MBA 6601, International Business 1 Course Learning Ou.docx

MBA 6601, International Business 1
Course Learning Outcomes for Unit VI
Upon completion of this unit, students should be able to:
8. Examine the major marketing considerations applicable to
international business.
Reading Assignment
In order to access the following resource(s), click the link(s)
below:
Dev, C. S., & Schultz, D. E. (2015). From the four Ps to the
four ‘why’s’. Marketing News, 49(9), 40–47.
Retrieved from
https://libraryresources.columbiasouthern.edu/login?url=http://s
earch.ebscohost.com/login.aspx?direc
t=true&db=bth&AN=109289010&site=ehost-live&scope=site
Seeds, D., & Khade, A. S. (2008). Transforming a multi-
national corporation from a centralized organization to
a decentralized organization. Journal of International Business

Strategy, 8(3), 99–104. Retrieved from
Van Meir, C. (2016). Branding benefits: Apply the four Ps of
marketing to make benefits more engaging.
Benefits Magazine, 53(3), 34–39. Retrieved from
Unit Lesson
There are two ways to look at global marketing strategies. One
way is to look at a company’s marketing
orientation. Marketing orientation refers to the philosophy that
guides a company’s marketing strategies. In
the United States, marketing orientation started with the
production concept (1920s) and evolved to the
present day holistic marketing concept. Along the way, several
distinct variations emerged that seem to work
well in the foreign markets. These orientations depend on the
types of products produced and the types of
buyers purchasing the goods. The second way to study global
marketing strategies is to analyze the
marketing mix of the product. The marketing mix is the 4 Ps:
product, place, price, and promotion.
Marketing Orientations
There seem to be five types of marketing philosophies that have
managed to stay significant. Typically, a

company’s marketing strategy will depend on whether the
company is production oriented, sales oriented, or
customer oriented. A combined strategy of all three yields a
strategic marketing concept. Last and still
emerging is the force of social marketing, sometimes referred to
as nonmarket strategies.
Production orientation: The production concept focuses on
products that are mass produced, have a low
price relative to disposable income, come with a standard
design, have low risk of product failure, and a short
window from purchase to consumption. These types of products
require advertising and sales promotion to
pull them through the distribution channel. Consequently,
manufacturers achieve high production efficiency,
low costs, and mass distribution. This type of product could be
a low value-added commodity, such as copper
or wheat, or a high value-added product, like a candy bar or a
standard automobile. This type of concept
works well in a country that has low labor manufacturing costs,
such as in China or Vietnam.
Sales orientation: The sales concept focuses on products that are
custom made. The consequences of
failure might be high, the expense is so high only large
organizations like governments can afford them, and
UNIT VI STUDY GUIDE
Managing International Operations, Part 1:
Marketing and Organizational Structures
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89010&site=ehost-live&scope=site

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the product takes years to build. This type of product might be a
dam, a nuclear reactor, a turnkey factory,
large airplanes, or ships. The manufacturer usually provides a
sales team to work out the details, and the
buyer usually reciprocates with a purchasing team to ask all of
the appropriate questions.
Customer orientation: Sometimes referred to as the marketing
concept, this philosophy is a customer-
centric concept. The job here is to find, develop, and produce

the products that the customer wants. One
version of this takes a basic product like a computer and allows
the customer to add on or take off features
they want and are willing to pay for. This approach works well
with products customized with little effort. A
good example is Burger King, a worldwide restaurant chain. Its
slogan—up until recently—“Have it your way”
implied a hamburger made with your choices of condiments and
sides (“Burger King ditches,” 2014).
Strategic marketing orientation: In the traditional view, you
first make the product (design, procure, and
manufacture) and then sell the product (price, sell, advertise,
distribute, and service). In the strategic
marketing concept, marketing is at the beginning of the
planning process. Instead of stressing production and
selling, firms decide on the product/service they are going to
provide based on their ability to create the most
value. According to this view, the firm first segments the
market, selects the target market, and conducts
value positioning. Then, the company develops the product,
prices it, manufactures it, distributes it, and
services it. The company also communicates the value to the
target market through sales, sales promotion,
and advertising.
Social marketing orientation: Companies, now more than ever,
are cognizant of the public’s attention to
environmental and public health issues that affect them.
Consumers tend to seek out products and services
that are environmentally friendly, healthy, and socially
responsible. In the United States, such programs are
not required. However, customers are more sophisticated and
gravitate to companies that show social
responsibility. Corporate social responsibility has become a
competitive advantage like branding or

advertising. In the 1970s, Nestlé pushed its infant formula into
African communities with disastrous results.
Consequently, while the consumer may not have the
sophistication to know better, most governments have
wised up, and many now require programs that consider not
only how a product is purchased but also how it
is made and disposed of, as well as how it might be changed to
be made more socially acceptable. This
philosophy is sometimes referred to as a nonmarket orientation
because it plays mostly to foreign
governments and activist groups.
Marketing Mix (The Four Ps)
Product strategies: The product is the item for sale. It can be
tangible like a car or it can be intangible like
the knowledge to build a nuclear reactor. According to the
World Trade Organization, tangible products are
“merchandise” and intangibles are “commercial services”
(2015). In 2014, the United States exported $687
billion in commercial services and $1.621 trillion in
merchandise (World Trade Organization, 2015).
Product characteristics include the product and/or service
qualities (e.g., types of warranties, service
contracts), labeling, packaging, and branding opportunities. By
branding opportunities, the product line can
extend the brand to similar products that may fit in, just as
General Motors has several brands like the Chevy
Malibu and the Chevrolet Impala. Companies strive to make
their product(s) as unique as possible to make
them stand out from other products. This is product
differentiation.
When it comes to producing the merchandise, the emphasis is
on product standardization. Companies can

usually cut production and inventory costs this way. However,
companies must adapt the products to meet
the legal, cultural, and economic needs of the customer in
different countries. While many countries have
adopted universal standards on some products, such as mobile
phones, other standards are lacking, such as
those for railroad gauges and power supplies. In fact, three
countries have yet to adopt the metric system for
weights and measures: the United States, Liberia, and Myanmar.
Pricing strategies: There are numerous strategies and tactics to
pricing. If the company is selling a premium
product, the price should reflect a premium. If the company is
building market share, then a low price that
barely covers the cost would be plausible. If the product goes
through a long distribution channel, then
consider there will be markups at each juncture of the channel,
making the price relatively high. A longer
distribution channel suggests higher transportation costs as
well.
One variable not encountered domestically is the foreign
government’s posture towards a given product. A
foreign government may have quota limits, which restricts the
number of products a company can send in or
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maybe a tariff that will cause the price of its product to go up.
The foreign government can also apply
penalties against products that are imported and sold below the
sales price in its domestic country (World
Trade Organizations, n.d.).
In Unit IV, hedging strategies were discussed. A company that
can bring a product in from a country with a
weak currency to a country with a stronger currency will have
the hedging advantage. The possibility of the
currency growing stronger will add to the profitability.
However, if the product comes in from a country with a
strong currency to a country with a declining currency, the
profits will be less.
Promotion strategies: The integrated marketing strategy should
address advertising, personal sales, events
and experiences, public relations, sales promotion, branding,
and direct marketing. This section includes all
forms of communication from the producer to the consumer.
The concept of push-pull originates in this area
of marketing. Sales people are responsible for contacting buyers
and pushing their product onto the buyer.
This type of communication works well for expensive
institutional size products like Boeing 767 airplanes.
Promotion and advertising are responsible for communicating
product attributes directly to the consumer
through social media, mass advertising, and sales promotions.
This is pull marketing because many
consumers will ask the distributor to stock the product, in
essence pulling the product through the distribution
channel. This type of communication works well for mass
produced products with lots of standardized
features like fast food restaurants or laundry detergent.

Promotion strategies include branding. A brand is an identifying
mark, picture, logo, sound, jingle, or word that
makes you think of the product. Advertisers will promote the
brand with all of the good and pleasant features
that the product has. Consequently, when a consumer sees the
brand, and they have a need, they buy the
product. Repetitive and frequent advertising causes the
consumer to link the need with the brand, and
purchase becomes automatic. Proctor & Gamble (P&G), the
world’s largest advertiser, spends $5 billion just
on repetitive and frequent advertising for consumer products
(Young, 2015). While the languages are
different, and the products are adapted to the cultural needs,
repetitive and frequent advertising works in all
cultural environments.
Place strategies: The word place in this context means
distribution strategies. The distribution strategy
should address the transportation of the product through the
distribution channel. Before the Internet, the
product had to be available in a physical location. The Internet
has changed that way of thinking because
people can order from social media or website intermediaries.
The range of physical distribution locations
ranges from discount stores to upscale department stores,
dealerships, farmer’s markets, convenience
stores, shopping centers, warehouses, and the list goes on. The
Internet has made it possible to order
virtually anything from anywhere. The problem in that situation
is product delivery and service after delivery.
The marketing mix is a way to look at the different marketing
techniques that affect any given product or
service. Some academics have gone as far to add additional Ps.
Other Ps could stand for people, processes,
programs, performance, and politics. Traditionally, the original

four Ps are inclusive, but if nothing else,
marketing is a flexible science.
Organizational Structures
Most people recognize that an organizational structure is the
arrangement of roles and positions of people in
multinational enterprises (MNEs). This arrangement represents
how assets, authority, and communication run
throughout the organization to achieve certain objectives. Rapid
changes in technology and economics
demand that businesses structure themselves such that they bend
with the stress and snap back to take
advantage of opportunities. Organizations that cannot adapt
quickly will not be competitive. Research shows
that certain organizational structures work better in certain
situations.
Centralization Versus Decentralization
The traditional structures of centralized and decentralized
organizations still abound and are probably still in
the majority of businesses. A quick review of what they do is
important.
Centralized organizations: Decision-making authority is
concentrated in the top executive levels. The
premise of this scenario is that senior executives have more
experience and have more information regarding
access to capital, staffing, corporate needs, and strategy.
Advantages would be avoiding duplicate activities in
different subsidiaries, dealing with strong unions (General
Motors & United Auto Workers Union) and strong

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vendors (P&G versus Walmart). The disadvantages of this
structure are bureaucracy, loss of initiative, and
mostly downward communication.
Decentralized organizations: Decision-making authority flows
down to the managers at the local level. The
premise of this scenario is that the local managers have
knowledge of what the current business trends are
through dealing with individual customers and vendors. The
advantages of this situation are that it
encourages entrepreneurial decisions, makes the organization
more innovative and flexible, and encourages
managers to become responsible for their decisions. The
disadvantages are that local decisions might
jeopardize global decisions, more risk is accepted, and duplicate
activities may take place at different
branches.
Some industries are prone to one type of organization over the
other. For example, fast food restaurants work
better with decentralized structures; however, companies with
capital-intensive operations do better with
centralized structures. In some cases, hybrids are evolving
where anything over the subsidiary level is
centralized, but anything below the subsidiary level is
decentralized. In principle, decision-making should
occur at the level of those who are most affected by the

outcome and those who have the most knowledge of
the situation (Daniel, Radebaugh, & Sullivan, 2015).
There are variations of these organizational structures that have
emerged in corporations that have wide
geographical coverage. The most common MNE organizational
structures are listed below:
centralized decision-making to trump local
responsiveness. Essentially, the company is broken down into
functions such as production,
marketing, and administration with each function having a
foreign branch. All decisions are made at
the functional level.
functional structure except the company is
broken down into product divisions. A company may have
automotive and aerospace divisions, each
with a foreign subsidiary. Again, all important decisions rise to
the divisional level.
ybrid of the previous two structures
could be a geographic structure.
Decisions would be more focused on area needs but still distant
from the local branch. For example,
there may be a North American Division and a Western
European Division.
There are other variations such as the matrix structure and the
mixed structure, but they are also composed
of traditional command and control principles.

