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Case 1: Political, Legal, and Ethical Dilemmas in the Global Pharmaceutical Industry
1. What are the key issues and challenges faced by the global pharmaceutical industry? high cost of research and development
12-15 years and more than $800 million
1 in 10,000 investigated and tested compounds is approved for patent use
3 out of 10 new, approved compounds are successful enough to recover their R&D costs high enough price to cover the cost of product development and cover the cost of products that never achieve profitability limited time to recover costs limited protection for intellectual property inadequate, especially in developing countries discourages investment in R&D and innovation selling of pirated generics at drastically lower prices governments can break patents challenge from generic brands patent protects for up to 20 years but factoring in the lengthy testing and approval phase the manufacturer usually has 5 to 8 protected years to recover their investment generic brands are sold at very low prices they do not incur the high costs associated with R&D because the medicine is already established in the marketplace lower marketing and sales expense increasing world market share rising demand for medications counterfeit drugs failure to ensure quality of imported drugs internet based pharmaceuticals are especially dubious branded pharmaceutical firms must spend significant resources to protect their patents and intellectual property public scrutiny making drugs more affordable for people that are extremely sick and need medication but cannot necessarily afford it ethical concerns future dilemmas fewer incentives to develop drugs ageing population puts higher demands on the need for drugs balance between profits and the need for medical attention government subsidies to aid with the high cost of R&D

2. What are the types of country risks that pharmaceutical firms face in international business? country risk is known as the political and legal environments adverse effects on the firm’s operations and profitability different political and legal systems weak political and legal systems governments can threaten to break patents with pharmaceutical firms governmental intervention and private initiatives (NGO’s) incentive packages and public-private partnerships to encourage the development of drugs for ailments common in poor countries weak regulatory oversight (failing to verify the quality of imported drugs) patent protection laws differ substantially around the world
‘approved generic compound’ standards differ around the world
3. How do the political and legal systems of countries affect the global pharmaceutical industry? political system totalitarianism/command economy state owned pharmaceutical production (strong intervention) not willing to invest in R&D and innovation (shortage occurs) focus isn’t on profit maximization socialism capital vested in the state for use not for profit (limited investment in R&D) democracy economy based on market forces and limited government involvement privately owned pharmaceutical companies high investment in R&D and innovation (focus on making the most profits) legal system inadequate intellectual property protection lead to fewer incentives to invent new drugs facilitate production of cheap generic brands high R&D costs common law interpret law (outline of the patent could be more flexible depending on the ruling of the judge) civil law patents are set in stone and must be honored for the full duration religious law different view on healing practices and the medicine that is allowed to be consumed
4. Consult the TRIPS agreement at the WTO portal (www.wto.org). What types of protection does this treaty provide to pharmaceutical firms? What enforcement mechanisms does TRIPS provide for ensuring that these protections will be carried out? introduced intellectual property law into the international trading system goal  ‘promote access to medicine for all’ protection and enforcement of all intellectual property rights meet the objection and contribute to the promotion of technological innovation mutual advantage of producers/users of technological knowledge, in a manner conducive to social and economic welfare balance rights and obligations provide copyright rights to all WTO members patents, trademarks, confidential information protecting the manufacturing of certain drugs right to negotiate payment for others to use it balance between protecting the inventors and easing public access eliminate obstacles of trades technical (ex: CE certification) administration procedures, remedies, dispute resolution procedural limitations give the right to governments to oblige companies to lift all trade obstacles in the case of emergency/pandemic conflict AIDS drugs in Africa (not prevent states from dealing with public health crises, generic treatments might be a component of an effective strategy to combat HIV) domestic market requirement (allows developing countries to export to other countries where there is a national health problem as long as drugs exported are not part of a commercial or industrial policy)
5. Which steps the management of a large pharmaceutical firm should take to minimize the firm’s exposure to political and legal risks? ensure that all drugs have strong, lengthy patent protection before exporting \ too much protection destroys trade conduct a country risk assessment negotiate terms of compensation with the host country legal basis for recourse in the event that something happens to disrupt the company’s operations political risk insurance acquire generic manufacturing firms stay informed on current events possible discussion on changes to regulation or legislation managing public image and reputation

Case 2: Prowling for Success – The Revival of Jaguar and Land Rover
1. Describe how Jaguar Land Rover leverages the advantages of its parent company in seeking new markets. Can this be a source of disadvantages as well?
TATA group spends billions on acquisitions regardless of losses, the company continued to inject cash into JLR until it finally generated profits you have to spend money to make money recognized the opportunity for the car companies to be successful
TATA motor’s depends on the company to provide 70% of its total global revenue and 90% of its profits size of the company financial reserves due to extensive product line and offerings cost competitiveness greater investment in R&D government support introducing new models to the market and redefining the brand as a luxury car manufacturer designed to appeal to a new target market (gap in the market place) creating joint ventures (local relationships) access to low cost manufacturing capabilities in India and Asian economies risk and resilience cultural brand image (negative perception of Indian companies) firm organization and hierarchy financial increase cost of raw materials decrease in demand in home markets economies may slow down not as much promise as expected increase competition (brand’s within the company as well as outside)

