Questions for Discussion
1. As you read our introductory case to Chapter 13, read comic books, or watch the hugely popular TV show, The Big Bang Theory, the name Stan Lee becomes familiar to you. Mr. Lee and Marvel Enterprises (www.marvel.com) are into a major ‘strategic’ growth initiative. Using the chapter topics explain why Marvel has used licensing agreements as the primary vehicle to ‘go international.’
Marvel Enterprises engages in licensing agreements because their main product (comic book characters and their associated stories) are intangible. Licensing agreements allows Marvel to distribute the idea of their characters worldwide while allowing firms in each market to determine which products would best serve that market. Additionally, this allows Marvel to focus on their core competency (creating comic book characters) and avoid getting involved in other industries such as manufacturing.
2. A small manufacturer of medical hip replacement parts, with home offices in Dallas, is about to place its manufacturing operations in the El Paso area to take advantage of the cost of labor. My question for you is: “What side of the border should the plant be placed—U.S. or Mexican? What are some of the pluses and minus for the ‘side you recommended.’
Based on the firm’s desire to access lower wages, the Juarez side of the US/Mexican border would be their best choice. Although maquiladoras are best known for manufacturing auto engines, clearly they have an aptitude for manufacturing. This combined with lower wages would be a boon for the Dallas firm. Additionally, the North American Free Trade Agreement means that the cost of importing and exporting will be significantly less expensive that outsourcing to another region. The main drawback with using Mexican labor is mostly cultural. Although the maquiladoras have produced fine craftsmanship in the past, buyers of medical devices might prefer that they were made in the USA.
3. After you have listen/read our media story for Lesson/chapter 13 you will know something about the level and size of Dallas Fort Worth import/export economy. To gain more knowledge and to be able to continue to stay informed, please go to the Federal Reserve Bank, Dallas Branch and look for the research and data generated under the heading, International—search for the monthly reports about the El Paso economy. Read two or three of the monthly reports. Identify for us one or two of the ‘points/facts of interest’ that you found in the monthly reports of economic activity in the El Paso area.
I reviewed El Paso’s economic indicators for the months of April through June. I was at first blown away by the level of imports and exports passing through El Paso (approximately $65.2 Billion). I am also curious about the growth of jobs in the financial and professional services sectors. I’m curious if this is tied to importers/exporters operating on the US side of the border and conducting trade. The final chart of each month does seem to indicate that US industrial production is tied to the production of maquiladoras in Juarez.
Wild, J. & Wild, K. (2013). International Business: The Challenges of Globalization. (7th ed.). Upper Saddle River, NJ: Pearson.