1.

Kwento mo in english yung case ng McKinsey & Company: Linking the Business World,
Governments, and Global Institutions sa Module 6. Anong nangyare?

McKinsey & Company is a privately held global management-consulting firm that serves as a trusted
adviser to the world’s leading businesses, governments, and institutions. As a management consultant firm,
McKinsey is approached by its clients to analyze and solve complex problems. McKinsey has helped global
businesses understand how to enter new markets around the world, how to compete more effectively against
their global competitors, and how to harness efficiencies and make improvements in all levels of business.
McKinsey has discreetly been an advisor to governments around the world on diverse issues, including how
to amend policy and regulation to encourage more trade and investment in their countries; developing and
implementing processes for privatizing industries; and creating more efficiencies in the public sector. At
the same time, McKinsey has helped the IMF and the World Bank craft policy to meet their evolving roles
in the world economy. The McKinsey mystique is another interesting aspect of the firm that adds to the
secrecy that surrounds it. Despite its size, the firm does not discuss specific client situations and maintains
a carefully crafted and low-profile external image, which also protects it from public scrutiny.

2. Kwento mo in english yung case ng Why a Main Street Firm, Walmart, Is Impacted by Foreign
Exchange Fluctuations sa Module 7. Anong nangyare?

Walmart is an American company which sells essential and nonessential products. Walmart’s strength
comes from the upper hand it has in its negotiations with suppliers around the world. Suppliers are
motivated to negotiate with Walmart because of the huge sales volume the stores offer manufacturers. In
order to buy goods from around the world, Walmart has to deal extensively in different currencies. Small
changes in the daily foreign currency market can significantly impact the costs for Walmart and in turn both
its profitability and that of its global suppliers.

A company like Walmart needs foreign exchange and capital for different reasons, including the
following common operational uses:
1. To build new stores, expand stores, or refurbish stores in a specific country
2. To purchase products locally by paying in local currencies or the US dollar, whichever is
cheaper and works to Walmart’s advantage
3. To pay salaries and benefits for its local employees in each country as well as its expatriate
and global workforce
4. To take profits out of a country and either reinvest the money in another country or market or
save it and make profits from returns on investment Walmart can then buy cheap Chinese products, add a
small profit margin,
and then sell the goods in the United States at a price lower than what its competitors can offer

Walmart often requires that the currency exchange rate be fixed in its purchasing contracts with Chinese
suppliers. By fixing the currency exchange rate, Walmart locks in its product costs and therefore its
profitability. Fixing the exchange rate means setting the price that one currency will convert into another.
This is how a company like Walmart can avoid unexpected drops or increases in the value of the RMB and
the US dollar.
 3. Kwento mo in english yung case ng The Invisible Global Retailer and Its Reentry into US
Markets sa Module 8. Anong nangyare?
Otto Group, the German retailing giant that’s second only to Amazon in ecommerce. The Otto Group’s
lines of business include financial services, multichannel retail, and other services.
 The financial services segment covers an international portfolio of commercial services along the
value chain of retail companies, such as information-, collection-, and receivable-management
services.
 The multichannel retail segment covers the Otto Group’s worldwide range of retail offerings;
goods are marketed across three distribution channels—catalogs, e-commerce, and over-the-
counter (OTC) retail.
 The third segment combines the Otto Group’s logistics, travel, and other service providers as well
as sourcing companies.

Future growth is guided by the Otto Group’s Vision 2020 strategy, which is based on achieving a
strong presence in all key markets of the three largest regions—Europe, North America, and Asia. As a
global operating group, Otto aims to have a presence in all major markets and will continue to expand
OTC retailing. Germany remains the Otto Group’s most-important regional sales market, followed by
France, the rest of Europe, North America, and Asia.

Industry experts thought it surprising that Otto launched the clothing line because it had previously left
the US market after its acquisition of Eddie Bauer’s parent company, Spiegel, failed in 2009.

Still, the Otto Group has received much acclaim for its innovations in the retail arena. For example,
according to a Microsoft case study, Otto was the first company (1) to use telephone ordering, (2) to produce
a CD-ROM version of its catalog in the 1990s (to deal with slow dial-up connections), and (3) to build one
of the largest collections of online merchandise.

The latest effort to make an entry in the US market is different from the prior one in terms of mode of entry.
Earlier, the company adopted the mode of acquisition and entered the market by acquiring Spiegel, the
parent company of Eddie Bauer. This time, the company has entered the US market by opening its own
stores and launching the brand Field & Stream 1871 (Dishman 2010). It is different as it has entered now
through its own sales subsidiary, while earlier it adopted the entry mode of acquisition.
4. Kwento mo in english yung case ng Q-Cells sa Module 9. Anong nangyare?
Q-Cells is a German company that became the largest manufacturer of solar cells worldwide. Germany is
known for its engineering prowess but is known of having a high-cost manufacturing country compared
to China or Southeast Asia.

The trouble was that solar cells aren’t that sophisticated or complex to manufacture, and Asian
competitors were able to provide reliable products at 30 percent less cost than Q-Cells.

Q-Cells recognized the Asian cost advantage and opened a manufacturing plant in Malaysia. Once the
Malaysian plant is fully ramped up, the costs to manufacture solar cells there will be 30 percent less than
at the Q-Cells plant in Germany.

Then, Q-Cells entered into a joint venture with China-based LDK, in which Q-Cells used LDK
silicon wafers to make its solar cells. Although the joint venture gave Q-Cells local knowledge of the
Chinese market, it also locked Q-Cells into buying wafers from LDK. These wafers were priced higher
than those Q-Cells could
source on the spot market. As a result, Q-Cells was paying about 20 cents more for its wafers than
competitors were paying. Thus, in the short term, the joint venture hurt Q-Cells.

To stay cost competitive, Q-Cells has decided to outsource its solar-panel production to contract
manufacturer Flextronics International. The outsourcing has not only saved manufacturing costs but also
brought the products physically closer to the Asian market where the greatest demand is currently.