SMALL BUSINESS DILEMMA
Chapter 1
• Developing a Multinational Sporting Goods Corporation
1. Is the Sports Exports Company a multinational corporation?
- Yes, The Sports Exports Company is a multinational Company because it is engaged in an international business.
2. Why are the agency costs lower for the Sports Exports Company than for most MNCs?
- The agency costs are lower for the Sports Exports Company than for most MNCs because as Jim produces footballs in his garage it avoids the rent and labor expenses. On the other hand, Jim is the only owner of his company and performs work by himself so there are no agency problems which will contribute to no agency costs.
3. Does Sports Exports Company have any comparative advantage over potential competitors in foreign countries that could produce and sell football there?
- In my opinion, I think that there are some comparative advantages over potential competitors in foreign countries that could produce and sell football there. As Jim produces low-priced footballs and exports to foreign countries, people of foreign countries will be more attracted towards his footballs. This way the foreign companies can buy footballs from Jim which costs them less than if they produce by themselves. On the other side, foreign companies can sell materials needed to make footballs to Jim in lower cost and thus save a lot of money in producing footballs. Therefore, this way there exist comparative advantages over potential competitors.
4. How would Jim Logan decide which foreign markets he would attempt to enter? Should he initially focus on one or many foreign markets?
- Jim Logan should learn about the foreign countries who are mostly interested in sports. As sports are an interest since the childhood, he should focus on the areas where there are many schools. He should also search over the history of the country on how faster they are growing with sports.
I think he should initially focus on only one foreign market. This...