Week 2 Assignment Due Jun 18, 2017 (in 11 days) Portfolio Project – Part 1 Please address the following 10 questions for Part 1: Identify three major countries with which your chosen company operates. Preferably, the three countries are in different continents. Are these three countries members of the IMF, the World Bank, and WTO? Do you believe that these three countries actively follow guidelines of these three major international institutions? Compare the institutional structure of these three countries to determine if they promote globalization, i.e., (a) are their political institutions transparent and (b) do they have a functioning judiciary system? Do you believe that the three countries under consideration practice policies that promote globalization? For example, what are those countries’ policies toward (a) governance, (b) competitive markets, (c) property rights, and (d) corruption? Determine whether your company is a producer of goods or services. What are the major products and/ or services provided by your company? Are those outputs sold only domestically or are they also exported? Do these products and services face tariff or non-tariff barriers in the target export markets? What are the tariff rates or non-tariff barriers imposed on these items? Identify regional trading blocs with which your chosen company operates as well as the benefits that your company gains because it is part of those trading blocs. Would your company be better off under a system of multilateral trade liberalization like the WTO, or with bilateral or regional trading blocs? If you were visiting a foreign country to negotiate a transaction on behalf of this company, what cultural knowledge would you need to gain before the visit? How and from where would you get the information? You have the option of answering each question individually or in essay format, as will be required in your final report in Week 7. In your responses, make certain that you include references from search engines below or from scholarly sources from the APUS Online Library. Turnitin is not required for Part 1. Your compiled report in Week 7 will be submitted to Turnitin. In the Assignment dropbox, please attach your paper as a file, do not copy & paste. I will grade and return your file.

 

Toyota Motor Corporation

 

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Toyota Motor Corporation

Toyota is a Japanese multinational manufacturer of automotive. The corporation operates 53 manufacturing plants in twenty eight countries globally. Among the countries include China in Asia, United States in North America and South Africa in Africa. China, United States and South Africa are members of International monetary Fund (IMF) organization that offers financial stability and growth of international trade (Moden 1983)

China is not a member of World Bank but both South Africa and United States are members. World Bank is a global financial institution that offers financial assistance in form of loans to member countries. The three countries are all members of World Trade Organization that provides rules which govern international trade. United State and South Africa diligently follow the guidelines provided by the three international institutions whereas China only follows guidelines illustrated by the IMF and the WTO (Peet 2009)

There is political stability in China which supports the development of international interactions in trade because of the one party system present in the country. Negatively the transparency levels are low in China posing as a great risk to globalization as foreign investors face a lot of challenges in the country due to corruption and focus on domestic interests. The rules and regulations in the country change rapidly leading to inconsistency. China has a functional judicial system that comprises of the people’s courts system, public security and people’s procuratorate system that protect trade activities.

Political institutions in the United States are not open and accountable for their action slowing down the growth of trade with other nations. The decrease in transparency has been caused by the dysfunction of some government agencies. The involved agencies are not welcoming to reforms contribution to economy imbalance.

The level of corruption in United States has increase with powerful people getting preference over the poor. The judicial systems in the country are functional offering solutions to various problems that the trading companies face and defending their interests. The problems are solved by federal statues created by the state legislatures and congress.

South Africa has high corruption cases lowering its accountability levels. Political institutions in the country are facilitating the corruption as they use funds meant for the development of trade. The low accountability affects international trade as foreign companies are afraid of instabilities. The judicial system in the country is effective as it provides laws that govern trading activities ensuring that investors trade fairly and promote economic growth.

Policies

The three countries have in place policies that govern how trade takes place with other countries providing rules and regulation. The laws also regulate the type of business that is conducted together with providing standards to maintain in offering goods and services.  Policies that answer to competition with other companies in the markets have been put in place by the countries to ensure that there is healthy competition to foster collaboration.

The countries have built strong intellectual property rights to promote innovations in the individual countries and protect companies that invest in the country. Anti-corruption commissions that seek to curb the high levels of corruption have been established to deal with corruption cases. The commission aim at instituting equality in trade and fair distribution of resources.

 

Products and tariffs

Toyota Motor Corporation produces vehicles, spare parts, marine products and vehicle accessories that are sold both domestically and exported to different countries. Their products face tariff and non-tariff barriers in their exports according the country they trade with. In the U.S Toyota products are liable for a 25% tariff on pickups. Toyota Prius which is manufactured outside North America faces a 2.5% tariff at U.S port for passenger cars.

The company is currently facing non-tariff barriers with threats from U.S president on high taxes on corolla cars exports to United States from the company’s plant in Mexico. Toyota also face barriers such as acquiring various certification for them to export their products. The company is also required to customize their cars according to the export destination.

Trading blocs

Toyota enjoys trading blocs in all the countries it operates in as it promotes the country’s economy. Japan being a member of Asian-Pacific Economic Cooperation that promotes a free trading environment is an advantage to Toyota. The tariffs on exports and imports are reduces for Toyota saving on costs. Also Japan is a member of the bilateral free agreement ASEAN that enhances trade. The country has an agreement with Europe that helps in economic integration promoting Toyota’s trading activities.

Regional trading blocs is the most favorable trade liberalization as the agreement offers Toyota the efficiency in the automotive market by easy access. There is increased trade with less tariffs in foreign countries and healthy competition as Toyota will be protected from import of cheap products that would be chosen over Toyota products (Wacziarg 2008)

 

Cultural knowledge

In negotiating on behalf of Toyota with a foreign country, knowledge on their language is an important element that will help in communicating. Having the appropriate physical language is also beneficial to create trust and portray confidence. Knowing about their transport system is also important for easy assessment of products to offer.

Being punctually is a skill that is acceptable in many cultures. Respecting their beliefs and way of business promotes effective negotiations. Researching from the internet would help in learning about the foreign country’s culture. Also asking from colleagues who have visited the country and residents of the country is a beneficial source of information.

 

References

Dür, A., Baccini, L., & Elsig, M. (2014). The design of international trade agreements: Introducing a new dataset. The Review of International Organizations, 9(3), 353-375.

Monden, Y. (1983). Toyota production system. Favor de rectificar..

Nagai, Y., Dohmae, K., Ikeda, Y., Takagi, N., Tanabe, T., Hara, N., … & Jiang, H. (2008). In Situ Redispersion of Platinum Autoexhaust Catalysts: An On‐Line Approach to Increasing Catalyst Lifetimes?. Angewandte Chemie International Edition, 47(48), 9303-9306.

Peet, R. (2009). Unholy trinity: the IMF, World Bank and WTO. Zed Books Ltd..

Wacziarg, R., & Welch, K. H. (2008). Trade liberalization and growth: New evidence. The World Bank Economic Review, 22(2), 187-231.