Non-traditional structures have emerged due to new Internet
technology, allowing the workforce and the
buyers and vendors to collaborate on the production and
consumption of new products. Social media
technology has improved to the point where people from
different locations around the world can work on any
given project. It is easier to acquire human talent, physical
resources, and distribution networks. These virtual
organizations are temporary: forming, disbanding, and
reforming as each new project comes forward.
Organizational Culture
An important byproduct of the organizational structure is the
organizational culture. From Unit I, we know how
country culture influences the country’s political, legal, and
economic decisions. Corporate culture has that
same impact in a company. People inculcated with a set of
beliefs have shared expectations of decisions and
outcomes. Because of this, international companies recognize
two problems. First, there are differences in
values from one company to another. Second, there are
differences in values from one country to another.
Putting a manager from one country over the workers of another
country can be disastrous if the manager is
not properly trained. Companies recognize the strategic
importance of culture, and many of the leading
corporations are actively training their employees on how to
make decisions based on company philosophy.
For example, Toyota, with 27 overseas plants, has trained over
700 foreign executives in the “Toyota Way,” a
collection of company values (Fackler, 2007).
References

Burger King ditches ‘have it your way’ slogan. (2014).
Retrieved from
http://www.foxnews.com/leisure/2014/05/20/burger-king-
ditches-have-it-your-way-slogan/
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Daniels, J., Radebaugh, L., & Sullivan, D. (2015). International
business: Environments & operations (15th
ed.). Upper Saddle River, NJ: Pearson.
Fackler, M. (2007). The ‘Toyota way’ is translated for a new
generation of foreign managers. Retrieved from
www.nytimes.com/2007/02/15/business/worldbusiness/15toyota.
html
World Trade Organization. (n.d.). Anti-dumping. Retrieved
from
https://www.wto.org/english/tratop_e/adp_e/adp_e.htm
World Trade Organization. (2015) United States. Retrieved

from
http://stat.wto.org/CountryProfile/WSDBCountryPFView.aspx?
Language=E&Country=US
Young, N. (2015). P&G, the world’s biggest advertiser, gives
top media role to woman who ran their pet
empire. Retrieved from
http://www.thedrum.com/news/2015/01/17/pg-worlds-biggest-
advertiser-
gives-top-media-role-woman-who-ran-their-pet-empire
Romans
Martin Luther
The Epistle is really the chief part of the New Testament and
the very purest Gospel, and is worthy not only that every
Christian should know it word for word, by heart, but occupy
himself with it everyday, as the daily bread of his soul. It can
never be read or pondered too much, and the more it is dealt
with, the more precious it becomes, and the better it tastes
Author
Paul; had never been to Rome. However, was a citizen of a
Roman province- Tarsus
Characteristics

Character and Style: Romans is the most formal of Paul’s
letters. Its arrangement is systematic and logical
Doctrine: Romans is the most comprehensive statement on
salvation by faith
3. Quotations. There are more Old Testament quotations in
Romans than all of the other Pauline epistles together.
Quotations come from at least fourteen different books in the
Old Testament, Isaiah and Psalms being the most frequently
quoted.
Outline
Introduction 1:1-17
Condemnation – Righteousness Demanded 1:18-3:20
Justification- Righteousness Declared 3:21-5:21
Sanctification – Righteousness Defended 6-8
Vindication- Righteousness Declined 9-11
Application- Righteousness Demonstrated 12:1-15:7
Conclusion 15:8-16:27
1 Corinthians
Author
Paul
He Co-planted this church on the second missionary journey
(Acts 18)
Background

Paul had left Aquilla and Priscilla at Ephesus after leaving
Corinth. Appollos soon became a leader in the Corinthian
church. While Apollos was in Corinth, Paul returned to
Ephesus. Because of increased factionalism in the Corinthian
church, Apollos left it and returned to Ephesus. Thereafter,
members of the household of Chloe brought a firsthand report of
the problems at Corinth. Also, a letter from the Corinthian
church cam concerning various doctrinal and moral issues
Literary Design
To correct the problems mentioned in the personal report from
Chloe’s house (Chapter 1-6)
To deal with questions raised in the letter written to Paul from
Corinth (Chapter 7-16)
Outline
Reply to the personal report on specific problems at Corinth (1-
6)
Divisions (1-4)
Immorality (5)
Lawsuits (6:1-8)
Purity (6:9-20)
II. Response to the questions sent in a letter from the Corinthian
believers (7-16)
I. Marriage (7:1-40)
II. Christian Liberty (8:1-11:1)
III. Public Worship (11:2-14:40)
IV. The Resurrection (15:1-58)
V. Collection (16:1-4)
III. Conclusion (16:5-24)

II Corinthians
Author
Paul
Co-Planted the church at Corinth (Acts 18). Had corresponded
in 3 previous letters, one of which was inspired
Background
Not long after leaving Corinth, Paul sent a letter to the Church
(Cf. 1 Cor.5:9-11) Corinthians A
Paul expected to follow the letter with a personal visit soon but
soon afterward changed his plan and headed to Macedonia. He
sent Timothy instead (1Cor.16:5-11, Acts 19:22) Paul explained
this in a letter – Corinthians B, known to us as 1 Corinthians
3. I Corinthians was not received well, so Paul had sent
Timothy to correct problems at Corinth, but he failed in his
attempt. Then Paul made a “painful visit” to Corinth (2 Cor.2:1)
4. Paul sent Titus with a stinging letter – Corinthians C – to
correct problems at Corinth; he seemed to be more successful
than Timothy, for he brought a good report back to Paul
(Cor7:6)
5. False apostles in Corinth were still leading some astray,
challenging Paul’s apostleship. However, Paul sent a letter
primarily of glad response to the Corinthians’s open heart –
“Corinthians D,” known to us as II Corinthians

Characteristics
This book reveals the sensitive character of Paul; outside of
Philemon, it is the most personal and least doctrinal of all of
Paul’s epistles.
This book carefully examines the character and tactics of the
false apostles
The person and ministry of Satan are also emphasized in this
text
Outline
Paul defends his conduct with the Corinthians (1:3-2:11)
Paul defends his ministry (2:12-chapt.7)
Paul gives instructions for collection of the offering for Judean
saints (8-9)
Paul defends his Apostleship to the Corinthians (10-13)
ACTS
Author
Luke
External Evidence
The Anit-Macronite Prologue to Luke,dated 150-180 AD
The Muratorian Canon, Irenaeus, Clement of Alexandria, and
Tertullian all supported Lukan authorship “There is no

conflicting tradition during the early church period.” (Kent,
P.14)
Internal Evidence
Acts 1:1 claims the work to be a continuation of another volume
written to Theophilus
The “We’ sections” of Acts
16:10-17 Second Missionary Journey
20:6-21:18 Third Missionary Journey
27:1-28:16 Voyage to Rome
Characteristics
Acts marks the numerical growth of Christianity
(2:41,47;4:4;5:14;6:7;9:13;11:21;12:24;16:5;17:6;19:20;28:31)
Acts portrays the Jews as the real persecutors of Christians
(Jews, not Christians, should have been on trial for civil
disturbances; 1:31;23:12)cf.4:1-3; 8:1-3;14:1-2;17:5-9:
18:12;19:33;
3. Acts is a transitional book. It bridges a gap between Gospels
and Epistles. It also links the ministry of Christ and the
activities of the Apostles
4. There is an emphasis on the Holy Spirit. He is mentioned
over fifty times in this book; more than any other New
Testament book. (cf.1:5;2:4;7:51;9:31:13:1;16:6-7;20:28).
5. There is an emphasis on Prayer: Every chapter shows the
result of prayer, and almost every chapter mentions it by name.
6. Give insight to early church life, such as the instruction of
converts (2:42); providing for the physical needs of members

(2:45;4:32-37:6:1)
7. Records several speeches/sermons of the early Church,
including seven by Peter, and eleven by Paul.
8. Acts gives the background to several epistles of Paul.
Purpose
Luke wanted Theolphilus to be aware of the geographical
outreach of the gospel message.
Luke wanted to answer the question
Outline
The Planting of the Church in Jerusalem 1:1-6:7
The Planting of the Church in Judea and Samaria 6:8-12:25
The Planting of the Church in the Uttermost parts of the World
13:1-28:31
Titus
Author
Paul
Titus was his “trouble-shooter” in the ministry
Characteristics
References to many of the major doctrines of the Christian faith
are made in this letter, including

1:1 election
2:13 the deity of Christ
2:5 inspiration
2:13 the second coming of Christ
2:14 substitutionary atonement
3:5 regeneration
3:7 justification
2. There is an emphasis on “good works,” (1:16;2:7;2:11-
14;3:1;3:4-7;3:8), as similar to 1 Timothy
3. Paul give Titus further instruction for strengthening the
church at Crete. This included:
Picking qualified elders
Rebuking false teachers
Teaching and exhibiting sound doctrine in relation to proper
Christian domestic behavior
Correcting moral laxity while properly encouraging good works
with respect to God’s grace
Establishing proper relationships with the unsaved, especially
civil authorities
Using church discipline
Outline
Directors for the Church in the World (1)
Doctrine for the church in the World (2)
Deeds for the church in the world (3)

Philemon
Author
Paul
He led Philemon to Christ
At this time he is an aged missionary and theologian
Characteristics
The doctrine of imputation is clearly illustrated in this letter
Insights are given as to how first century Christians dealt with
the issue of slavery
Outline
Praise of Philemon 1-9
Plea for Onesimus 10-25
4 principles of slavery
Christian slaves and masters were in Christ (Gal.3:23)
Christian masters should treat their slaves as a brother in Christ
once a slave has accepted Christ (1:16)
Christian slaves were to work deligently as for he Lord.
(Eph.6:5-8, Col.3:22-25)
Christian master were to treat their slaves justly and fairly,
remembering their accountability to their master in heaven
Hebrews
Author

Unknown
Most likely it was not Paul
In church history, other suggestions for the author have
included Barnabus, Clement of Rome, Luke, Silvanus, Philip the
Evangelist, Priscilla, and Apollos.
Recipients
Jewish converts in a mixed church (believers and unbelievers)
It appears that the recipients has been introduced to Christ (2:1-
4)
There are some who are turning away from Christ
They are being persecuted
Immature in their faith
Characteristics
This epistle presents the doctrine of the priesthood of Christ,
including, His present ministry of intercession 2:17-18
This book has six warning passages (2:1-4; 3:7-9; 4:11-12;
5:11-6:9; 10:26-39; 12:18-29) they are passages in which the
reactors are sternly warned not to turn away from Christ
3. The author gives several hortatory commands by the use of
“let us…”
4. A key word in this book is “better/perfect” used thirteen
times to impress upon the reader the superiority of the
believer’s position in Christ (1:4;6:9;7:7, 19,22;8:6 (2x);
9:23;10:34; 11:16, 35,40).
5. The “Faith Hall of Fame” can be found in Heb.11
6. The book in rich in its use of the Old Testament, with at least

80 direct references from it
7. The idea of Kingdom receives considerable treatment in the
book under such different terms as “kingdom (1:8); “the world
to come” (2:5); “God’s house” (3:5); “rest” (3:1); “Sabbath
rest” (4:8-9); “what has been promised” (6:12); “a better hope”
(7:19); “the city which has foundations (11:10,16); “a home
land” (11:14); “a heavenly country” (11:16); “Mount Zion,”
“the city of the living God,” “the heavenly Jerusalem,” “the
innumerable company of angels…” (12:22-24); “a kingdom
which cannot be shaken” (12:28), “the city to come” (13:14)
Types of address
The author confirms these Hebrews Christians in their faith in
Christ
The author comforts the Hebrews in their trials and sufferings
The author cautiousness the Hebrews about the danger of
apostasy
Apostate
Is one who once professed to be a Christian, and then renounces
that profession; a lifestyle of denial; giving evidence of being
an unbeliever
Outline
The superior person of Christ the high priest over old covenant
mediators (1:1-4:13)
The superior work (ministry) of Christ the high priest over the
levitical system (4:14-10:18)
The superior life of faith (10:19-13:20) based on the superior
high priest hood of Christ

