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2(b)	Boeing outsourced 70 percent of the parts and components to suppliers. Explain THREE benefits arising from the outsourcing decision to Boeing. (9 marks)

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2(b)	Boeing outsourced 70 percent of the parts and components to suppliers. Explain THREE benefits arising from the outsourcing decision to Boeing. (9 marks)

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Outsourcing is the practice of buying from another company a good or service that is not central to a company’s competitive advantage

1.      Lower cost

2.      Lower risk

3.      Greater flexibility

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1)They can efficiently plan for the selection of expatriates. In addition to technical and managerial skills, interpersonal skills that could assist in the cultural adjustment.

2)Pre-departure can be better prepared. This preparation should prepare the expatriate for the assignment abroad to ensure success in the international assignment. Some preparations are career counselling, cross-cultural adjustment and language training.

3)Continuous communication with the expatriates while they are in their international assignment. This keeps the expatriate aware about what is going on in their home organisation, their performances, strategic decisions, re-organisation and potential opportunities when the return.

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2(a)	Boeing produced 30 percent of the parts and components of the aircraft. Explain THREE benefits arising from a make decision to Boeing. (9 marks)

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2(a)	Boeing produced 30 percent of the parts and components of the aircraft. Explain THREE benefits arising from a make decision to Boeing. (9 marks)

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1.      Lesser dependency on suppliers

2.      Greater control over the scheduling of production/logistics

3.      Greater control over the protection of proprietary technology

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1. How is facilities location planning affected by (a) location economies and (b) centralized versus decentralized production? (8 marks)

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1. How is facilities location planning affected by (a) location economies and (b) centralized versus decentralized production? (8 marks)

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(a) Location economies has economic benefits derived from locating production activities in optimal location. Reduce transportation cost??
(b) Centralized production is where the facilities for production are located only in one location. A single factory can dramatically reduce per unit production costs by using the same equipment to produce different products, allowing the company to achieve economies of scale.Decentralized production is where the facilities for production are located in more than 1 location. A decentralized manufacturing company has multiple facilities that cover large areas, allowing products to be manufactured and distributed close to customers.

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Factors that could have contributed to expatriate failure are lack of cross cultural adjustment by expatriates, this is when the expatriate and their family have to adjust to a new culture and experiences a culture shock

Another factor could be poor expatriate selection, as despite their importance, technical and managerial skills are not for the only skills required for effective international staffing. More attention must be paid to interpersonal skills that can help in cross-cultural adjustment.

The third factor is increased responsibilities and stresses, as moving to another country and leaving family, parents, friends and comfortable environments behind causes stress. This stress will increase with the cross-cultural adjustment as they face ambiguous situation at work.

Lastly there is the adjustment within the social context, to achieve the expected performance and cope with the stress, expatriates must adapt to the new working and living conditions. From social contexts, such as positive social contact with the locals and social networks, have positive influence on their adjustment.

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Question 2 "Staffing policy is the means by which a company staffs its offices and is influenced by international involvement. The main approaches to the staffing of international operations are ethnocentric, polycentric and geocentric. Companies often blend different staffing policies. Discuss an advantage and a disadvantage of a geocentric staffing policy.

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Question 2 "Staffing policy is the means by which a company staffs its offices and is influenced by international involvement. The main approaches to the staffing of international operations are ethnocentric, polycentric and geocentric. Companies often blend different staffing policies. Discuss an advantage and a disadvantage of a geocentric staffing policy.

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Advantages of Geocentric staffing is that it has a strong unifying culture and informal network and the disadvantage is that these individuals demand high salaries.

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Question 1 “Starbucks has been sparring with hiring American in its overseas stores as they believe that in the intermediate term, these businesses should be run by the locals”. Identify the staffing policy adopted by Starbucks, and the advantages and disadvantages of this policy. Also, do you agree that this is the best policy for Starbucks?

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Question 1 “Starbucks has been sparring with hiring American in its overseas stores as they believe that in the intermediate term, these businesses should be run by the locals”. Identify the staffing policy adopted by Starbucks, and the advantages and disadvantages of this policy. Also, do you agree that this is the best policy for Starbucks?

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Polycentric Staffing.Advantages are less cultural “myopia” and responsibility on those knowing local business. Disadvantages are potentially harming operation, means they might lose control when overseas and gap between host and home country managers. I don’t think this is the best policy for starbucks as I think Geocentric staffing is better as it can develop global managers who can adjust easily to any business environment and it breaks down nationalistic barrier

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1.     Trade creation - Integration create new trade opportunities and deliver a wider selection of goods and services at lower cost.

2.     Greater consensus - Building consensus may be easier among a small group of countries than it is in larger groups, such as the World Trade Organization.

3.      Political cooperation - Political cooperation may reduce the potential for military conflict among members.

4.     Creates jobs - And new employment opportunities can arise when people are allowed to relocate internationally for work or higher wages.

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(4c)	Elaborate on TWO advantages and TWO disadvantages associated with franchising from the perspective of the franchisers. 

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(4c)	Elaborate on TWO advantages and TWO disadvantages associated with franchising from the perspective of the franchisers. 

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Franchising helps in brand development as business can expand fast. As more stores are open in any location in the world, it gains popularity by gaining trust from other companies and this helps to promote the brand.

In addition, franchising helps to ease supervisions. Since franchisor are not responsible for day to day management of the franchising units, it eliminates managerial responsibilities and this allows them to focus on improving other area of the business.

However, the franchising have rigid rules and reputation risk. Franchisees follows strict rules set by the company and thus they have lack of control over the business operations. It is also difficult to control and constantly check on the quality for individual stores due to the high amount of outlets. Thus quality of product might not be consistent and this may leads to bad reputation.

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(4b)	Highlight THREE differences between franchising and licensing. 

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(4b)	Highlight THREE differences between franchising and licensing. 

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1. Franchisor provides licensed privilege to franchisee to do business while licensing allows another company to use patents, trademarks, copyrights, designs and others intellectual in exchange for a percentage of revenue or fee.

2. For franchisors , franchising allows them to expand their business for less cost than opening new locations themselves. Other advantages of franchising include the fact that you know what the business looks like when it's successful, and you can often take advantages of economies of scale in your relationships with vendors and suppliers.Licensees also enjoy lowered risk because they're usually entering the marketplace with a known quantity and a built-in customer base. However, they enjoy a lot more freedom than franchisees.

3.Lastly , a franchise and a license have different amount of support they can receive. A franchised system will provide you with support in site selection, training, marketing and much more, whereas a licensing agreement provides you with little to none of that.

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(4a)	Explain franchising with examples. 

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(4a)	Explain franchising with examples. 

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Franchising is a licensed agreement, whereby an organization who wants to enter a foreign market quickly, can do so with low risk and resource commitment. An example of franchising would be Subway.

Subway is the fastest growing franchises and the largest single-brand restaurant chain in the world.