Description
International Business
Dec 2026 Examination
Q1 A mid-sized electronics manufacturer in Germany is evaluating a plan to expand operations by setting up a new plant in Vietnam. The decision is based on the shortage of skilled labor and rising wage costs in Germany, contrasted by Vietnam’s abundance of affordable labor and improving infrastructure. The company wants to ensure that its export strategy leverages its core strengths while remaining competitive in a global market where capital-intensive rivals in South Korea and the US are introducing advanced automation. The executive board is assessing which international trade theory should guide their production, export, and investment decisions. How should the company apply the Heckscher-Ohlin theory to optimize its production and export decisions in Vietnam, considering the factor endowments of both Germany and Vietnam? What strategic recommendations would you provide to ensure long-term competitiveness as global industry dynamics shift? (10 Marks)
Ans 1.
Introduction
This German electronics manufacturer faces rising wage costs and a shrinking skilled labor pool at home. Vietnam offers cheaper labor and improving infrastructure instead. The company wants a clear trade theory to guide this move. The Heckscher-Ohlin theory fits this situation well. It explains trade through differences in factor endowments between countries. Germany is rich in capital and skilled labor. Vietnam is rich in low cost labor. Applying this theory can guide smarter production, export, and investment decisions. It can also help the company compete
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Q2 (A) A global pharmaceutical firm’s vision statement aspires to revolutionize healthcare access worldwide. Its mission emphasizes current breakthroughs and region-specific innovation. With regulatory requirements, cultural differences, and rapid technological change in its various markets, the company struggles to balance the broad global vision with practical, locally-adapted actions. Employee surveys indicate confusion regarding their role in achieving organizational objectives. Evaluate how effectively the current vision and mission statements support both global integration and local responsiveness in this scenario. What improvements would you recommend to ensure that strategic objectives are understood across all levels and cultures, and how would you justify these changes? (5 Marks)
Ans 2(A).
Introduction
This global pharmaceutical firm wants to revolutionize healthcare access worldwide. Its mission focuses on breakthroughs and local innovation. Regulatory differences and cultural variation make this balance hard. Employees now feel confused about their exact role in this large global
Q2 (B) The International Monetary Fund (IMF) has been approached by two neighboring countries in South Asia, both facing balance of payments crises but with very different governance standards and records of fund usage. One country has a history of inefficient fund allocation and lack of policy reform, while the other demonstrates transparent economic management. There is public debate and skepticism about the role and impartiality of the IMF in supporting both countries equally, especially when past assistance has not always translated into economic improvement. Critically assess how the IMF should approach lending and technical assistance to these two countries, given the contrasting records on governance and economic management. Justify what criteria and safeguards should be applied to ensure financial support achieves intended outcomes without encouraging misuse or dependency. (5 Marks)
Ans 2(B).
Introduction
Two South Asian countries face balance of payments crises. One has a history of poor fund use, the other shows transparent management. Both approach the IMF for support. This creates a real challenge in deciding fair, effective lending criteria for each country.
Concept and Application
The Case for Equal Treatment