Benediction and concluding acknowledgement (13:20-25)
Key Verse
1:1-4
12:1-2
12:25
James
James
Half brother of Jesus
Characteristics
James was most likely the first book written in the New
Testament. (It is also a good first book for a new Christian to
read).
James liked to use Old Testament characters as illustrations,
(Abraham 2:21, Isaac 2:21, Rahab 2:25, Job 5:11, and Elijah
5:17).
3. Many metaphors and similes are made from references to
nature or daily activities of man
4. There is a “brotherly” tone to this epistle; the word
“brethren” is used 19 times.
5. Literary dependence on the sermon on the mount
Outline
I. Theme: Tests of a Living Faith 1:2-18

II. Six Tests of a Living Faith 1:19-5:20
“Faith is tested by its…)
Response to the Word of God 1:19-27
Reaction to partiality 2:1-13
Production of good works 2:14-26
Production of self-control 3:1-18
Reaction to the worldliness 4:1-5:12
Resorting to prayer 5:13-18
Recourse towards sinning brethren 5:19-20
1 Peter
Author
Peter
Apostle to the Jews
Date
Difficult to determine
Probably before the martydom of Paul since Paul is mentioned
in the second later
About AD 63-65
Recipients
The recipients, according to 1:1, appear to be a large group of
Jewish Christians scatter outside of the Jewish homeland
because of persecution.
They seem to be mixed in with Gentiles

Characteristics
How to live in the midst of suffering is one of the underlying
themes of this epistle; the term “suffering” occurs 16 times.
Included are six references to Christ’s own sufferings
(1:11;2:23;3:18;4:1,13;5:1)
2. One of the most difficult passages to interpret in the New
Testament is found here – (3:18-22).
Spirits (men or angels)? When imprisoned? What did Christ
preach to them? Did He give them a second chance? What do
the days of Noah have to do with this? In what ways does this
baptism save?
3. Peter gives a large portion of material to the doctrine of
Christology, including refrences to Christ’s incarnation (1:20),
sinless (1:19;2:22), suffering and death (2:24), ascension (3:22),
presence with the Father (3:22), and His second coming
(1:7,13;4:13;5:1,4).
4. A Key verse on prophecy and the understanding of the
prophets is found in the book (1:10-11)
Outline
Peter encourages his readers by establish the doctrinal truths of
their salvation in Christ and the enduring hope that it brings;
(1:1-12)
Peter gives a series of exhortations based upon the present
realities of the believer’s salvation; (1:13-5:11)
Peter concludes his letter with epistolary characteristics (5:12-
14)

II Peter
Author
Peter
This is his second epistle
Characteristics
Peter emphasized knowledge as the best safeguard against
apostasy; forms of the verb “to know” are found sixteen times
in this epistle
One of the two key New Testament passages on the Inspiration
of Scripture can be found here (1:20-21)
He gives a vivid pictures of false teachers. (2)
Important passages on patients of God in judgment (3)
purpose
Peter writes to equip believers to prepare themselves to stand
against apostate teachers
Peter wants to assure these believers of the certainty of the
judgment of these false teachers at the return of the Lord
outline
Peter gives three safeguards against succumbing to false
teachers (1)
Peter gives a detailed composite of false teachers (2)
Peter reflects specific teaching of the false teachers (3)
I John

Author
Apostle John, now aged
purposes
To assure the readers that Jesus Christ is both fully human and
fully divine, so that his own joy may be full
To explain how a believer has fellowship with God, so that
these readers might not sin
To assure these believers that they contain an accurate
knowledge of the truth concerning the Person of Jesus Christ
To reassure these believers that they have eternal life, based on
the witness of their works and their experiential knowledge
concerning the truth with respect to the Person of Jesus Christ
Outline
Introduction (1:1-4)
Assurance of fellowship with the Father and the Son is to be
evaluated through the believers’ practice and confession by
which the spiritual life of themselves and others maybe seen as
true or false (1:5 – 2:27)
III. Assurance of fellowship with the Father and the Son can be
determined by the moral practice aspects of those professing to
be believers (2:28-5:3)
IV. Assurance of fellowship with the Father and the Son is seen
in the outcome of the beneficial results that genuine Christian
faith brings (5:4-21)

II John and III John
Author
The Apostle John
Summary
John warns believers not to give place (hospitality or freedom
to instruct the church) to false teachers- antichrists (II John),
and encourages them to straighten out disorder in a local
assembly caused by Diotrephes unwillingness to give place to
true teachers – traveling missionaries (III John)
II John Outline
Praise for walking in the truth (1-3)
Preaching the truth (4-6)
Protecting the truth (7-11)
Conclusion (12-13)
III John Outline
Commendation of Gaius’ walk in the truth (1-8)
Condemnation of Diotrephes hindrance of the furthering of the
truth (9-10)
Commendation of Demetrius example of walking in the truth
(11-12)
Jude

Author
Jude
The half-brother of the Lord, and the brother of James
Characteristics
There is an extensive comparison of the false teachers with
various natural phenomena
The writer makes use of two non-canonical books: The
Assumption of Moses (v.9), and The book of Enoch (vv.14-15)
Outline
Salutation (1-2)
Jude states that the occasion of this letter has been changed due
to the influx of false teachers (3-4)
Jude reminds the readers of examples of historic apostates and
the punishment they received (5-7)
Jude gives a detailed description of the present apostates (8-16)
Jude gives a exhortations to those in the midst of apostasy (17-
23)
Doxology: a return to proper focus (24-25)
Revelation
Title and Genere
The first five words of the book, “The revelation of Jesus
Christ,” clue the reader to the details to follow.
“Revelation”- not “revelations,” plural- is a transliteration of
the Greek apokalypis, meaning “an unveiling,” or “a discourse
of what has been concealed.” From this word comes the English,

“apocalypse.”
Author
The Apostle John
Interpretive views
Idealist. This method sees the book as basically spiritual or
symbolic in nature. The book does not depict historical events,
but portrays for the readers timeless truths on the cosmic
conflict between good and evil.
Historicist. The book of Revelation is seen as a prophecy of the
events of Western history from the time of the apostles until
the reader’s own time.
3. Preterits. Identifies the events of Revelation solely with the
events surrounding the time of the author.
4. Futurist. With the exception of chapters 1-3, all the visions in
the book relate to a period immediately preceding and following
the Second Advent of Jesus Christ. This view is usually held by
premillennarians, especially dispensationalists.
Outline
The Revelation of Jesus Christ as the Lord in History Past (1)
The Revelation of Jesus Christ as the Lord in the Present (2-3)
The Revelation of Jesus Christ as the Lord in the Future (4-22)
1 Thessalonians

Author
Paul
Planted the church in Acts 17
Literary Design
To commend the Thessalonians for their faith (Ch.1)
To defend Paul against charges made against him (2-3)
To exhort the belivers on to moral purity and brotherly love
(Throughout the epistle)
To correct the Thessalonians’ erroneous thinking concerning
the Lord’s return (4-5)
Characteristics
No Old Testament quotations; thus, this way probably a
predominantly Gentile church. (When written to a gentile
church no knowledge of the OT)
Every chapter ends with a reference to the return of the Lord
Outline
Personal: Paul reminds the readers of his past relationship with
them, ad explains his absence from them (Chapter 1-3)
The occasion of epistle is found in 3:5
Practical: Paul exhorts the Thessalonian church concerning their
Christian life, the Return of Christ, and conduct in the church
(Chapters 4-5)
The passage on the rapture of the church is found in 4:13-18
II Thessalonians

Author and Date
Paul
With companions Silas and Timothy still together; apparently in
Corinth (1:1), where opposition to the Gospel also exists (1:7;
3:1-2). The letter seems to have been written around AD 50,
within two months of the first letter.
Occasion
A new crisis: some in Thessalonica had been convinced via
false report that Paul had said the Day of the Lord was actually
present (2:2), and persecution was intense (1:4; 2:17;3:3ff)
Types of Address
Paul challenges the Thessalonian believers: “Do not be shaken
by the error” (2:5)
Paul challenges the Thessalonians by explaining the purposes of
God
Characteristics
This book contains no less than four prayers of Paul for the
readers (1:11-12; 2:16-17; 3:5; 3:16).
The original manuscript contained a Pauline concluding mark to
distinguish his letter from error (3:17)
The return of Christ is mentioned in every chapter (1:7-10; 2:1,
8: 3:5)
There is a significant passage on the Day of the Lord, the
apostasy, and the Antichrist (2:1-12)
I Timothy

Author
Paul
The apostle is now aged
Been all over the world
Knows well about church
Recipient
Timothy; Paul’s protégé in the ministry. Has now traveled with
Paul for many years and is the Apostolic appointee to give
spiritual guidance and leadership to the church at Ephesus
Occasion
Paul needs to write to Timothy because of the presence of false
teachers within the Christian community at Ephesus, (cf. Acts
20:28-31). Some have been by the false teacher to dviate from
the true faith (I Tim. 1:6; 6:21). The false teaching included
elements which rejected marriage and freedom in diet (I
Tim.4:3), and misused the Old Testament (I Tim.1:4)
Characteristics
The epistle includes what appear to be several early Christian
doctrine- hymns (I Tim. 1:17; 2:5-6; 3:16; 6:11-12; 6:15-16)
Chief among the “hymns” is “the mystery of Godliness,” a
cryptic form of the Gospel and additional early Christian
theology, (3:15-16)
Three of the five “faithful sayings” in the Pastorals are
contained therein (1:15; 3:1;4:9-10)

4. Teaching on the roles several groups in the Church are
touched upon, including men (2:1-8), women (2:9-15),
bishops/pastors/elders (3:1-7), and deacons and their wives
(3:8-13), slaves and masters (6:1-2) and the wealthy (6:17-19)
5. Teaching on the church’s responsibility towards several
groups is also mentioned, including older and younger men
(5:1), older and younger women (5:2), widows (5:3-16), and
elders (5:17-25)
2 Timothy
Author and Date
Paul the Apostle (1:1)
Timothy’s father in the faith and Gospel ministry (1:2;2:1)
In chains for the Gospel (1:16)
Now near his AD 67 martydom in Rome (4:6) and alone (4:9-19;
21).
The epistle was probably written around late AD 66
Occasion
Apparently Timothy was under fire in his role as apostolic-
pastoral-appointee to the church at Ephesus and need to be
encouraged to continue in the ministry
Paul, near martyrdom, desired the comforting fellowship and
service of his young companion in the ministry
Characteristics
The letter is extremely personal, giving familial-faith
background on Timothy (1:5), and expressing Paul’s affection
toward Timothy (1:3-4). The letter makes a personal appeal

toward Timothy.
A series of metaphors are used in the second chapter to describe
the life of one ministering for the Gospel, including a soldier
(2:3); athlete (2:5); farmer (2:6); workman (2:15); honorable
vessel (2:20-21); and servant (2:24)
3. A key passage on the doctrine of the inspiration of the
Scriptures is found in the book (3:16-17)
4. There is an emphasis on enduring suffering in the book
(1:8,12; 2:3,9,10,12; 3:1,11,12,14; 4:2,5)
5. The ministry of the Holy Spirit in the life of the Gospel
servant is given treatment in this book (1:6,7,14, 3:16)
6. There a passage on the Apostasy in the book (3:1-9)
7. There is an eschatological tone to the epistle, with its
emphasis on the Day of Christ and the coming Kingdom
(1:12;18;4:1,8,18)
Outline
Introduction 1:1-2
Paul’s charge to Timothy to endure for the sake of the Gospel
1:3-4:8
Paul’s call to Timothy to come serve Paul in his imprisonment
4:9-18
Conclusion 4:19-22

