INTERNATIONAL BUSINESS AND THE WORLD ECONOMY (MMM143)Java

Java Python INTERNATIONAL BUSINESS AND THE WORLD ECONOMY (MMM143)

IN-CLASS TEST

Answer ONE question.

Word limit: 500 words

1. Referring to one or more appropriate theoretical frameworks presented in the module, critically discuss the decision of Danish Crown to open a processing plant in the UK, as illustrated in Terazono (2022). In particular, focus on the following questions:

a.  Why did Danish Crown take this decision only after Brexit?

b.  If it was Finland leaving the EU, would Danish Crown have decided to open a processing plant in Finland?

c.  Would Danish Crown have taken a different decision were they a smaller company?

References

Terazono E. (2022) Danish Crown to build £100mn UK plant as bacon demand rebounds, Financial Times, 22

November 2022, https://www.ft.com/content/8c9fc0ce-4315-4f5c-9825-

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Below is an excerpt from Terazono (2022):

One of Europe’s leading meat companies is to build a £100mn production facility in the UK as the country’s appetite for bacon surges. Danish Crown will build the plant in Rochdale, north of Manchester. ... The new facility will allow it to sell its bacon and gammon processed in the UK made from imported Danish po INTERNATIONAL BUSINESS AND THE WORLD ECONOMY (MMM143)Java rk.

The UK already has the highest consumption of bacon per capita in Europe, eating more than 3kg of the pork product a year (see chart below), far higher than other consumers in other European markets, according to consumer data group Kantar. The market has remained one of Danish Crown’s important export destinations, with its bacon business in the UK worth an annual £600mn (see picture below).

The company, which is owned by a farming co-operative, has been exporting bacon to the UK since 1887, and its sales have remained steady despite Brexit, the chief executive added, although it has meant that it has to produce an additional 33,000 sets of documents a year to trade. He described the process as “crazy”, before adding that as a large company it was manageable. “We can do it. But, of course, small and medium-sized companies are struggling with this kind of bureaucracy issue,” he said.

2. Relying on the two scatterplots below (from Lendle et al., 2016) and arguments developed in the module, critically discuss the following statement: “eBay can help defy the gravity law of trade” .

Note:

The two scatterplots show the relationship between distance from the US and import in the US for a large number of country-product pairs. The scatterplot on the left focuses on trade occurring on eBay, while the one on the right shows the Total trade