Assuming the facts from Question 1, what would be the advantages and disadvantages of a joint venture with a major foreign company abroad compared to the alternatives discussed in Question 1? Data from Question 1: Hirt Systems Company is a U.S. company that has a strong market in the United States for securing computer terminals. It envelops such terminals with lead to prevent them from emitting microwaves that can be picked up by “spy receivers.” The key to Hirt’s success is its design knowhow. Because the application is labor intensive, models produced abroad are significantly cheaper. Hirt has been affected by these lower-priced models, although it has held its own because its design is superior. As part of its expansion program, Hirt is considering constructing a new assembly plant. Compare the relative benefits and risks of building it as a Hirt-owned concern in a developing country under the direction of Hirt’s U.S. management with building the plant in the United States.
> Alvarez, a Mexican physician, was wanted by the U.S. Drug Enforcement Agency for the torture and murder of one of its agents in Mexico in 1985. When Mexico would not extradite Alvarez, the agency employed Sosa to kidnap Alvarez from his home and fly him
> During the Spanish-American War, the United States Navy seized two commercial fishing ships sailing from Havana. The unarmed ships were owned by a Spanish citizen living in Cuba and sailed under Spanish flags. The owners were unaware of the hostilities b
> Japan Airlines (JAL) is a Japanese air carrier based in Tokyo, with offices in California and Hawaii. The plaintiffs were employed by a Hawaiian company that contracted to perform services for JAL flights. They alleged that JAL had required a seriously i
> The plaintiff, a U.S. citizen, entered into an employment contract with the German firm of Stumm Handel, the defendant. The contract was written entirely in German. Without being able to speak or read German, the plaintiff signed the contract. He never r
> The United States contracted with Transatlantic Financing, the operator of a cargo ship, to transport wheat from Texas to Iran in 1956. The parties never agreed on the route the ship would take. Six days after the ship left Texas, the government of Egypt
> Dayan received an exclusive franchise to operate McDonald’s restaurants in Paris, France. The franchise agreement required that the franchise meet all quality, service, and cleanliness (QSC) standards set by McDonald’s. The agreement stated that the rati
> The Kiobel suit was filed in 2002 by Nigerian citizens from the Ogoni region of Nigeria against Dutch and British holding companies that were operating in the region through their Nigerian subsidiary. The petitioners alleged that the respondents aided an
> Name four types of adjustments to regulations that are often addressed in the context of privatizations. Explain how they may be addressed.
> Wood pulp is the principal raw material used in production of paper and paperboard. In 1988, the EU member states produced only a small fraction of their requirements for wood pulp. Virtually all of the product purchased in the Union originated from prod
> The plaintiffs are domestic purchasers of “magnesite.” The plaintiffs allege, on behalf of a putative class, that the defendants—Chinese producers and exporters of magnesite—engaged in a conspiracy since at least April 2000 to fix the price of magnesite
> Nineteen states and numerous private parties brought antitrust suits against U.S. insurers, U.S. and foreign reinsurers based in London, and insurance brokers. The insurers, reinsurers, and brokers were alleged to have agreed to boycott commercial genera
> In 1931, a group of aluminum producers—one French, two German, one Swiss, one British, and one Canadian— formed a Swiss corporation named “Alliance.” Each of the producers was a shareholder of Alliance. In 1936, the shareholders instituted a system of r
> Tetra Laval, a Swedish company that is the world’s largest carton-packaging manufacturer, decided to expand into the field of plastic bottle plugs. It sought to buy the French company Sidel, which makes the equipment that blows plastic plugs into milk an
> Schneider Electric SA (Schneider), a company incorporated under French law, is the parent company of a group engaged in the manufacture and sale of products and systems in the electrical distribution, industrial control, and automation sectors. Incorpora
> A U.K.-based travel company, Airtours (now MyTravel), sought to purchase a travel agency known as First Choice. It announced its planned merger to EC authorities in early 1999. Later that year, the Merger Task Force blocked the proposed merger, asserting
> Microsoft Corp., a U.S. company, designs, develops, and markets software products, including operating systems for client personal computers (client PCs), operating systems for work group servers, and streaming media players. Sun Microsystems, Inc., anot
> Economic development in the Republic of Costa Azul is perceived to be hindered by the ownership of all farmland by a few families and a few firms, some of which are U.S.-owned. A new government is democratically elected on a platform of land redistributi
> The Kingdom of Carolinium has a strong commitment to the preservation of wild horse herds. The neighboring Republic of Giles Run is a major dog food manufacturer and regularly uses wild horse meat in its products. These products are exported to and marke
> Briefly describe the concession model of privatization. How long should the term of the concession be?
