ASSESSMENT 3

1. What do you think the Egyptian government needs to do in order to get the economy growing
again and to attract foreign capital? What are the risks to the government of taking such actions?

- The Egyptian government needs to implement comprehensive reforms to improve the business
environment, this includes simplifying regulations, and ensuring transparency to make Egypt
more attractive for investors. Implementing sound fiscal and monetary policies to stabilize the
economy can build investor confidence that could control inflation, managing public debt just
like hat Poland has done. Investing in education can also improve innovation and adopting new
technology that can drive growth and make the economy more competitive. However, Rapid
economic changes might lead to inflationary pressures or currency fluctuations. Even with the
right policies, corruption and weak governance can undermine efforts to attract investment.
Ensuring that reforms are implemented effectively and transparently is critical.
2. Use the theory of comparative advantage to explain the way in which Logitech has configured
its global operations. Why does the company manufacture in China and Taiwan, undertake basic
R&D in Freemont and Switzerland, design products in Ireland, and coordinate marketing and
operations from California?

- David Ricardo’s Theory of comparative advantage argues that countries can benefit from
trading with each other by focusing on making the things they are best at making, while buying
the things they are not as good at making from other countries. Logitech does basic R&D work
in Switzerland with 200 employees, its headquarters are in Fremont, California with 450
employees as well as some R&D, the ergonomic designs are developed in Ireland, and the
products are manufactured in Taiwan and China. The comparative advantage is that it is the most
cost effective to break up the business in many different countries that specialize in a certain job.

3. You are a senior manager in a U.S. automobile company considering whether to invest in
production facilities in China, Russia, or Germany. These facilities will serve local market
demand.
Evaluate the benefits, costs, and risks associated with doing business in each nation. Which
country
seems the most attractive target for foreign direct investment? Why?

- China is known for its large and rapidly growing consumer market, some benefits in
investing in China include; a huge customer base, has an increased purchasing power
 through the rising of middle class and China has a well-developed transportation and
logistics networks, making it easier to distribute the products. The downside of it is that
China has complex regulations and bureaucratic processes can be challenging for foreign
companies. Market in China is highly competitive, with both domestic and international
players.
- In Russia it has an abundant natural resources, such as oil and gas, which can support the
automobile industry. The Russian government offers various incentives to attract foreign
investment in the automobile sector. The downside are Russia's economy is subject to
fluctuations due to factors like oil prices and geopolitical tensions. Some regions in
Russia may have underdeveloped infrastructure, which can impact production and
distribution.
- In India the Indian government has implemented policies to promote manufacturing and
attract foreign investment. However, India's infrastructure, particularly in terms of
transportation and logistics, may require improvements.
- In conclusion China has the more advantage to invest in due to its large consumer base,
growing middle class, and established infrastructure. However, it is crucial to carefully
assess the specific market conditions, regulatory environment, and competition in each
country before making a final decision.

4. Which groups gain from the outsourcing of legal services? Which groups lose?
- Corporations outsource to scare cash and this is considered the biggest advantage for legal
outsourcing while an attorney in major legal such as the U.S. may charge from $150 to $500
perhaps when perform note services legal process outsourcing firms generally charge a small
faction of that price. U.S. law firms seeking to out-source routine legal work to low-cost
locations. Some 75 percent of its business comes from Fortune 1000companies, while the rest
comes from law firms.

5. What dangers do you see in the current trajectory of the Egyptian economy? What are the
implications of these dangers for foreign companies considering doing business in Egypt? What
do you think it would take to encourage more foreigners to visit, invest, and do business in
Egypt?
Would such inward investment be good for the Egyptian economy?
- The Egyptian economy is still in trouble because there is still political unrest and that scares off
some companies, which leads to greater unemployment. They are still battling inflation and they
have low foreign currency reserves. They also need to develop economic reforms in their own
country instead of counting on revenue streams outside their own country. They are giving far
too many politically based economic incentives that are not doing anything to strengthen their
economic position. They are at risk of retaliation from the former government if it is able to take
back power, which makes many companies hesitant to do business in Egypt. Many companies
there have also been privatized, which puts control of them back in the hands of the government
and effectively not allowing any real completion to occur. The investments would be great for
the Egyptian economy so long as Egypt is able to guarantee the safety of its citizens and tourist.
6. What are the drawbacks of basing manufacturing in a country such as India? What other
locations might be attractive? Why?

- The drawbacks of basing manufacturing in a country such as India is the fact that their
population is high, the roads are submerged in traffic and they are also in very poor condition
hence it is still a developing country. It will be hard to sell cars when the roads are in terrible
condition. Suppliers won’t be able to make deliveries as efficient as they’d like which is potential
damage for production. Better locations might reside around areas where it is less populated and
an efficient work level can still be done.

7. What might occur if renewed economic slowdown triggered a wave of protectionist measures
around the world? Would protectionism protect jobs, or would it make things worse?

- Protectionism would make things worse as it would result in a domino effect of a retaliatory
wave of protectionist measures resulting in worldwide limitations of the free-flow of goods,
services, labour, capital resulting in an even more sever contraction of trade.

8. Why do you think calls for protectionism are greater during sharp economic contractions than
boom periods?

- Calls from business for protection could be based on the fact that in times of sharp economic
contractions there is generally a reduced demand for goods and services within the local market.
This results in foreign companies and their goods and services competing with domestic
companies and their goods and services in a local market characterized by a reduction in
demand. Local business would therefore be interested in reducing foreign competing goods and
services and their competition. In addition, local businesses may prefer protection to being
forced to change business practices in response to the greater completion to secure the reduced
demand. Secondly, government and unions may call for the protection of employment since
during economic downturns as the reduced demand would lead to increased competition and
pressure on input costs resulting I possible layoffs.
9. Who creates more value for Logitech, the 650 people it employs in Fremont and Switzerland,
or the 4,000 employees at its Chinese factory? What are the implications of this observation for
the argument that free trade is beneficial?

- The 650 employees in Fremont, California and Switzerland create more value for Logitech. It is
where all of the R&D and designs are developed. The 4,000 employees of China add $3 to the
Wanda product, which is almost nothing in comparison to the remaining $37.Free trade is
beneficial because, it is the free trade which is allowing Logitech to take advantage of the low
cost manpower available in China.

10. Why do you think the Obama administration brokered a deal with Mexico to allow Mexican
truck drivers to access the United States? Do you think this is a reasonable deal?

- Obama administration brokered a deal with Mexico to allow Mexican truck drivers to access
the United States, not only as a testament of good faith towards the Mexican drivers and
businesses, but also as a way to further enhance the relationship between the United States and
Mexico and to levy a reason for the tariffs to be dropped between the two countries. Going
through safety checks, environmental regulatory checks, competency in the native language,
understanding the native signs, and purchasing of US insurance all apply directly to what the
truckers are doing, so the deal makes both economic sense and provides a safer alternative than
the original provisions.