New Testament Survey
Final Exam
1. Why is the book of Acts so important in the New Testament,
and what sets this book apart from all other books? Using the
bible verse discuss the following (1) Acts chapter 1 (4 points I
discussed in class and how it sets up the whole book) (2)
Conversion of Paul (3) Paul’s three missionary journeys
2. Please discuss how book of Romans has characterized the
impact on church history and present the purpose of Romans.
Then please explain how Romans encouraged Christian
believers to live their lives.
3. What are the prison epistles? Please evaluate critical issues
that have been raised about each of the Epistles.
4. Please list the four major theological ideas developed in
Revelation. Also compare the four theories used to interpret
Revelation.
5. Please define eschatology. Then describe the 3 millennial
views that I have discussed in class.
MBA 6601, International Business
Unit IV Assignment
Complete Part1 and Part 2 of this assignment, and submit as a
single document for grading.
Part 1:
Your company is deciding to expand to the following countries,
and you and two other managers will have to visit these
countries to set up operations. You have $1,500.00 to convert in
each currency. Compute the exchange amount for each, and
complete the table.
Country/Currency
USD value for 1 unit of another currency (as of 2/17/16)
Exchange amount

Japanese yen
$0.008754
Ұ
Euro
$1.1159
€
British pound
$1.4398
£
While you are visiting each of these countries, you have to buy
supplies and equipment for your operations. You want to
determine what it is costing you in U.S. dollars. Utilizing the
same exchange rates given above, compute the costs into U.S.
dollars, and complete the table:
Japanese yen
Computer Ұ167,000.00
$
Euro
Desks & chairs €1,125.00
$
British pound
Printer £575.00
$
Part 2:
Pedro in Costa Rica wants to purchase some wild Atlantic
salmon from Hans in Iceland. The fish are purchased in
Iceland’s currency, the krona. Pedro’s brother works in a bank
and will take care of the transactions free of charge. Pedro has
1,000,000 colons to start with. (There is no transaction fee, and
shipping is not calculated at this point.)
How much krona does he have to work with?
Answer:
Country/Currency

USD $ value for 1 unit of another currency (as of 2/17/16)
Euro € value for 1 unit of another currency (as of 2/18)
Costa Rica colon CRC
$0.001909
€0.001745
Iceland krona ISK
$0.00788
€0.007062
The next day Hans decides to purchase some bananas from his
new trading partner in Costa Rica. Han’s sister works for an
import/export agency and can arrange the transaction in euros
with no fee. Hans takes all of the krona he received from Pedro
and proceeds to convert his currency to colon. (Note, one
country’s currency experienced some weakness overnight.)
How much colon does he have to work with? List your steps and
the results you achieved with each step. Also, explain some
factors that could cause the country’s currency to weaken.
Answer:
MBA 6601, International Business
Unit I Assignment Template
Part 1: Pick three individual countries, one in the Middle East,
one in Asia, and one in Europe. Apply Hofstede’s
characteristics to each one, and state if the characteristic is low,
medium, or high in each country. Also, explain why you think
each country deserves that description.
Characteristics
[Middle East]
[Asia]
[Europe]
Power Distance

Uncertainty Avoidance
Individualism/Collectivism
Masculinity/Femininity
Long-term/Short-term Orientation
Part 2: Given your descriptions, explain which country is most
like the United States and which country is most unlike the
United States.
Answer:
31
Journal of the International Academy for Case Studies, Volume
13, Number 3, 2007

CHICAGO FOOD AND BEVERAGE COMPANY:
THE CHALLENGES OF MANAGING
INTERNATIONAL ASSIGNMENTS
Virginia Bodolica, University of Quebec in Outaouais
Marie-France Waxin, American University of Sharjah
CASE DESCRIPTION
The primary subject matter of this case concerns the
management of expatriate managers
with a particular focus on their recruitment and compensation.
Secondary issues examined include
the internationalization strategies of a multinational company
and particularly the alignment of
international strategy and headquarters’ orientation regarding
the international human resource
management policy. The case has the difficulty level of six
(appropriate for second year graduate
level). The case is designed to be taught in three class hours and
is expected to require five hours
of outside preparation by students.
CASE SYNOPSIS
The Chicago Food and Beverage Company (CFB Co.) is an
American multinational with
subsidiaries in North America, Europe and Asia. The case is
about the alignment of CFB Co.
internationalization strategy and the orientation of the head
office in regard to its international
human resource management (IHRM) policy and management of
international assignments, with
an emphasis on expatriates’ recruitment and compensation. The
case describes the international

development of the company and the subsequent expatriation of
Paul Fierman, the head of the
Vietnam subsidiary. Paul’s three-year mandate includes the
preparation and execution of the
strategy to synergize the three Asian subsidiaries (Singapore,
Hong Kong, Vietnam) with the
collaboration of the head of the Pacific Rim, which should
allow CFB Co. to conquer the Asian
market. Six months after his arrival, Paul Fierman is
disappointed by the financial conditions of his
contract and by his relationships with local colleagues, not to
mention the difficulties his wife has
been having adapting to this new environment. The discussion
of this case in class allows
introducing and illustrating the theoretical concepts related to
the following topics: 1)
internationalization strategies and international human resource
management policies; 2) strategic
management of international postings; and 3) advantages and
disadvantages of different
international compensation methods.
32
13, Number 3, 2007
EVOLUTION OF CHICAGO FOOD AND BEVERAGE
COMPANY
FROM 1960 TO 1998
Chicago Food and Beverage Company (CFB Co.) is an
American multinational which was
established in Chicago in 1963. The company is specialized in

the production of all kinds of fruit
jams, canned fish, meat, vegetables, and non-alcoholic
beverages. CFB Co. is primarily an American
company and until 1985, it concentrated exclusively on the U.S.
market. Due to its reputation as a
high-technology intensive company and its capacity to adjust to
the changing market demands, CFB
Co. grew rapidly. It expanded all over the U.S. through its five
national subsidiaries based in
Chicago, New York, Atlanta, Los Angeles and Portland. In
1985, CFB Co. became the fifth largest
American producer in the food and beverage sector. In 2003 its
revenues amounted to several billion
U.S. dollars (US$).
Since the long U.S. recession of the 1980s, CFB Co.’s
management wanted to expand abroad
so that the company wouldn’t be so dependent on the already
saturated domestic market. However,
Mr. Brandon Long, CEO of the company since it was
established, stubbornly opposed the idea. In
late 1984 Mr. Long retired and was replaced by Mr. Bill Stevens
who always dreamed of CFB Co.
becoming a global power. With top management’s approval,
CFB Co.’s foreign expansion plans
finally started and at the beginning of 1985, the company went
international. The foreign expansion
plans included two growth strategies: the company would either
purchase small foreign enterprises
operating in the same sector or establish joint ventures with
foreign food and non-alcoholic beverage
producers. CFB Co. expanded to Europe first, and between 1985
and 1990, the company acquired
three local enterprises in Belgium, France, and Germany.
Following that, from 1991 to 1998, CFB Co. turned toward the

Asian market, installing three
joint ventures in that region. According to CFB Co.’s managers,
there was a huge potential for food
processing and distribution in the Asian market because firstly,
it accounted for over 60% of total
world population, and secondly, Asian consumers’ expenditures
were increasing three times more
rapidly than those of North Americans. Therefore, the
company’s expansion to this region was
thought to be of crucial importance for its economic health.
Thus, the first joint venture specializing
in Asian fruit-based jam production was established in 1991 in
Singapore. The second joint venture
which was created in 1995 in Hong Kong produced canned fish,
meat and vegetables. The third joint
venture, started in 1998 with a Vietnamese subsidiary based in
Haiphong, specialized in the
production of all kinds of non-alcoholic drinks, fruit juices, and
sodas. Although some of their
clients are based in the neighbouring countries, each joint
venture produces its own products which
are basically distributed on the local market. There is no
cooperation between subsidiaries since they
are considered as completely independent entities from each
other.
33
13, Number 3, 2007
CREATION OF CFB VIETNAM JOINT-VENTURE IN 1998
CFB Vietnam, created one year after the beginning of the Asian

economic crisis, is a joint-
venture between CFB Co. (which owns 49% of capital) and a
local state-owned enterprise (which
owns 51% of capital). It was CFB Co.’s largest investment in
Vietnam. The joint venture formula
was chosen due to the mutual advantages it offered to the
parties involved. On the one side, CFB
Co. was gaining rapid access to the Vietnamese market,
benefiting from the lands, buildings, and
other infrastructure of the local enterprise and from the cheap
national labour costs. On the other
hand, the Vietnamese counterpart was benefiting from the
accrued capital, high technology transfers,
and American know-how. Therefore, the joint venture was
rapidly granted with the licence to
produce and distribute non-alcoholic drinks in the Vietnamese
market. During its first year of
functioning, the multinational invested more than US$ 2 million
in bottling equipment. In three
years, the subsidiary became the second biggest non-alcoholic
beverage producer in Vietnam. It had
only one competitor in the market: Vietnam Drinks Company,
which was the national producer of
all kinds of drinks and had its headquarters in Ho Chi Minh
City.
The subsidiary is located in Haiphong, the third largest city in
Vietnam after Ho Chi Minh
and capital city of Hanoï. Haiphong is one of the three cities of
the Northern economic triangle
(Hanoi - Haiphong - Quangninh) and is very popular among
foreign investors. CFB Co. management
had chosen Haiphong for its economic dynamism and its
accessibility to the sea, rail and air
transport. Haiphong represents a main gateway by the sea to the
Northern provinces of Vietnam,

facilitating fluvial commercial exchanges not only with the
whole country but also with
neighbouring countries. The subsidiary’s activities, its
production, bottling factory, and
administrative buildings, are all concentrated in one site
situated at the Northern periphery of
Haiphong. CFB Vietnam’s primary mission was to produce
exclusively for the national market, with
an objective to export its products to neighbouring Asian
countries over the next three years.
CFB CO. RESTRUCTURING IN 2000
At the end of 1999, CFB Co. started to lose money in all of its
foreign operations. National
and international competition grew in all markets and
consumers became quality-oriented. Even
though the company’s main operations in the U.S were still
profitable, the figures were declining
significantly as compared to the 1998 levels. The modest profits
from the U.S. plants were not
enough to offset the losses reported abroad.
In 2000, U.S. headquarters analysed the situation and decided to
undertake a radical strategic
change. In order to reduce costs and achieve greater profits, the
company’s management decided to
regroup its food and beverage production activities into three
regional zones: United States, having
its center in Chicago; Europe, with its regional center in
Brussels; and Asia, with its center in
Singapore. In other words, the subsidiaries which previously
enjoyed exclusive rights in their

