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Week 1 Homework International Finance: 535 Mohamed E Abdelrhaman Prof: Anthony Criniti Strayer University Fall 2013
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17. International Joint Venture: A. Explain how the joint venture enabled Anheuser-Busch to achieve its objective of maximizing shareholder wealth. Answer: The joint venture creates a way for Anheuser-Busch to distribute Budweiser throughout Japan. It enables Anheuser-Busch to penetrate the Japanese market without requiring a substantial investment in Japan. B. Explain how the joint venture limited the risk of the international business. Answer: The joint venture has limited risk because Anheuser-Busch does not need to establish its own distribution network in Japan. Thus, Anheuser-Busch may be able to use a smaller investment for the international business, and there is a higher probability that the international business will be successful. C. Many international joint ventures are intended to circumvent barriers that normally
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prevent foreign competition. What barrier in Japan did Anheuser-Busch circumvent as a result of the joint venture? What barrier in the United States did Kirin circumvent as a result of the joint venture? Answer: Anheuser-Busch is able to benefit from Kirin’s distribution system in Japan, which would not normally be so accessible. Kirin is able to learn more about how Anheuser-Busch expanded its product across numerous countries, and therefore breaks through an “information” barrier.
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