Case Analysis
GlobalEconomics
MID8TERM! EXAMINATION
Students!must!answer!both!(2)!questions . !This!is!an!individual,!take:home!exam,!which!
can!be!downloaded!from!Mycourses .!Please!be!advised!that!you!may!not,!under!any!
circumstances,!communicate!with!other!students!during!the!course!of!this!assignment.!
This!examination!is!governed!by!the!Code!of!Conduct!in!the!School’s! 2012/201 3!Student!
Handbook.!
Time!Allott ed:! 3!hours! !
Assignment: Mid- term exam (20% of overall grade)
Important instructions:
This assignment must be answered individually. You are not allowed to
collaborate with others when undertaking this assignment.
It is an open – book exam.
Please answer both questions. The questions are equally weighted.
Please note that there is a maximum of 3,000 words for the two questions in
total.
The British company United Biscuits (UB) is the world´s fourth largest
producer of biscuits. Its brands include Penguin, Jaffa cakes, Carr´s water
biscuits, and McVitie´s digestives. Its brands are global. McVitie´s, for
example, is sold in over 100 markets around the world.
Today, 15% of UB´s sales come from outside UK and NW Europe (up from
5% just 5 years ago). While consumption of chocolate and biscuits is falling
in the industrialized markets amid health concerns, UB is experiencing
double – digit growth in the Emerging Markets of Africa, the Middle East,
China, and India. Its small value snacks are easy to sell in developing
countries.
For this reason, UB has been busy acquiring stakes in companies in
emerging markets. For example, UB acquired Saudi firm Rana
Confectionary Products in October 2013. In February 2014, UB acquired a
stake in biscuit company A&P in Nigeria, where the market for biscuits is
growing at 18% a year. The Nigerian market is still dominated by local
players as a consequence of an import ban on foreign biscuits from 2003 -2012, and as a result, local firm Yale Foods has 38% value share. In 1980,
McVitie´s was the number one imported biscuit in Nigeria, resulting in a lot
of lost sales as a result of the trade embargo imposed by the Nigerian
government in 2003. With its recent stake in A&P, UB has now acquired a
manufacturing presence in Nigeria, and is now expanding production and re-building distribution both within Nigeria, but also to other target markets
such as Kenya and Angola.
Furthermore, on the back of a new trade deal between the UK and India in
Sept ember 2014, UB has stepped up its investment in India (where it has had
a manufacturing facility since 2010) from £ 30 million to £ 50 million. In
addition to production facilities in India, UB manufactures its products in
factories throughout England, Irela nd, Belgium, France, and the
Netherlands.
Questions:
1. Discuss in general the advantages and disadvantages of regional
trading blocs such as the EU. Discuss the benefits that UB may now
enjoy after acquiring a stake in the Nigerian firm, A&P.
2. Discuss in general how countries can use monetary policy and fiscal
policy to stimulate their economies. Explain how increases in money
supply by the Bank of England may affect the competitiveness of UB
products in foreign markets.
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