34
13, Number 3, 2007
respective local markets had to be integrated into “three
regional networks: United States, Europe,
and Asia”.
This strategy was expected to allow CFB multinational to find
synergies within these three
regional zones and thus to assure a significant increase in
revenues per region. For instance, CFB
Co.’s management wants the Vietnamese subsidiary to export its
non-alcoholic drinks to the whole
Asian zone, helped by the distribution systems of other regional
subsidiaries from Hong Kong and
Singapore. It is therefore necessary to create and implement
common distribution and
communication strategies. The main objectives are to reduce
costs, to increase revenues and to
promote CFB Co.’s activities in the whole Asian region.
CHANGES IN EXPATRIATES’ COMPENSATION POLICY IN
2002
Back in 1985, when CFB Co. started its international expansion,
the company did not have
any experience in the field of expatriation management. Since
the initial stage of foreign growth
strategy, only a small number of expatriates were used.
Therefore, the Chicago management team
opted for a flexible expatriate compensation approach: the
negotiation method. According to this
method, each expatriate is handled case by case; the components
included in the compensation

package represent the final outcome of negotiations between the
expatriate and the company.
Moreover, this compensation formula is beneficial due to its
administrative simplicity, requiring
little information on costs of living and tax issues in host
countries. Over the years, however, the
multinational company penetrated several European and Asian
markets and, therefore, the number
of its expatriates increased considerably. Hence, starting in
1998 CFB Co. employed constantly
about 25 American expatriates. With increasing expatriation
development, the negotiation method
became less effective, more time consuming, and rather
expensive. In order to keep its costs under
control, CFB Co.’s senior management decided that a
significant change in its current expatriate
compensation philosophy would be needed.
In 2002, Chicago human resources department (HR), which
manages the company’s
expatriates, adopted a new and mixed compensation approach.
In light of this approach, different
compensation systems are proposed to senior and junior
expatriates. Seniors, expatriates having
more than six years of international experience, are
compensated according to the international
method. In this case, a specific international scale is applied to
all senior expatriates. During their
expatriation period, senior expatriates are compensated using
the international compensation scale
and once they are back in their home countries, they reintegrate
the standard national compensation
scale. Expatriate juniors, having less than six years of
international experience, are compensated in
line with the home country method, which uses the balance
sheet approach. According to this

method, the parent company allows it’s expatriate to make the
same expenditures in terms of
accommodation, goods and services in the host country as those
that would have been incurred in
the home country had the employee remained at home.
Moreover, the company commits to maintain
35
13, Number 3, 2007
the purchasing power of its expatriates in the host country,
making some adjustments to the home
compensation package in order to balance additional
expenditures in the host country due to a higher
cost of living index. The key purpose of this approach is to
ensure that expatriate employees are no
better or worse off as a result of an international assignment.
The summary of important events in the evolution of CFB Co. is
presented in table 1.
Table 1: Summary of important events in the evolution of CFB
Co.
Year Important event
1963 Creation of Chicago Food and Beverage Co., Chicago,
United States
1963-1985 Expansion in United States, five American
subsidiaries based in Chicago,
New York, Atlanta, Los Angeles and Portland

1985 Beginning of the international adventure
1985-1990 Acquisition of three European local companies:
Belgium, France, Germany
1991-1998
1991
1995
1998
Conquest of the Asian market:
Joint venture Singapore;
Joint venture Hong Kong;
Joint venture Vietnam
1999 CFB Co.’s economic slowdown
2000 CFB Co.’s strategic change and restructuring: creation of
three regional
networks: United States – Europe – Asia
2002 Introduction of the new expatriates’ compensation policy:
the mixed
compensation method
2004 Recruitment and expatriation of Paul Fierman to Haiphong
(Vietnam)
PAUL FIERMAN’S EMPLOYMENT WITH CFB CO. AND
HIS EXPATRIATION TO VIETNAM IN 2004
Paul Fierman, a 34-year-old American, was appointed General
Director of CFB Vietnam at
the end of March 2004, with a mission to lead the subsidiary
and to implement the new
organizational strategy.

Obtaining this expatriate position was not a difficult endeavour
for Paul. In 1995 he earned
his bachelor’s degree in marketing from Johnson Business
School, at Cornell University in New
York. After graduation, Paul took a position as product vice-
manager in the marketing department
at the New York subsidiary of CFB Co. Three years later, he
became carbonated non-alcoholic
36
13, Number 3, 2007
beverages’ manager for the Eastern American region. After two
years in this position, Paul was put
in charge of both carbonated and non-carbonated non-alcoholic
drinks in the U.S. market. As a
country manager, he was paid US$ 300.000 annual base salary
and 10% to 15% commission on
sales. Although Paul was satisfied with his job, he wanted to
reorient his career towards general
management positions in this company. Therefore, in 2002 he
decided to undertake a full-time
Master in Business Administration studies in international
management at Harvard Business School
in Boston. After completing his MBA, Paul wanted to come
back to CFB Co., but in order be able
to reach the pinnacle of his career, he thought he needed to
acquire some international professional
experience. The only international experience he had so far was
a year spent in Oxford, Great
Britain, as an exchange program student.

Paul Fierman’s employment for CFB Co. is summarized in table
2.
Table 2: Paul Fierman’s professional evolution
Year Professional evolution
1995 Bachelor’s Degree in Marketing, Johnson Business
School, Cornell
University, New York;
Recruitment by CFB Co., New York subsidiary, product vice-
manager
1998 Regional product manager: Eastern U.S. markets,
carbonated non-alcoholic
beverages
2000 Country brand manager: U.S. markets, carbonated and
non-carbonated non-
alcoholic beverages
2002-2004 Master of business administration in international
management, Harvard
Business School, Boston
2004 Expatriation to Haiphong, Vietnam
During his M.B.A. studies, Paul kept in touch with his former
supervisor at his first position
within CFB Co., Allan Roger, marketing director of the New
York subsidiary. Just before graduating
from his M.B.A., Paul called Allan to discuss about his
potential return to the company. Allan, very
enthusiastic about this perspective, told him:
“Mike Shannon, the expatriate Managing Director of CFB

Vietnam, has just returned to the
U.S. unexpectedly due to health problems. Since Mike’s
departure was not planned, the headquarters
are desperate to replace him as soon as possible. If you are
interested, you can send me your
application for the position of Managing Director in Haiphong,
and I will forward it to the General
Manager in Chicago. In my opinion, Paul, you have a high
professional potential in this company.
Your lack of international experience is a problem…, but it does
not mean that you would not be
able to prepare and implement, in collaboration with the
regional director of Pacific Rim, the new
37
13, Number 3, 2007
strategy aiming at integrating the three Asian subsidiaries. This
expatriation would be an exceptional
training experience for you, preparing you for a higher level
managing position within the Chicago
headquarters on your return to the U.S., three years later.”
With his experience within CFB Co. and his high
recommendations, Paul Fierman was a
good candidate for this three-year expatriate position. He was
perceived as a promising young
manager due to his excellent academic background and the
outstanding professional results he
achieved during his employment within the company.
At that point, things went very fast. In March 2004, thanks to

Allan’s intervention and
contacts, Paul met directly with the General Manager in
Chicago. Two weeks later, a notice of
approval had been sent to Paul from the Chicago HR
department, officially confirming his managing
position within CFB Vietnam. Robert Greenberg, managing
director in charge of the Pacific Asia
region, had been informed about Paul’s nomination by
Chicago’s General Manager himself. One
month later, in April 2004, Paul began his new position in
Haiphong. Before his departure he spent
a couple of weeks preparing his move and organizing the rental
of his house in New York. His wife
Carrie and their seven-year-old daughter Rachel joined him two
months later in Haiphong. These
two extra months gave Carrie enough time to have her dismissal
accepted by her employer. In the
meantime, Paul settled into their new Vietnamese house and
enrolled their daughter at Haiphong
international school. Before his departure, Paul bought three
books on Vietnam in order to get some
preliminary knowledge about the general business context of the
country. However, his readings on
culture and the economic and political history of Vietnam
seemed to be too disconnected from
today’s business reality.
One week before his arrival in Vietnam, Paul had a three hour
meeting with Robert
Greenberg in New York. Robert showed him the outlines of the
corporate strategy aiming at creating
synergies among the three Asian subsidiaries. Since then, they
never spoke to each other directly
anymore.
PAUL AND ARRIE’S FRUSTRATION SIX MONTHS AFTER

THEIR ARRIVAL IN HAIPHONG
Six months after his arrival in Vietnam, Paul was feeling
extremely frustrated. Sadly, he
begins to explain to his wife Carrie:
“I have two big problems. My first one is related to the
financial conditions of my
expatriation contract. When I applied for this expatriation
position in Vietnam, I expected to benefit
from an excellent compensation offer, as all the other
expatriates I had met before in the CFB Co.
internal conferences had enjoyed. Although the final result of
negotiations with the HR manager
from headquarters varied from one expatriate to another, all of
them were generally managing to
negotiate at least double their previous salaries and lots of
mobility, protection of purchasing power,
accommodation, and hardship allowances. I thought that this
expatriation to Vietnam would be not
38
13, Number 3, 2007
only a springboard for my career but also a good financial
move. Unfortunately for me, the expected
financial gain did not materialize. I am one of the five
expatriates out of 25 who have less than six
years of international experience. My compensation is therefore
calculated according to the balance
sheet approach. Of course, the cost of living in Haiphong is
significantly lower than in New York

and the company had provided me with a nice house and a good
company car. Nevertheless, I feel
upset and frustrated. The expatriates from other multinational
companies that I met in Hanoi and Ho
Chi Min City enjoy better living conditions. In addition, they
live in far more attractive cities than
Haiphong. As I am the only American expatriate in CFB
Vietnam, I feel isolated and frustrated.
Since my arrival in Haiphong, I have practically worked alone
in order to make the things work. The
expatriates from CFB Hong Kong and CFB Singapore
subsidiaries are all seniors, they are paid
according to a far more advantageous compensation scale, plus
they are living in very modern cities
where all the usual distractions Americans are accustomed to
are available. Furthermore, these two
Asian subsidiaries employ several expatriates who are all
collaborating closely in order to achieve
their objectives together. Between Hong Kong and Singapore,
the expatriates are used to pay each
other regular friendly visits. My own salary does not allow me
to enjoy the week-ends that my
counterparts from Hong Kong and Singapore are enjoying.”
Carrie was not surprised. She had many times noticed the sad
mood of her husband in the
past few months… She encouraged him to continue. “What is
your other problem?”
“My second problem is related to my work. I feel very
frustrated by the results of my work
in the subsidiary and the relationships I have with my
Vietnamese colleagues. The financial situation
of the subsidiary six months after my arrival is very bad:
declining revenues, decreasing motivation
of Vietnamese plant workers and staff, lack of cooperation on

behalf of local management, etc. The
implementation of the new organizational strategy is far from
even getting off the ground! I have
to handle all these problems alone. I have the impression that
my work does not produce any of the
expected results… What about you, Carrie, how do you feel?”
Carrie’s situation was hardly encouraging. Carrie seemed to be
getting more and more
depressed and irritated. Before their departure from U.S., she
had been starting her fourth year of
employment at the New York Stock Exchange as a financial
analyst. Even though she liked her job
and had good prospects for advancement in her career, she
seemed enthusiastic to accompany her
husband to Vietnam for the entire expatriation period. Thus, she
could spend more time with their
daughter. Carrie collected her thoughts and her courage and
replied to Paul:
“To me, who have never left the North American continent,
Vietnam seemed to be an exotic
country… and I thought, before our departure, that your
expatriation would be a very new, enriching
experience. However, this experience turns out to be hard to get
through. Life here in Haiphong is
not what I had imagined. Being used to work, I am getting bored
staying home all day long. I also
miss my family and friends whom we were used to visiting
regularly in New York. Besides that, I
have to admit that Haiphong’s heat and humidity are really
unbearable for me… And finally, I am
also very worried for Rachel. The fact that she has arrived in
the middle of the school year in the