> Despite the Montreal Protocol, the nation of Livy continues to produce CFC-emitting refrigerators and to export them to nations throughout the world. A number of governments object to Livy’s practices and ban its exports pursuant to the protocol. Livy br
> Assume that a democratically elected government, after a favorable vote in a popular referendum, launches a program to clear 150,000 acres of tropical rain forest in order to promote economic development. To carry out the will of the people, the governme
> If a U.S. company is presented with the opportunity to build a plant in a former communist country with less stringent laws on carbon dioxide emissions, what factors should it take into consideration before proceeding with the project? To what extent sho
> How would an Austrian judgment for money damages against the Czechoslovak government be enforced? What type of injunctive relief would be possible?
> In the Judgment of February 23, 1988, what would the Austrian Supreme Court have done if a private cause of action had been available in Czechoslovakia? How do you think the court would handle complaints about a nuclear accident such as Chernobyl?
> Pursuant to Bulgaria’s new joint venture program, Zasada, Inc., a U.S. firm, constructs a football helmet manufacturing facility in Sofia to produce helmets for export to the United States. Four years later, a change in the Russian Parliament leads to do
> What are the implications for an American who purchases shares in a German company on the basis of inside information?
> If a U.S. company establishes a 100 percent subsidiary in another country, what three general aspects of U.S. income tax law should the company be sure it has addressed?
> What financing alternatives would be available to a U.S. firm that was interested in investing in a proposed manufacturing plant in a small country that recently left the communist bloc and did not wish to invest many of its own resources?
> Susan Currie is a U.S. manufacturer of tear gas, which she sells to various governments for crowd control. To reduce transportation costs to the interested governments, Ms. Currie is considering building a new plant in Germany. The plant will employ 2,50
> List three reasons why giving employees equity shares in the new private entity makes sense. Give a reason that is principally applicable in Eastern Europe. What are two disadvantages associated with transferring shares to employees? What are two types o
> Would a U.S. court override an employer’s contractual rights (as the Supreme Court of Japan did) because of a countervailing “socially accepted view”? What if the employment contract was between a drug lord and his “trigger man”? Do you think that the re
> Assume the same facts as in Question 1, except that the joint venture is to build and operate a computer microcircuit manufacturing plant. What different considerations come into play in government review? What is the likely outcome?
> Keefe Energy, Inc., a U.S. firm, enters into a joint venture with Energia Guerra, S.A., a Mexican firm, to build and operate a coal-fired electric-power-generating plant with an estimated useful life of 35 years. The building and land will be owned by G/
> Plaintiff, a Swiss corporation, entered into contracts to purchase chicken from B.N.S. International Sales Corporation. Defendant was a New York corporation. The English language contracts called for the delivery of “chicken” of various weights. When the
> Pro Golf, a U.S. company, manufactured and sold golf equipment under the brand name “First Flight,” which had been registered in the United States and certain other foreign countries. Pro Golf negotiated with Wynn to act as its foreign sales representati
> International business managers try to build trust with their foreign counterparts, whether it is a customer, supplier, or partner. How would you suggest they do this? Why is trust important to the long-term relationship, and what might it mean to managi
> How does international business differ from domestic business? Explain how those differences affect the risk of doing business internationally. What factors influence that risk?
> Students often confuse the International Court of Justice with the International Criminal Court. What is the difference between them? Although not covered in this chapter, what is the European Court of Justice and what is its jurisdiction?
> Describe the five theories of international criminal jurisdiction. How have these been made applicable to international terrorism? What types of crimes are covered under the principle of universality? From an international law perspective, do you think t
> What are the different forms of criminality that are of concern to international businesses? Explain why international solutions are important. Give some examples
> Briefly describe the trade sale model of privatization. What is the distinguishing feature of the trade sale? How is privatization achieved through management contracts?
