Answer all five questions. Each answer will be judged on completeness, correctness, clarity of
presentation and freedom from errors in spelling and grammar.
Case Scenario 2: Jewell Company.
Jewell Company (JC) is a $2 billion diversified manufacturer and marketer of simple household items,
cookware, and hardware. In the early 1950s, JC’s business consisted solely of manufactured curtain rods
that were sold through hardware stores and retailers like Sears. Since the 1960s however, the company
has diversified extensively through acquisition into such businesses as paintbrushes, writing pens, pots
and pans, and hairbrushes. Over 90 percent of its growth can be attributed to these many small
acquisitions, whose performance it improved tremendously through aggressive restructuring and its
corporate emphasis on cost-cutting and cost controls. While JC’s sixteen different lines of business may
appear quite different, they all share the common characteristics of being staple manufactured items and
sold primarily through volume retail channels like Wal-Mart, Target, and Kmart. Because JC operates
each line of business autonomously (separate manufacturing, R&D, and selling responsibilities for each
line), it is perhaps best described as pursuing a related linked diversification strategy. The common
linkages are both internal (accounting systems, product merchandising skills, and acquisition
competency) and external (distribution channel of volume retailers). JC is presently contemplating the
acquisition of Plastico, a $3 billion U.S.-based manufacturer of flexible plastic products like trash cans,
reheatable and freezable food containers, and a broad range of other plastic storage containers designed
for home and office use. While Plastico has been highly innovative (over 80% of its growth has come from
internal new product development), it has had difficulty controlling costs and is losing ground against
powerful customers like Wal-Mart. JC believes that the market power it wields with retailers like Wal-Mart
will help it turn Plastico’s prospects around.
1. (Refer to Case Scenario 2). How might JC’s related diversification strategy result in economies of
scope and market power?
2. Discuss multi-domestic strategy, global strategy, and transnational strategy. On what factors are
these strategies based?
3. A friend of yours stated: “I would never want to be dependent on an alliance. I prefer an acquisition
so that everything would be under my control.” How would you respond?
4. What do you think about the use of offshoring by MNEs? Is it a threat to jobs in the U.S.? Has it
benefited MNEs and other countries more than the U.S.?
5. Briefly describe how exchange rates influence business activities.
There is the book required for this International Business course