2. How do you think the shift of economic activity to emerging regions affects growth in advanced economies? Discuss if a reverse shift of activity is possible. access to resources including financial reserves (emerging regions) low cost centers in emerging markets and production streamlining lead to lost jobs in advanced economies as more money and resources are invested in emerging regions, the growth in advanced economies slows down as economic activity increases in emerging regions they are reversing investment activities into advanced economies high return on investment as these economies have lower risk and stronger market activity
China
rise in per capita income in emerging regions increasing demand for luxury items celebrity endorsement joint venture with local automobile manufacturer
India
hub for sourcing low cost components lower Indian tariffs on fully imported cars assembly due to recent increase in on import duties
3. What is the role of Government Business linkages in creating emerging market challengers? Do you think that emerging and transition economies can move to a more hands-off approach with time? success factor is managing government industry linkage vital to the transition into emerging markets
TATA known to have high government support aids in developing joint ventures governments have vested interest in attracting FDI into industries to sustain a large labour force
India
stop decline within a region and create new jobs in an advanced economy nationalization and de-nationalization shows clear intervention to boost growth in vital sectors government incentives
4. Discuss Jaguar Land Rover’s shift into other developing regions in Africa. What will be the implications of these on its sourcing and supply chain economies? in a continued economic downturn, the sales of luxury cars decreases
JLR lacks scale and most of its profits are going into building competencies that most of its competitors already possess it is a late mover into many emerging regions a possible shift into other developing regions could cause resentment and labour disruption in advanced regions where most of its supply chain cluster and technology cluster are located sourcing and supply chain would have to be modified to adapt to the new region reduce transportation/procurement costs introduction of new models and diversification (speed boats)

Case 3: Advanced Biomedical Devices – Assessing Readiness to Export
1. Do you believe ABD’s products are in a state of readiness to begin exporting to Europe? Why or why not? Are the products ready for exporting to emerging markets (China, Mexico, and Russia)? Why or why not? What factors suggest Speedheal products might enjoy demand in all types of foreign markets? the firm has many more tasks to complete before they begin exporting to Europe product suitability, country screening, industry market potential, foreign business partners, and firm sales potential received unsolicited orders from abroad learned about handling international transactions foreign exchange, letters of credit, and logistics greater concern when exporting to emerging markets more culturally diverse different surgeries may be popular in different countries procedures may differ high demand several different devices for different surgeries miniaturization as a form of competitive advantage

2. Does management at ABD possess the appropriate knowledge, skills, and capabilities for internationalization? Justify your answer. What steps should management take to better prepare the firm, managers, and employees to internationalize? yes worked extensively in European markets, pacific rim, and Latin America manufacturing director is from Germany understanding/past experience with this market clarify strategic intent, develop a strategic plan mangers prefer dealing with psychically close markets familiar culture, business customs, legal/banking systems feel comfortable learning and working with markets that are less like their own managers believe they can reduce risk by diversifying sale understand that there are risks associated with internationalization

3. How well did ABD complete the key tasks in global market opportunity assessment? Evaluate whether it accomplished each task well or poorly. Did ABD achieve each of the objectives set out for the task? organizational readiness highlighted goals and objectives completed a CORE analysis product suitability dealt with training sales representatives and after-sales service understands their channel of distribution and warehousing flexible packaging prepared to modify to meet standards and regulations
CE mark, ISO standards limited knowledge of appropriate pricing strategy country screening must consider the competitive landscape no not know size or growth rate of market have limited understanding of the financial investment required consider intellectual property regulations must still complete industry market potential, foreign business partners, and firm sales potential

Case 4: Subway and the Challenge of Franchising in China
1. Why choose China for franchising? What are the challenges of franchising in China? large market size and growth dramatic rise in disposable income win-win proposition private ownership combining Western know-how with local market knowledge
Chinese have strong entrepreneurial instincts minimal entry cost cost is borne by franchisor rapid expansion leverage resources of numerous local entrepreneurs brand consistency easier to maintain due to strict rules circumvention of legal constraints avoid trade barriers
China had never heard of franchising before Subway was introduced had to teach the people a new concept confusion exists between lawmakers, entrepreneurs, consumers, government officials, and creditors finding appropriate partners franchise fee is equivalent to two years’ salary for the average Chinese and capital sources for small businesses are limited escalating start-up costs linguistic and cultural barriers shortage of restaurant equipment identifying suitable marketing, financing, and logistics strategies availability and financing of suitable real estate

2. Subway brings to China various intellectual property in the form of trademarks, patents, and an entire business system. What are the specific threats to Subway’s intellectual property in China? What can Subway do to protect its intellectual property in China? ambiguous legal system numerous loopholes and ambiguities leads to diverse interpretations of the legality of franchising in China franchisors must be vigilant about protecting trademarks many imitators using similar logos and menus suitable real estate
Chinese government typically owns real estate that is not available for individuals to purchase must be mindful of possible eviction restrictions on the repatriation of profits to the home country

3. What are the advantages and disadvantages of franchising in China from Jim Bryant’s perspective? What can Bryant do to overcome the disadvantages? From Subway’s perspective, is franchising the best entry strategy for China? expanding target market for casual dining increasingly hectic lifestyles consumers interested in sampling non-Chinese food cultural problems didn’t understand how to order  put up signs didn’t believe the tuna was made from fish because they could not see the head or the tail did no like the idea of touching their food  used the wrapper to hold the sandwich don’t typically eat sandwiches  ‘roasted duck sub’

4. Subway faces various cultural challenges in China. What are these challenges and what can Subway and its master franchisee do to overcome them? establishing a presence in Hong Kong before moving inland adapting offerings to local tastes help build logistical infrastructure