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Kellogg Co

1. For the past eight years the Kellogg Co. has struggled to get permission to put the same vitamins in all its European corn flakes. In theory Europe completed building a unified market in 1993 with the birth of the European Union, but so far it has not applied to vitamins in cereals.

Denmark doesn't want vitamins added, fearing that cereal eaters who already take multivitamins might exceed recommended daily doses, which some experts say can damage internal organs. Netherlands officials don't believe either Vitamin D or folic acid is beneficial, so it doesn't want them added. Finland likes more Vitamin D than others countries to help Finns make up for sun deprivation. And the list goes on.

Questions:
a. Which major facet [or component ] of the globalization definition is
Kellogg trying to implement? Explain.

b. If Kellogg is successful in getting acceptance of "one" vitamin formula for its European corn flakes, who benefits? Explain the significance and ramifications of these benefits.

2. The trade deficit that Western countries have with China is soaring.
Previously Western countries have complained to China, but had not threatened
any real action. In the case of the U.S. China has agreed to "work on" letting the
value of their currency rise in response to the U.S. [and European] accusations that
it is held artificially low.

The EU is now showing a get tougher strategy with China over its trade deficit with China, as European protectionist sentiment grows. The EU wants Beijing to open more markets, crack down on technology theft and allow its currency to strengthen. If Beijing doesn't comply, the EU would take action to protect its own interests, including the imposition of new antidumping duties. [The EU already has punitive anti-dumping tariffs on imports of Chinese shoes and more than 30 other goods. In essence the EU wants China to demonstrate [other than giving lip service to] a commitment to "open markets and fair competition."

The U.S. trade deficit with China in 2005 surpassed 202 billion and the EU deficit is approaching that. Europe's concerns over loss of jobs is fueling their stronger language to China [which mirrors the position of the U.S.]

In response, Chinese officials say the EU would be making a mistake to try to penalize it over the trade deficit. "China's been making a lot of efforts" in areas such as tackling counterfeiting and intellectual -copy-right theft according to one Chinese official.

European business lobbies complain that they don't get a fair deal with China. For example, car companies aren't allowed to own their own subsidiaries in China, and must partner with a Chinese company. Car makers say they are forced by high customs duties to buy parts from local suppliers, rather than import their own. The EU, the U.S. and Canada have a joint case pending at the World Trade Organization demanding China cut the tariffs.

Questions:
A. China's currency is significantly weaker than the euro. Why does the EU
want China to strengthen their currency?

B China has been "making a lot of efforts" to work through the problems.
Should the EU give China more time? Why or why not?

C. Is the EU exercising good strategy in going to the WTO with their
complaints? Why or why not?

#3 It appears that globalization and the United States participation in trading blocs [NAFTA] has again become a political issue. From your text reading you know that it is almost impossible to separate politics from globalization issues. Setting aside partisan politics, evaluate the following:

a. The pros and cons of trade restrictions [some would call this "free trade vs
"protectionism"]

b. Your take on remaining a member of NAFTA. Should we or shouldn't we?

4 You are an American on business traveling in Egypt. You have a 9AM business
meeting appointment, but your Egyptian counterpart does not show up until 10AM, and does not apologize. What is your assessment of the situation?

Solution Preview

4 questions about Business Analysis
1. For the past eight years the Kellogg Co. has struggled to get permission to put the same vitamins in all its European corn flakes. In theory Europe completed building a unified market in 1993 with the birth of the European Union, but so far it has not applied to vitamins in cereals.

Denmark doesn't want vitamins added, fearing that cereal eaters who already take multivitamins might exceed recommended daily doses, which some experts say can damage internal organs. Netherlands officials don't believe either Vitamin D or folic acid is beneficial, so it doesn't want them added. Finland likes more Vitamin D than others countries to help Finns make up for sun deprivation. And the list goes on.

Questions:
a. Which major facet [or component ] of the globalization definition is
Kellogg trying to implement? Explain.
The major facet of the globalization definition is 'Standardization". Kellogg is attempting a pure global strategy with standardized products.
b. If Kellogg is successful in getting acceptance of "one" vitamin formula for its European corn flakes, who benefits? Explain the significance and ramifications of these benefits.
Kellogg will benefit from such a strategy. A single global market, a uniform spread of the market, and a situation where the markets became homogenized would benefit Kellogg because it can derive benefits from economies of scale and reduce its costs. In this manner it plans to get competitive advantage. In addition, Kellogg can benefit from coordinating dispersed activities in the market. Kellogg can locate its manufacturing in the most favorable country and can coordinate its activities all over the world.
The significance is that Kellogg can select if concentration of activities or dispersing will help it gain competitive advantage. Kellogg can choose where and how to challenge a competitor. Knowledge and expertise at one location can be transferred to another location.

2. The trade deficit that Western countries have with China is soaring.
Previously Western countries have complained to China, but had not threatened
any real action. In the case of the U.S. China has agreed to ...

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