> Describe the different functions of the ITA and the ITC in regulating import competition. Why do you think that Congress split their respective functions into two separate agencies?
> Discuss the social responsibility of a Canadian or U.S. manager working in Mexico. If a certain course of action is illegal in the manager’s own country but lawful and accepted in Mexico, which standard should the manager follow? Describe the social resp
> What is a rule of origin? Why is it important to the operation of a free trade area?
> Geyer Schokolade, A.G. makes the bonbon of choice for the German yuppie. Its product’s cachet permits Geyer to charge a hefty premium at home. Geyer expands into the U.S. market, where no one has heard of its bonbons, and charges a more reasonable price
> Laffite Enterprises, Inc., a U.S. firm, has purchased the right to use the trademark of Wellington Imperial, Ltd., in the United States for a high-quality line of Napoleonic War reproductions. Wellington has a cheap line of Napoleonic trinkets that it se
> Analyze the same issues raised in Question 4, but assume Mr. Wise is considering entry into a “prior-approval” country.
> Mr. Wise’s marketing experts advise him that the Japanese market is hungry for his shoes. Focusing on technology transfer issues, discuss whether he should seek a Japanese joint venture partner or enter through a wholly owned subsidiary.
> David Wise, a U.S. inventor, has developed and patented a revolutionary new running shoe that increases one’s speed significantly. His invention has achieved considerable success in the Midwestern region of the United States. Two European companies have
> Hirt Systems Company is a U.S. company that has a strong market in the United States for securing computer terminals. It envelops such terminals with lead to prevent them from emitting microwaves that can be picked up by “spy receivers.” The key to Hirt’
> Briefly describe the partial sale model of privatization. What is the predominant characteristic of the partial sale? How can a minority private investor try to protect itself from abuse by the majority government owner?
> Assume that Joseph retained Srta. Casañas but failed to obtain the contract. To Joseph’s chagrin, it subsequently learns that Srta. Casañas y Diaz used part of her fee to make a $10,000 payment to a government official. If Joseph has total assets of $5 b
> Using the facts in Question 5, assume that a reference check has uncovered rumors that Srta. Casañas y Diaz has had an intimate relationship with Platano’s assistant secretary for government procurement, although they have no plans for a more permanent r
> Joseph Supersonic Company, a U.S. jet fighter manufacturer, is eager to sell its aircraft to the state-owned airline of the Republic of Platano and wishes to retain a local representative to assist it. Maria de la Concepcion Casañas y Diaz is reputed to
> Borges Meat Marketing, Inc., a Nebraska corporation, wishes to establish a network of gourmet butcher shops in India. It has a well-developed introductory advertising campaign that it has employed in establishing similar butcher shops in the United State
> Jordan Motors, Inc., opens a dealership in Frankfurt, West Germany, selling American cars. In its advertising campaign, Jordan claims that for the next two weeks only, it will beat the price on any comparable German car by 1,000 euros. Faced with this th
> After conducting a market survey, Penton Intergalactic, Ltd., a manufacturer of plows, believes that there is pent-up demand for its product in the expanding agricultural economy of Paraguay. Penton retains Saul Ortiz, a Paraguayan who operates a substan
> Suppose that Roger Sobodka, a U.S. executive stationed in Paris, wishes to build a support office for his firm’s technicians in the Parisian suburb of Asnieres. He enters into an agreement with Francois Demblans, a homebuilder, to do the work for $100,00
> How do a directive, a regulation, and a recommendation differ? Why would the EU choose one over the other? Give examples. What impact does this decision have on businesses?
> The EU sought a declaration that, because of the way in which long-standing Italian law permitted extrajudicial debt recovery by creditors against entities established in other member states, Italy had failed to fulfill its treaty obligations. The EU had
> Following the discovery of a probable link between a variant of Creutzfeldt–Jakob disease, a disease affecting human beings, and bovine spongiform encephalopathy (BSE), which was widespread in the United Kingdom in the mid-1990s, the Commission adopted D
> Is privatization a recent phenomenon? Why has it become more prominent in recent years? What triggered the move to more privatization in Latin American countries? What triggered increased privatization in former communist nations?