39
13, Number 3, 2007
local Anglophone school prevents her from making any friends,
as her classmates do not speak
English outside the classroom. Rachel no longer wants to do her
homework and cries every morning
before going to school… We definitely cannot go on like this!
What will we be doing, Paul? I hardly
recognize our family, which is normally so happy.”
SELECTED QUESTIONS FOR CASE DISCUSSION
Topic 1: Alignment of International Strategy and Headquarters’
Orientation Regarding
the International Hrm Policy
1. Which internationalisation strategies do you recognise in this
case study?
2. What is the HRM orientation adopted by the headquarters?
What comments can you
make concerning this choice? What can you recommend to the
company’s
headquarters in this sense?
Topic 2: Expatriation Management
1. Is Paul Fierman a good candidate for this expatriation
position?
2. What comments can you make on the expatriation
management in general? And what

comments can you make on the expatriate recruitment policy in
particular?
Topic 3: Compensation of International Staff
1. What are the different expatriate compensation methods you
recognised in the text?
What are the advantages and disadvantages of these different
expatriate
compensation methods?
2. What do you suggest to the U.S. headquarters’ human
resources manager in order to
improve the expatriate satisfaction / compensation?
40
13, Number 3, 2007
Appendix 1
Map of South-East Asia
41
13, Number 3, 2007

Appendix 2
Chicago Food and Beverage Co. organizational chart
Chicago Food and Beverage Co. (CFB Co.)
Headquarters: Chicago (United States)
Regional zone: UNITED STATES
Regional center: Chicago
Regional zone: ASIA
Regional center: Singapore
Regional manager: Robert Greenberg
Chicago
subsidiary
New York
subsidiary
Atlanta
subsidiary
Los Angeles
subsidiary
Portland
subsidiary
Belgium
subsidiary

Germany
subsidiary
France
subsidiary
Singapore
subsidiary
Hong Kong
subsidiary
Vietnam subsidiary
(Haiphong)
Manager: Paul Fierman
Regional zone: EUROPE
Regional center: Brussels
Appendix 3
Compensation packages
Table 1: Annual compensation package of a junior expatriate
employee: balance sheet approach
Employee: Paul Fierman
Position: General manager of CFB Vietnam
Country: Vietnam
Reason for relocation: New assignment
Effective date of change: 5April 2004
Item Total amounts
US$
Paid in US$ Paid in local currency VN

dong
Base salary: 320,000 160,000 2602240000
Hardship allowance (20%) 64,000 64,000
Trip allowance 25,000 25000
Housing deduction - 22,000 - 22,000
Car deduction - 5,000 - 5,000
Tax equalization - 43,200 - 43,200
TOTAL 338,800 178,800 2602240000
Cost of leaving allowance index: Haiphong: 84; New York: 100
Exchange rate: US$ 1 = 16,264 VN dong
42
13, Number 3, 2007
Table 2: Annual compensation package of a senior expatriate
employee: international method
Employee:
Position: General manager
Country: Hong Kong
Effective date of change:
Item Total amount (US$) Paid in US$ Paid in local
currency HK$

Base salary 400000 200000 1560000
Cost of living allowance 25000 195000
Overseas service premium (20%) 80000 80000
Trip allowance 35000 35000
Schooling allowance 10000 10000
Taxprotection 50200 50200
Housing and car provided
TOTAL 600200 375200 1755000
Cost of living allowance index: Hong Kong: 110; New York:
100
Exchange rate: US$ 1 = HK$ 7.8
95
16, Special Issue, Number 1, 2010
ACCOUNTING FOR BUSINESS COMBINATIONS
AND THE CONVERGENCE OF INTERNATIONAL
FINANCIAL REPORTING STANDARDS WITH U.S.

GENERALLY ACCEPTED ACCOUNTING PRINCIPLES:
A CASE STUDY
Marianne L. James, California State University, Los Angeles
CASE DESCRIPTION
The primary subject matter of this case concerns changes in
accounting for business
combinations and the convergence of International Financial
Reporting Standards (IFRS) with U.S.
Generally Accepted Accounting Principles (GAAP). The case
focuses on the effect of the changes
on financial statements of global entities, as well as strategic
decisions made by company
executives.
Secondary, continuing significant differences between U.S.
GAAP and IFRS and future
potential developments in accounting for consolidated
multinational entities are explored. This case
has a difficulty level of three to four and can be taught in about
50 minutes. Approximately three
hours of outside preparation is necessary to fully address the
issues and concepts. This case can be
utilized in an Advanced Accounting course, either on the
graduate or undergraduate level to help
students understand changes in and differences between U.S.
GAAP and IFRS. Two sets of questions
address U.S. GAAP and IFRS and include researchable
questions that are especially useful for a
graduate level course. The case has analytical, critical thinking,
conceptual, and research
components. Utilizing this case can enhance students’ oral and
written communication skills.

CASE SYNOPSIS
Financial reporting in the U.S. is changing dramatically.
Consistent with the Securities and
Exchange Commission’s proposed “Roadmap” (SEC, 2008), the
U.S. likely will join the more than
100 nations worldwide that currently utilize International
Financial Reporting Standards (IFRS),
and require the use of IFRS in the U.S.
Because of the globally widespread use of IFRS, multinational
entities with subsidiaries that
prepare IFRS-based financial statements already have to be
knowledgeable about IFRS as well as
the current differences between U.S. GAAP and IFRS.
Fortunately, the Financial Accounting
Standards Board (FASB) and the International Accounting
Standards Board (IASB) are working
96
together to bring about convergence between the two sets of
accounting standards.
Recently, FASB and the IASB issued new and revised several
existing standards that
eliminate many differences between U.S. GAAP and IFRS with
respect to business combinations and
consolidated financial statements. However, some significant
differences persist. Until the SEC

makes a final decision regarding the mandatory use of IFRS,
and during the proposed multi-year
transition period, current and future accounting professionals
must continue to keep abreast of
changes in U.S. GAAP, be knowledgeable about differences
between U.S. GAAP and IFRS, and, at
the same time, prepare for the likely transition to IFRS. In
addition, company executives should be
cognizant of developments that may affect their strategic
decisions as the U.S. moves toward a likely
adoption of IFRS during the next five years.
This case focuses on the effect of changes in financial reporting
for business combinations.
Changes as well as continuing differences between U.S. GAAP
and IFRS are explored. Secondarily,
strategic decisions arising from the changes and the likely
future adoption of IFRS are addressed.
This case, which can be utilized in Advanced Accounting on
either the graduate or undergraduate
level can enhance students’ analytical, technical, critical
thinking, research, and communication
skills.
INTRODUCTION
Financial accounting and reporting in the U.S. is changing
rapidly. During the past six
months, the Financial Accounting Standards Board, the primary
accounting standard setter in the
U.S., issued twelve (12) new standards and launched its on-line
“Accounting Standards
Codification,” which organizes existing GAAP into 90 topics
(FASB, 2009). At the same time, a
significantly more dramatic change is on the horizon for
accounting professionals, company

executives, and financial statement users.
Consistent with the SEC’s 2008 proposal entitled, “Roadmap for
the Potential Use of
Financial Statements Prepared in Accordance With International
Financial Reporting Standards by
U.S. Issuers,” (Roadmap) in approximately five years, public
companies likely will have to utilize
IFRS, instead of U.S. GAAP (SEC, 2008). In fact, some large
global U.S.-based entities are
permitted to early-adopt IFRS starting in 2009. The SEC
expects to reach a final decision regarding
the mandatory adoption of IFRS in 2011 (SEC, 2008).
If the U.S. indeed adopts IFRS as the required standard for
financial accounting and
reporting, the U.S. will join the more than 100 nations
worldwide that currently permit or mandate
the use of IFRS. For example, starting with the 2005 reporting
period, all European public
companies listed on any European stock exchange must prepare
IFRS-based financial statements.
Other nations, such as Canada, are planning to adopt IFRS in
the near future.
Currently, U.S. GAAP and IFRS are not identical. However,
since signing their
Memorandum of Understanding, commonly referred to as the
“Norwalk Agreement,” in 2002, FASB
and the IASB have been working together to develop a set of
high-quality globally acceptable
97

financial accounting standards and to bring about convergence
of U.S. GAAP and IFRS. Since the
Norwalk Agreement was signed, many new and revised
standards issued by FASB and the IASB
have served the purpose of eliminating existing differences.
However, while many differences have
been eliminated, others persist.
Accounting for and reporting by global entities is quite
complex. U.S., as well as
international accounting rules require that a parent company
consolidates its subsidiaries’ financial
statements with the parent company’s financial statements.
Recent standards issued by the IASB
and FASB have eliminated many differences between U.S.
GAAP and IFRS in accounting for
business combinations and financial reporting for consolidated
entities. However, some significant
differences continue to exist.
KLUGEN CORPORATION
Irma Kuhn, CPA, CMA holds the position of Chief Financial
Officer (CFO) of Klugen
Corporation, a global telecommunications company. Klugen is
a consolidated entity headquartered
in the U.S. with four majority-owned European subsidiaries.
The company has expanded primarily
by acquiring majority interest in European companies and holds
between 51% and 70% of the
outstanding voting stock of its subsidiaries. Three of these
subsidiaries were acquired in stages and
consolidated once the company achieved majority ownership.

Consistent with current accounting rules, Klugen consolidates
all four of its subsidiaries. In
addition, Klugen also holds financial interests in several
unconsolidated entities and accounts for
those as investments.
Klugen’s European subsidiaries currently prepare their financial
statements consistent with
International Financial Reporting Standards (IFRS), which are
promulgated by the International
Accounting Standards Board (IASB). Klugen, the parent
company, issues consolidated financial
statements, which include the results of its majority-owned
subsidiaries in conformity with U.S.
GAAP. Preparation of Klugen’s consolidated financial
statements requires that Irma and her staff
convert the subsidiaries’ IFRS-based financial statements into
U.S. GAAP prior to consolidating the
numbers. This process is quite complex and requires many of
the accounting departments’ resources.
Irma is well aware of efforts between the FASB and the IASB to
bring about convergence
between U.S. GAAP and IFRS. She expects that consistent with
the SEC’s “Roadmap,” (SEC, 2008)
within the next five years, U.S. public companies likely will
have to apply IFRS, rather than U.S.
GAAP. Irma welcomes this development and believes that in the
long-run, use of IFRS by the parent
company as well as its subsidiaries will preserve and strengthen
the company’s global financial
competitiveness. In addition, she believes that it will simplify
the accounting and consolidation
process significantly and, in the long-run, reduce financial
reporting costs. She is aware, however,

that in the short-run many challenges, such as conversion of the
accounting and IT systems and
extensive staff training will increase costs. Knowing that the
SEC’s Roadmap proposes a phased-in
98
adoption by public companies between 2014 and 2016, Irma
plans to recommend adoption of IFRS
at the earliest permitted time.
As the person who ultimately is responsible for financial
reporting, Irma is very
knowledgeable about current and proposed changes in U.S.
GAAP as well as IFRS. She knows that
the IASB and FASB have issued new and revised standards
applicable to business combinations that
affect the company’s consolidated financial statements. After in
depths analysis of the new and
revised standards, she determined that many of the past
differences between U.S. GAAP and IFRS
where eliminated when the FASB issues FAS 141 R “Business
Combinations” and FAS 160 “Non-
controlling interest in consolidated financial statements”
(FASB, 2007) and the IASB revised IFRS
3 “Business Combinations” and IAS 27 “Consolidated and
Separate Financial Statements” (IASB,
2008). She also realizes that some significant differences still
persist. Klugen Corporation has
properly adopted FAS 141R and FAS 160 (now codified in
sections 805 and 810 of FASB’s 2009

