Reference no: EM13322

The Magic Fuel Company (MFC) is an Australian public company specialising in the production of fuel additives and other fuel products.

Experimentation with fuel and the utilisation of  additives to make engines run more efficiently has resulted in the production of a super concentrated fuel gel which has the potential to reduce all fuel to approximately 20% of current volume and increase the efficient burning of the concentrate by up to 200% of current refined fuel products.

This means that each litre of fuel is equivalent  to approx 200 ml of gel and fuel usage is reduced to half current usage. Using the fuel gel a car with a 60 litre tank using 10 litres per hundred kilometers of conventional fuel could carry the equivalent of 300 (5*60) litres and travel approximately 3000 kilometres per tank. The gel is the same weight as current fuel, is less volatile and has a longer shelf life.

MFC is aware of the potential of the new technology  te company has developed to refine crude petroleum and the value of the special additives for the gelling process and reactivation of the gel within the engines of vehicles. The dilemna is how to take their  knowledge and the process to the world. (Australia currently imports refined fuel from Asia).

In this assignment you have to advise MFC how to internationalise this new and potentially huge business.

Question 1:

a. Why would MFC choose to trade internationally? State your reasons clearly and concisely. 

b. Describe concisely the main types of international business this firm is likely to set up in the short term and long term. Give reasons for your choices.

c. What does the term globalisation means in relation to this business?

Question 2:

1. Describe concisely the main barriers to international trade that MFC may face.
2. What are the arguments for and against trade protection and how would they influence MFC?

Question 3: 

1. What are the main types of political and legal risk  that MFC may have to deal with in its operations?
2. What type of strategies can MFC use to manage political and legal risk? 

Question 4:

1. Describe Hofstede's framework for analysing cultural differences. 
2. What are the strengths and weaknesses of Hofstede'sFramework  for MFC managers analysing cultural differences? 
3. How would cultural characteristics influence patterns of communication for MFC managers in USA and  in India?
4. How can the managers of CI take different communication characteristics into consideration to improve cross-cultural communication?

Question 5:

1. Using point format, briefly describe how could MFC use the range of international trade organisations. 
2. What influence could  regional economic groups be used by MFC?