Evaluate the impacts of an American company's new factory on South Africa.
Positive: Job creation for up to 150 South Africans with competitive wages and benefits. Negative: Local businesses may suffer sales decline due to competition with lower-priced goods from the multinational company.
What caused the decline in KP's sales when an American company entered the Johannesburg market?
KP's sales dropped because small shops that sold KP pottery lost customers to big retailers offering the American company's cheaper pottery.
What pricing strategy did the American company use in South Africa?
Penetration pricing.
How would the jobs in the American company's factory differ from those at KP?
The jobs would be less creative since the pottery would not be hand-made, but they would offer good wages with benefits.
What was the purpose of the American company opening a factory in Johannesburg in 2013?
To produce and sell African-looking pottery to large retailers across sub-Saharan Africa.
Can MNCs operate in just one country?
No, MNCs operate in more than one country.
Why are dismantled trade barriers important for MNCs?
Dismantling trade barriers is key for MNCs because it facilitates the seamless transfer of goods, materials, and production elements internationally, enhancing global trade operations.
How could a domestic producer use their local status to compete in a globalized market?
By leveraging their product's local or national origins as a Unique Selling Point (USP), a domestic producer can distinguish their goods from multinational companies' foreign products, appealing to consumers' local preferences.
How has globalization since World War II changed from previous forms of global interdependence?
Since World War II, globalization has intensified in scale and speed, with a larger economic value of traded goods and services. It is marked by the rise of post-national, multinational corporations operating across borders.
Define globalization in business.
In business, globalization is the trend of businesses, technologies, or philosophies spreading throughout the world, or the process of making this happen. It involves economies integrating to form a single global marketplace.