ASSIGNMENT FOR CHAPTERS 7 & 8

ASSIGNMENT FOR CHAPTERS 7 & 8 This assignment is open book; students may work together as a team or individually on this assignment. Answer each question briefly, but to the point; be thorough. I am looking for your knowledge of the materials, and your management and critical thinking ability. When you have completed the assignment, please submit your paper to the “Assignment List”. This may be a class or individual assignment; your choice. Call me if you have any questions. Your firm manufactures children’s toys in the People’s Republic of China for export to the United States. About 35% of your total worldwide production comes from China. While you market many styles of toys in other countries, the toys made in China are intended for the US market. You have invested heavily in China in the last five years and have come to depend greatly on inexpensive Chinese labor. You are concerned because of increasing tension between China and the United States over trade issues. Moreover, some members of the US Congress are calling for sanctions against China for its imprisonment of pro-democracy student demonstrators. Recent news stories on cable television vividly show the abuse of prison labor in Chinese camps. The president recognized the importance of trade with China and thus far has not show any interest in breaking off trade relations. 1 Describe the impact that a trade war would have on your firm. 2 Describe the impact on your firm if China were to lose is MFN trading status. 3 What strategic actions might you take now in order to reduce your firm’s exposure to the risks of these political events? 4 How as GATT 1994 affect the import of your products into the United States?