> What is the present status of Brexit? What effect has Brexit had on the United Kingdom and the EU? Are there other member states considering departing from the EU? What states and what reasons have been given for taking such action?
> Deutsche Parkinson Vereinigung (DPV) is a German organization devoted to improving the lives of those afflicted with Parkinson’s disease. DPV entered into a relationship with DocMorris, a mail order pharmacy located in the Netherlands, whereby DPV member
> Italy required chocolate products manufactured in other member states that contained vegetable fats other than cocoa butter to be sold in Italy as “chocolate substitutes.” The Commission claimed that Italy had failed to fulfill its obligation under Artic
> Rewe, a limited liability company with an office in Germany, imported goods from the EU countries. In 1976, Rewe applied to a German agency for permission to import Cassis de Dijon. The agency responded that spirits needed to contain 32 percent alcohol t
> How does the function of a NAFTA arbitral panel differ from that of a binational panel? What is the standard of review in binational panel decisions? Describe the role of an extraordinary challenge committee. Why does NAFTA recommend that panelists on bi
> Your company distills Kentucky bourbon. A Canadian competitor is selling “Kentucky bourbon” in Ontario, but its bourbon is made in Canada. Canada’s liquor control agency has looked the other way and ignored your requests to enjoin the sale. Does the sale
> Your company produces “Big Duster” tires. Your most popular styles are the ones with the raised white lettering on the outside of the tire. You would like to export tires to Mexico but cannot pass the Mexican labeling and marking requirements. Among the
> What is a “deemed export”? How can this affect technology companies and research institutions in the United States? Find a university’s deemed export policy. What does it cover?
> Consider a study of doing business in Mexico. How do the economic, cultural, social, and political climates affect a business there? Describe Mexico’s form of government. How are business relations conducted there? Are they more or less formal than in ot
> What is the present status of NAFTA in light of the Trump administration’s threats to renegotiate or abandon the agreement or impose significant tariffs on goods originating from Mexico? What are the pros and cons of these approaches? Who are the parties
> Maria Hartman, a U.S. investor, owns a toy assembly plant in the Kingdom of Fromage Vert. At a tennis match between a leading U.S. player and a star Fromagian, Maria irritates the king by cheering for the American. The next day, the king issues an edict
> The Slobovian Confederation’s five producers control 95 percent of the world’s supply of “goom,” the key ingredient in the production of goomey bears. To maximize the Slobovian standard of living, the government passed a law creating a cartel among the f
> Newland Company reported retained earnings at December 31, 2019, of $310,000. Newland had 200,000 shares of common stock outstanding at the beginning of 2020. The following transactions occurred during 2020. 1. A cash dividend of $0.50 per share was decl
> On January 1, 2020, Eddy Corporation had retained earnings of $610,000. During the year, Eddy had the following selected transactions. 1. Declared cash dividends $120,000. 2. Corrected overstatement of 2019 net income because of inventory error $40,000.
> Before preparing financial statements for the current year, the chief accountant for Toso Company discovered the following errors in the accounts. 1. The declaration and payment of $50,000 cash dividend was recorded as a debit to Interest Expense $50,000
> On January 1, 2020, the stockholders’ equity section of Newlin Corporation shows common stock ($5 par value) $1,500,000; paid-in capital in excess of par $1,000,000; and retained earnings $1,200,000. During the year, the following treasury stock transact
> B. Higgins, J. Mayo, and N. Rice have capital balances of $95,000, $75,000, and $60,000, respectively. They share income or loss on a 5:3:2 basis. Rice withdraws from the partnership under each of the following conditions. 1. Rice is paid $64,000 in cash
> Data for Sedgwick Company are presented in E12.8. Sedgwick Company now decides to liquidate the partnership. Instructions Prepare the entries to record: a. The sale of noncash assets. b. The allocation of the gain or loss on realization to the partners.
