
diversification or rather spreading risks across the regions. Indeed,
the management felt that excessive investment in one region would
generate considerable risks to the company (Nelson, 2000). In addition,
the company’s management had earlier on acknowledged the importance of
establishing some plants in countries that had low labor costs than in
the United States. Labor costs take up 30%-40% of the total production
costs in which case their reduction would mean immense cost savings
(Nelson, 2000). Not only did Latin America offer considerably low cost
of labor, but also came with logistical advantages for export
productions to Europe and the United States.
Intel has selected four countries including Brazil, Chile, Costa Rica,
and Mexico as potential countries in which it may establish its plant.
While each of the four countries provides considerably attractive
incentives for the establishment of the plant, Costa Rica comes as the
most appropriate (Nelson, 2000). This is especially considering that it
tends to meet almost every condition that Intel has set for the
appropriate country. In instances where Costa Rica seems deficient, it
is flexible enough to make changes that would allow for a smooth landing
for the company. It is willing to change its curriculum, increase the
incentives, enhance its electricity rates and does not have labor unions
that would disrupt the production process.
References
Siegel, J. I (2006). “Lincoln Electric.” Harvard Business School Case
Ghemawat, P (2004). The Globalization of CEMEX. Harvard Business
School.
Nelson, R (2000). Intel’s site selection decision in Latin America.
Thunderbird International Business Review 42,2
Martin, K.E (2008). Google Inc., in China. Business Roundtable Institute
for Corporate Ethics. Case BR1004
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