Standards Codification) for the 2009 fiscal period and its
forthcoming annual report will reflect
those changes.
Irma regularly conducts in-house seminars to instruct her
accounting staff regarding new
developments in financial reporting. In fact, her seminars meet
the Continuing Professional
Education (CPE) sponsor requirements set forth by the National
Association of State Boards of
Accountancy (NASBA) and the Quality Assurance Service
(QAS), which is required by State
Boards of Accountancy and other licencing organizations for the
renewal of CPA, CMA and other
professional certifications.
Irma’s CPE seminars entitled “Financial Reporting Updates” are
always well received by
her staff. During the past six months, Irma already has held
several seminars to inform her staff
regarding IFRS. Those who attended all her seminars are
already familiar with the SEC’s Roadmap
that proposes adoption of IFRS starting in 2014, and also know
about some of the most significant
differences between U.S. GAAP and IFRS.
Since in about five (5) months, Klugen Corporation will issue
its consolidated financial
statements, which will, for the first time, incorporate FAS 160
and FAS 141R, Irma decides to
schedule a seminar on “Business Combinations - Consolidated
Financial Statements” for October
15, 2009. The following is a brief agenda for Irma’s Seminar:
Business Combinations - Consolidated Financial Statements -
Financial Reporting Update

October 15, 2009 - Agenda
1. Review of fundamental concepts of business combinations
and consolidated financial
statements
2. Changes to U.S. GAAP (FAS 141R and FAS 160)
3. Significant continuing differences between U.S. GAAP and
IFRS
4. Developments with potential impact on future fiscal periods
99
5. Questions
The seminar will be highly beneficial for staff members who are
currently involved or
planning to become involved in critical aspects of financial
reporting and also for those who want
to develop their knowledge of IFRS. During the seminar, Irma
distributes several handouts,
including the company’s prior year income statement and
balance sheet for reference.
Table 1
Klugen Corporation
Consolidated Statement of Income
for the year ended December 31, 2008
Numbers are in million (except share amounts)

Operating Revenues
Business service $15,500
Residential service 10,200
Wireless service 18,000 $ 43,700
Operating Expenses
Cost of services (excludes depreciation & amortization) $
15,200
Selling, general, administrative expenses 11,100
Depreciation and amortization 7,150 $ 33,450
Operating Income $ 10,250
Other Income (Expense)
Interest expense (820)
Minority interest (1,010)
Investment income 405 (1,425)
Income Before Income Taxes $ 8,825
Income Tax 3,250
Net Income 5,575
Basic Earnings Per Share $2.08

Diluted Earnings Per Share $1.92
The accompanying notes are an integral part of the consolidated
financial statements
100
Table 2
Klugen Corporation
Consolidated Balance Sheet
December 31, 2008
(Numbers are in millions)
Assets
Current Assets
Cash and cash equivalents $ 519
Accounts receivables (net of allowances of $310) 4,200
Prepaid expenses 400
Other current assets 520
Total Current Assets $ 5,639
Non-Current Assets

Property, plant & equipment (net) 25,600
Goodwill 18,500
Licenses 12,900
Customer relationships (net) 3,100
Investments in non-consolidated entities 1,000
Dividends receivables 300
Other assets 1,200
Total Non-Current Assets $62,600
Total Assets $68,239
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable and accrued liabilities 5,200
Advanced billings and deposits 920
Accrued taxes 420
Total Current Liabilities $ 6,540
Non-Current Liabilities
Long-term debt 25,500
Post-retirement benefits 2,300

Deferred taxes 3,200
Total Non-Current Liabilities $31,000
Total Liabilities $37,540
Minority Interest 5,000
101
Table 2
Klugen Corporation
Consolidated Balance Sheet
December 31, 2008
(Numbers are in millions)
Stockholders’ Equity
Common stock ($1 par, 100,000,000 authorized, 60,000,000
issued)
60
Additional paid in capital 13,095
Retained earnings 14,588
Accumulated other comprehensive income (2,044)

Total Stockholders’ Equity 25,699
Total Liabilities and Stockholders’ Equity $68,239
The accompanying notes are an integral part of the consolidated
financial statements.
The Seminar
Agenda Item 1 Fundamental Concepts of Business Combinations
- Consolidated
Financial Statements
During the first part of the seminar, Irma reviews several
fundamental concepts
relating to accounting for business combinations. She
emphasizes that these concepts are
common to both U.S. GAAP and IFRS.
Fundamental Concepts common to both U.S. GAAP and IFRS
‚ The parent company issues consolidated financial statements
that include the results
for all subsidiaries that the company controls.
‚ Control is usually assumed when the parent holds a controlling
financial interest
(generally, more than 50% ownership of the outstanding voting
common stock.
‚ Consolidated financial statements include 100% of the
subsidiaries’ assets, liabilities,
revenue, expense, gains, and losses, even if the subsidiary is
only partially owned.
‚ Subsidiaries’ previously unrecognized assets are identified at

time of business
combination and are recognized in the consolidated financial
statements.
‚ Goodwill is recognized on the consolidated balance sheet if
the acquisition cost
exceeds the fair value of the subsidiaries’ identifiable net
assets.
‚ Goodwill is not amortized, but periodically tested for
impairment.
‚ Non-controlling interest (formerly called minority interest) is
recognized on the
consolidated balance sheet.
102
Agenda Item 2 Changes in U.S. GAAP
Irma discusses the most important changes in accounting and
financial reporting for
consolidated entities consistent with FAS 141R and FAS 160.
She prepares a handout for
the seminar participants, consisting of a comparative table that
contrast the new rules
(effective for the 2009 financial statements) with the prior
rules.
Table 3
Recent Changes to U.S. GAAP - effective 2009 - FAS 141R and

FAS 160
Issue E f f e c t i v e 2 0 0 9 F i n a n c i a l
Statements
Pre-2009 Financial Statements
Subsidiaries’ assets and liabilities All assets and liabilities are
revalued to fair market value at
acquisition date (100%
revaluation).
Assets and liabilities were
revalued based on the parent’s
ownership percentage
Negative goodwill Recognized as gain for year of
acquisition.
Recognized as a proportionate
reduction of long-term assets.
Balance sheet classification of non-
controlling interest (NCI)
NCI is classified as equity. NCI is recognized as liability,
equity, or between liabilities and
equity.
Income statement presentation of
NCI’s share of income
Presented as a separate deduction
from consolidated income to
derive income to controlling
stockholders.

NCI was presented as part of
“Other income, expenses, gains,
and losses.”
NCI valuation Is carried at fair market value of
subsidiaries’ net assets, multiplied
by NCI percentage.
Carried at book value of
subsidiaries’ net assets, multiplied
by NCI percentage.
Cost of business combinations Direct costs are expensed during
year of acquisition
Direct costs were capitalized as
part of acquisition cost.
In process research and development
(R&D)
Are capitalized at time of
acquisition.
Could be expensed at time of
acquisition.
Acquisition in stages Previously acquired equity interest
is remeasured when acquiring
company achieves control; gain or
loss is recognized in the income
statement.
Measurement was based on
values at time of individual equity

acquisition
Terminology Minority interest is now referred
to as “non-controlling interest.”
The commonly used term was
“minority interest.”
103
Agenda Item 3 Significant Continuing Differences Between
U.S. GAAP and IFRS
Irma highlights continuing significant differences between U.S.
GAAP and IFRS.
This information is particularly important for those staff
members who are involved in the
consolidation process and those who wish to prepare for the
future adoption of IFRS. The
following table represents a handout based on Irma’s
PowerPoint presentation:
Table 4
Summary of Current Differences Between U.S. GAAP and IFRS
Issue U.S. GAAP IFRS
Definition of control Defined as “controlling financial
interest” (ARB 51).
Usually interpreted as majority
voting interest.

Focuses on “power to govern
financial and operating policies”
(IFRS 3, par. 19); The goal is that
activities generate “benefits” for
controlling entity.
Shares considered for determining
control
Only existing voting rights are
considered.
May include exercisable shares.
Calculation of non-controlling
interest (NCI)
NCI interest is measured at fair
value of total net assets and
includes share of goodwill.
Choice between (1) fair value
and (2) proportionate share of fair
value of identifiable net assets.
Calculation of goodwill at time of
acquisition
Goodwill (if it exists) also includes
share attributed to NCI.
If second option is chosen,
goodwill is only attributed to
controlling interest (parent).

Contingencies - initial measurement Contractual contingent
assets or
liabilities are valued at fair market
value. Non-contractual contingent
assets and liabilities that meet the
‘more likely than not’ test are
accounted for consistent with SFAC
6.
Non-contractual assets and
liabilities: If they do not meet ‘more
likely than not test’ are accounted
for consistent with FAS 5.
Recognition of contingent liability:
Contingent liability is recognized
even if it is does not meet the
‘probable’ test if the present
obligation
arises from a past event and is
reliably measured.
104
Table 4
Summary of Current Differences Between U.S. GAAP and IFRS
Issue U.S. GAAP IFRS
Goodwill impairment test Two-step approach: (1) compare
book value of reporting unit to fair
market value of reporting unit; (2) if

book value is larger, impairment is
equal to book value less implied
fair value of goodwill.
One-step approach
Compare book value to larger of
cash generating unit’s (a) fair value
less selling cost and (b) value in use
[value in use = PV of expected
future cash flows].
Agenda Item 4 Developments with Potential Impact on Future
Fiscal Periods
Irma briefly mentions other developments in the consolidation
area. She mentions
that in June 2009, FASB issued FAS 166, “Accounting for
Transfers of Financial Assets,”
and FAS 167, “Amendments to FASB Interpretation No. 46R”
(FASB, 2009). FAS 166
eliminates the concept of qualifying special purpose entities
(SPE); FAS 167 deals with the
consolidation aspects of this elimination. Specifically,
companies with formerly classified
qualifying SPEs must now assess these entities for possible
consolidation.
FAS 167 focuses on control and the primary beneficiary of the
SPE in determining
whether a company, such as Klugen Corp., must consolidate its
SPE. A primary beneficiary
is (1) able to direct activities of the SPE and is required to
absorb significant gains and
losses. A company is assumed to have control if (1) it has the
power to direct activities, (2)
has the most significant impact on the entity’s performance, and

(3) is required to absorb
losses, and benefit from gains (FAS 167, par. 14A-G). Irma
reminds her staff that currently
Klugen Corporation does not have investments in qualifying
SPE’s; thus, the new standards
will not affect the company.
Irma also mentions that in December 2008, the IASB issued
Exposure Draft 10 (ED
10) “Consolidated Financial Statements,” (IASB, 2008), which
proposes a single definition
of control that is very similar to the FAS 167 definition. Once
this exposure draft is finalized,
convergence between U.S. GAAP and IFRS likely will be
further enhanced. Irma promises
to keep her staff informed about developments in that area.
Agenda Item 5 Questions
At the end of the seminar, many questions arise from the staff
and some from the
CEO, who attended the second half of the seminar. Irma
answers as many questions as
possible and promises to prepare a short question/answer
briefing sheet for all those who
105
were present at the seminar. During the seminar she summarizes
the following questions as
shown in the Assignments section.

ASSIGNMENTS
Answer the questions specifically assigned by your instructor.
U.S. GAAP Questions
1. How will adoption of the new accounting standards (FAS
141R and FAS 160) affect Klugen
Corporation’s financial statements in the forthcoming reporting
period?
2. Utilizing the 2008 numbers, prepare (1) a partial income
statement starting at income from
operations and (2) the equity section of the balance sheet
consistent with the requirements
of FAS 141R and FAS 160 (FASB Accounting Standards
Codification sections 805 and
810).
3. How will adoption of FAS 141R and FAS 160 affect Klugen
Corporation’s financial
statements in the long-run?
4. What key financial ratios will be affected by the adoption of
FAS 141R and FAS 160? What
will be the likely effect?
5. What additional estimates have to be made consistent with
the new accounting standards?
6. Could any of the recent and forthcoming changes affect the
company’s acquisition strategies
and potentially its growth?
7. What were FASB’s primary reasons for issuing FAS 141R

and FAS 160? (Research
question)
8. What are qualifying SPEs? Do they exist under IFRS? What
is the effect of FAS 166
eliminating the concept of qualifying SPEs on the convergence
of accounting standards?
9. FASB and IASB recently issued an updated Memorandum of
Understanding. Retrieve the
updated memorandum and identify several issues that the two
standard setting boards are
jointly focusing on to facilitate convergence. (Research
Question)
106
IFRS Questions
1. From the consolidation perspective, what would be the likely
overall effect of adopting IFRS
on the company’s financial statements?
2. What potential effect would arise if Klugen were to select the
option under IFRS 3 to value
non-controlling interest at the proportionate share of its
subsidiaries’ net identifiable assets?
3. Do you believe that an impairment of goodwill would be
more likely under IFRS or under
U.S. GAAP? Why, or why not?