> Sedgwick Company at December 31 has cash $20,000, noncash assets $100,000, liabilities $55,000, and the following capital balances: Floyd $45,000 and DeWitt $20,000. The firm is liquidated, and $105,000 in cash is received for the noncash assets. Floyd a
> Terry, Nick, and Frank are forming The Doctor Partnership. Terry is transferring $30,000 of personal cash and equipment worth $25,000 to the partnership. Nick owns land worth $28,000 and a small building worth $75,000, which he transfers to the partnersh
> For National Co., beginning capital balances on January 1, 2020, are Nancy Payne $20,000 and Ann Dody $18,000. During the year, drawings were Payne $8,000 and Dody $5,000. Net income was $40,000, and the partners share income equally. Instructions a. Pr
> Coburn (beginning capital, $60,000) and Webb (beginning capital $90,000) are partners. During 2020, the partnership earned net income of $80,000, and Coburn made drawings of $18,000 while Webb made drawings of $24,000. Instructions a. Assume the partner
> Indicate whether each of the following statements is true or false. If false, indicate how to correct the statement. ________ 1. Each partner is personally and individually liable for all partnership liabilities. ________ 2. If a partnership dissolves, e
> On January 1, 2020, Vahsholtz Corporation purchased 5,000 shares of treasury stock. Other information regarding Vahsholtz Corporation is provided as follows. (a) Compute earnings per share for each year and (b) discuss its change from 2019 to 2020.
> On January 1, 2020, Vahsholtz Corporation purchased 5,000 shares of treasury stock. Other information regarding Vahsholtz Corporation is provided as follows. (a) Compute return on common stockholders’ equity for each year, and (b) dis
> Hoyle Corporation has issued 100,000 shares of $5 par value common stock. It authorized 500,000 shares. The paid-in capital in excess of par on the common stock is $263,000. The corporation has reacquired 7,000 shares at a cost of $46,000 and is currentl
> Frontenac Company reported net income of $75,000. The partnership agreement provides for salaries of $25,000 to Miley and $18,000 to Guthrie. They divide the remainder 40% to Miley and 60% to Guthrie. Miley asks your help to divide the net income between
> The partners of LR Company have decided to liquidate their business. Noncash assets were sold for $125,000. The income ratios of the partners Cisneros, Gunselman, and Forren are 3:2:3, respectively. Complete the following schedule of cash payments for LR
> PFW Co. reports net income of $45,000. Partner salary allowances are Pitts $15,000, Filbert $5,000, and Witten $5,000. Indicate the division of net income to each partner, assuming the income ratio is 50:30:20, respectively.
> Rod Dall Co. reports net income of $75,000. The income ratios are Rod 60% and Dall 40%. Indicate the division of net income to each partner, and prepare the entry to distribute the net income.
> Penner and Torres decide to merge their proprietorships into a partnership called Pentor Company. The balance sheet of Torres Co. shows: The partners agree that the net realizable value of the receivables is $14,500 and that the fair value of the equip
> Barbara Ripley and Fred Nichols decide to organize the ALL-Star partnership. Ripley invests $15,000 cash, and Nichols contributes $10,000 cash and equipment having a book value of $3,500. Prepare the entry to record Nichols’s investment in the partnershi
> Income and common stock data for Ziegler Corporation are presented in BE14.8. Assume also that Ziegler has cumulative preferred stock dividends for the current year of $30,000 that were declared and paid. Compute the earnings per share of common stock.
> Ziegler Corporation reports net income of $380,000 and a weighted-average of 200,000 shares of common stock outstanding for the year. Compute the earnings per share of common stock.
> Financial Statement The following information is available for Reinsch Corporation for the year ended December 31, 2020: cost of goods sold $205,000, sales revenue $350,000, other revenues and gains $50,000, and operating expenses $75,000. Assuming a cor
> SUPERVALU, one of the largest grocery retailers in the United States, is headquartered in Minneapolis. Suppose the following financial information (in millions) was taken from the company’s 2020 annual report: net sales $40,597, net income $393, beginnin
> For the year ending December 31, 2020, Soto Inc. reports net income $170,000 and cash dividends $85,000. Determine the balance in retained earnings at December 31, assuming the balance in retained earnings on January 1, 2020, was $220,000.
> The stockholders’ equity section of Pretzer Corporation consists of common stock ($10 par) $2,000,000 and retained earnings $500,000. A 10% stock dividend (20,000 shares) is declared when the market price per share is $14. Show the before-and-after eff e