4. What challenges would arise for the accounting staff if the
company adopts IFRS? Do you
believe that he company is making progress toward meeting
some of these challenges?
5. What opportunities would arise for the accounting staff if the
company adopts IFRS?
6. What other (non-staff related) factors should Klugen
Corporation consider prior to adopting
IFRS? Differentiate between advantages and disadvantages.
7. Two of Klugen’s non-consolidated entities regularly grant
stock options to its employees.
How could this affect Klugen’s accounting for these entities
under IFRS?
8. As indicated in the case, Irma previously highlighted some
other significant differences
between IFRS and U.S. GAAP. Research the issue and find
three (3) differences other than
those related to business combinations. You may want to
consider accounting for inventory,
extraordinary items, property, plant and equipment, and
research and development.
9. Assume that the SEC provides a choice in the timing of the
adoption of IFRS. What ethical
issues could arise for the CFO in deciding whether to adopt
IFRS at the earliest possible, or
at a later required date? (Research question)
10. Review comment letters received by the SEC regarding its
Roadmap. List two concerns
mentioned by those offering comments. (Research question)

REFERENCES
Committee on Accounting Procedures (1959). Accounting
Research Bulletin No. 51. Consolidated Financial Statements.
Original Pronouncement. Financial Accounting Standards
Board: Stamford: CT.
107
Financial Accounting Standards Board (2009). FASB
Accounting Standards Codification. Http://www.fasb.org.
Financial Accounting Standards Board (2009). FASB Statement
No. 167. Amendments to FASB Interpretation 46R.
Retrieved on July 7, 2009, from http://www.fasb.org.
No. 166. Accounting for the Transfer of Financial
Assets - an amendment of FASB Statement No. 140. Retrieved
on July 7, 2009, from http://www.fasb.org.
No. 160. Non-Controlling Interest in Consolidated
Financial Statement. Retrieved on January 5, 2008, from
http://www.fasb.org.
No. 141R. Business Combinations. Retrieved on
January 5, 2008, from http://www.fasb.org.

Financial Accounting Standards Board (2002). Memorandum of
Understanding. The Norwalk Agreement. September
18. Retrieved on June 18, 2008, from
fasb.org/newsmemoradum.pdf.
International Accounting Standards Board (2008). ED 10
Consolidated Financial Statements. December 2008. Retrieved
on March 30, 2009, from http://www.iasb.org.
International Accounting Standards Board (2008). International
Financial Reporting Standard No. 3. Business
Combinations. London, England: IASB.
International Accounting Standards Board (2008). International
Accounting Standard No. 27. Consolidated and Separate
Financial Statements. London, England: IASB.
Securities and Exchange Commission (2008). Roadmap for the
Potential Use of Financial Statements Prepared in
Accordance With International Financial Reporting Standards
by U.S. Issuers. Release No.: 33-8982, File No.
S7-27-08. Retrieved on November 19, from
http://www.sec.gov.
108
AUTHOR’S NOTE
This is a fictitious case. Any similarities with real companies,
individuals, and situations are solely
coincidental.

Copyright of Journal of the International Academy for Case
Studies is the property of Dreamcatchers Group,
LLC and its content may not be copied or emailed to multiple
sites or posted to a listserv without the copyright
holder's express written permission. However, users may print,
download, or email articles for individual use.
UNIT I
Why do you think the world’s largest theme park operator, the
Walt Disney Co., was motivated to establish parks in Tokyo,
Paris, and Hong Kong? What particular market characteristics
of each of those sites were especially attractive in your opinion?
Should Disney establish additional foreign parks, and if so,
when, where, why, and how?
Your response should be at least 300 words in length.
UNIT V
1. Discuss the risks that an international fast food restaurant,
such as Subway, would have by operating abroad rather than
just domestically. Include at least two factors or policies, and
explain the impact of each.
2. Assume that the corporation you work for is having trouble
with a partner in a new foreign market. Discuss the various
problems of collaborative arrangements that might be occurring.
Be sure to explain the impact of each problem that you use.

Journal: No word length requirement but should be in APA
1. In your opinion, what role does culture play in international
expansion by a corporation?
2. What are the pros and cons to living in a society where the
rule of man dominates the legal system? Would the rule of man
be a better system than the rule of law in your opinion?
3. Recently, there has been much criticism about the Trans-
Pacific Partnership free trade agreement. Discuss three issues
that may seem questionable in relation to the agreement. Given
that eight other nations have already signed their participation,
would you recommend to the U.S. Senate that it should be
ratified?
4. Many financial newspapers or websites say that the U.S.
dollar is the strongest currency in the world. Think about the
factors that affect exchange rates, and make a case that our
currency should or should not be the strongest. In your opinion,
what are the advantages to having a strong currency versus a
weak currency?
5. Describe a couple of products in your household that have
been imported. Could a domestically made product have filled
the need just as well? Can you describe any services that you
use as being imported?
6. The unit lesson explains five international marketing
philosophies. Which orientation mostly applies to Maytag’s
washers and dryers? Explain why.
7. If you were the CFO for a $10 billion-a-year international
company headquartered in Ireland, which accounting rules
would you recommend your company to follow: U.S. GAAP or
IFRS? Are these rules comparable? What are the major
differences between the two accounting standards? What was
your rationale for choosing a rule?
8. Research suggests many expatriate employees encounter
problems that limit both their effectiveness in foreign
assignments and their contributions to the firm once they return
home. What do you see as the primary causes and consequences

of these problems? What can a firm do to reduce the occurrence
of such problems?
MBA 6601 International Business
Unit I
For this assignment, you will use Hofstede’s characteristics to
differentiate international and domestic business operations.
This exercise will help identify the key characteristics that
drive business decisions on an international and domestic level.
Part 1: Pick three individual countries, one in the Middle East,
one in Asia, and one in Europe. Apply Hofstede’s
characteristics to each one, and state if the characteristic is low,
medium, or high in each country. Also, explain why each
country deserves that description.
Part 2: Given your descriptions, explain which country is most
like the United States and which country is most unlike the U.S.
Your response must be a minimum of three pages in length.
Unit II PowerPoint Presentation
Your company wants to put a ball-bearing factory in Africa.
Your company predicts this is where the most growth will be in
the 21st century. Your assignment is to research a country on
the African continent that you think would be the most
advantageous to your company in cultural, economic, and
political environments.
Your assignment is to point out and explain the facts or
statistics that you think would make this country a good place to
build and staff your factory.
Remember to keep the cultural, economic, and political
environments in mind. Your presentation must include at least
two facts or statistics that relate to each environmental area
(cultural, economic, and political).
Feel free to use the suggested readings as a starting point for
your research on sources of data about different countries in the

world.
You must use at least three authoritative sources, and you are
required to use the
Pull a minimum of two facts or statistics from each source that
you use.
Some good examples of authoritative sources are provided
below:
The U.S. State Department
http://www.state.gov/p/af/ci/index.htm
The World Bank http://data.worldbank.org/country
The Academic Search Complete database features information
on countries through the CIA World Factbook.
The Business Source Complete database has a “Country Report”
that can be selected in the Publication Type area. These reports
by country can be 200
-plus pages and are very in depth.
Your PowerPoint presentation should be a minimum of 10
slides. Be sure to use APA guidelines to cite and reference the
sources for your facts.
Unit III Essay
For this assignment, write an essay that addresses each of the
following points:
1. Choose five U.S. government policies that affect trade with
foreign nations. Identify three factors of production and
describe how their mobility is good or bad for U.S. trade
2. Distinguish between absolute advantage and comparative
advantage trade theories and give examples
3. Choose either the TPP or the T-TIP free trade agreement and
describe which other countries have signed on and why the U.S.
Senate should ratify or not ratify the agreement. Also, explain
how regional trading groups influence organizations.
Your essay submission should be a minimum of three pages in
length in APA style; however, a title page, a running head, and

an abstract are not required.
You are required to use at least two scholarly sources for this
essay. Your responses to the three prompts must be in paragraph
form.
Be sure to cite and reference all quoted or paraphrased material
appropriately in APA style
Unit IV Assignment
For this assignment, you will practice calculating exchange
rates and examine some of the key factors that have an impact
on foreign exchange. Document is attached
Unit VI Article Critique
Your task is to offer a detailed critique of a peer-reviewed
article, which you can locate in the CSU Online Library. The
article must be related to international marketing. In your
critique, address the following questions:
What are the main points and arguments of the author(s)?
What is your opinion of the article?
How can the points and arguments of the author(s) be applied to
the lesson in this unit? (Some examples include the marketing
mix, marketing orientation, and organizational structure.)
The critique should be a minimum of two pages in length in
APA style; however, a title page, a running head, and an
abstract are not required.
appropriately in APA style.
Unit VII Case Study
Read the case study indicated below, and answer the following
questions:
Marianne, J. L. (2010). Accounting for business combinations
and the convergence of International Financial Reporting
Standards with U.S. Generally Accepted Accounting Principles:

A case study. Journal of the International Academy for Case
Studies, 16(1), 95-108.
1. What key financial ratios will be affected by the adoption of
FAS 141R and FAS 160? What will be the likely effect?
2. Could any of the recent and forthcoming changes affect the
company’s acquisition strategies and potentially its growth?
3. What were FASB’s primary reasons for issuing FAS 141R
and FAS 160?
4. What are qualifying SPEs? Do they exist under IFRS? What
is the effect of FAS 166 eliminating the concept of qualifying
SPEs on the convergence of accounting standards?
5. If the company adopts IFRS, what changes should
management be aware of?
6. What are the principle differences between IFRS and U.S.
GAAP?
Your submission should be a minimum of three pages in length
in APA style; however, a title page, a running head, and an
abstract are not required. Be sure to cite and reference all
quoted or paraphrased material appropriately in APA style.
Unit VIII Case Study
To read the case study below,
Bodolica, V., & Waxi, M. (2007). Chicago food and beverage
company: The challenges of managing international
assignments. Journal of the International
Academy for Case Studies, 13(3), 31-42.
Please answer the following questions after reading the case
study:
1. Which staffing framework do you recognize in this case
study? Explain its characteristics and the advantages to using
this type of framework?
2. Would this type of staffing framework affect Paul’s ability to
get things done?
Why, or why not?

3. Explain if any of the other staffing frameworks would be any
better? What can you recommend to the company’s headquarters
in this sense?
4. Why does Paul want this job? Is Paul a good candidate for
this expatriate position?
5. What comments can you make on expatriate management in
general? And what comments can you make on the expatriate
recruitment policy in particular?
6. What are the different expatriate compensation methods you
recognized in the text? What are the advantages and
disadvantages of these different expatriate compensation
methods?
7. What do you suggest to the U.S. headquarters’ human
resources manager in order to improve the expatriate
satisfaction/compensation?
Your submission should be a minimum of three pages in length
in APA style; however, a title page, a running head, and an
abstract are not required.
appropriately in APA style

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