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When abroad, managers often don't know what to do about "requests" for funds or gifts. Walking out on the deal could ruin business relations. Paying up may mean violating the Foreign Corrupt Practices Act as well as personal moral standards. Understanding the importance of gifts in some societies may help U.S. executives find ways to satisfy both the foreign request and U.S. standards. They can, for example, make an equivalent, public donation to a social project in the requester's country; offer services to local causes in lieu of private payments; offer to create local jobs.

Factors like foreign and domestic market structure determine a company's operating exposure to exchange rates. But sophisticated managers have learned to manage foreign-exchange exposure in new ways. For example, companies can approach production units not as fixed, but as flexible, facilities whose importance to the corporation can be adjusted when exchange rates shift. The company can also shift sources of raw materials, subassemblies, and components. Above all, managers are more likely to adopt appropriate courses of action if their performance measurement takes into account the effect of exchange rate changes on operating performance.

In approaching the prospect of a joint venture in the People's Republic of China, foreign executives often plunge ahead with insufficient attention to the strategy of deal making. They waiver in their purposes and seem vague or noncommittal. When such weaknesses come up against the subtle strength that the Chinese bring to the art of negotiating, they become stumbling blocks to the development of effective and profitable commercial relationships. A better understanding of Chinese culture and practices will lead to a better deal.

Presents the economic and political dimensions of competition in the commercial aircraft industry, as demonstrated by Airbus of Europe and Boeing of the United States.

This case is designed to support a discussion of how to apply an economic evaluation of the appropriate level of control of an externality to a real problem with incomplete information of uncertain quality and high political stakes. It sketches the Reagan administration's stance on the issue, explains how regional interests have divided Congress on the desirability of acid rain control legislation, and presents the essential details of a House bill widely felt to have some credibility and political potential. Congressional estimates of the costs of attaining the several different levels of acid rain control possible under the House bill, by several different control methods, are presented and compared to administration estimates of the cost of acid rain damage to agriculture, forests, materials, and lakes. HKS Case Number 699.0

Contains brief introductory material for the body of the case, which is Nixon's August 15, 1971, speech announcing the suspension of the convertibility of gold and wage-price controls. The case will allow discussion of the problems of the Bretton Woods system, the relationship of domestic and international economic problems, and the process of institutional change.

In an effort to retain more corporate earnings, exercise more managerial control, and meet demands of local constituents, governments worldwide are seeking greater domestic ownership of foreign subsidiaries within their borders. A study of corporate responses to India's Foreign Exchange Regulation Act of 1973 (FERA) shows that multinational corporations facing forced equity dilutions have at least four strategic options available: strict compliance, exit, negotiation, and preemptive action. Certain practical considerations limit management's strategic options: the implications of setting a precedent, the corporation's decision-making structure, the level of bargaining power, the political climate, and management's own biases.

Describes three years of the Volcker monetary policy experiment. The Federal Reserve changed the focus by its operating procedure from an interest rate instrument to a reserve instrument and it reaffirmed its commitment to hitting its preannounced monetary growth target. At the same time Congress initiated widespread deregulation of financial institutions. The case encourages discussion on the best strategy and implementation of monetary policy, the effect of deregulation on its conduct, the causes of the recession and disinflation, and the competitive implications of the recent changes in monetary policy for competitive institutions.

Robert Malott, Chairman and CEO of FMC, must decide whether or not to continue his work on product liability law reform, an issue on which he has worked for almost 10 years. Malott must decide how extensive his own involvement should be and what arguments he can or should make to persuade fellow members of the Business Roundtable and other business leaders to join him.

In a letter to outside counsel, a hypothetical CEO comments that although corporate lawsuits are expensive, time consuming, and often counterproductive, business people and lawyers alike assume that litigating rather than settling is the normal way to deal with disputes. To alter this pattern, the CEO proposes that executives and lawyers recast their assumptions, treating prompt settlement of disputes as a primary goal and litigation as a last resort, and viewing lawyers, not as warriors, but as cost-conscious mediators. A cooperative effort by business people and lawyers, the CEO concludes, best ensures a reasonable and cost-effective approach to resolving disputes.

Many Japanese managers are concerned that traditional methods such as consensus management, the ringi decision-making system, seniority promotions, lifetime employment, and Japanese-style long-range planning will inhibit their companies' ability to adapt to rapid technological change and global competition. Three examples of Japanese companies illustrate some common problems with traditional Japanese management methods.

Describes a dilemma faced by Citibank's country manager for Indonesia. His superiors have asked him to raise his profit goal for 1984. But to produce increased profits he would either have to reduce the amount lent at below-market rates, particularly to prime customers and government entities, or to increase the bank's sovereign risk at the time of a downturn in the Indonesian economy. The goal is to illustrate the role of country managers and some of the difficult tradeoffs they face.

Explores the problems and opportunities associated with export controls--one of the most widely used tools of international trade policy in the 1970s and early 1980s; and the role of the United States and Soviet Union as major players in the international economy. Briefly reviews examples of government-initiated export controls--their purposes and methods--from the 1930s through 1983.

Describes the U.S. experience with floating exchange rates between 1973 and 1978, focusing on the rapid decline of the dollar in the summer of 1978. Illustrates the major determinants of the exchange rates and the role of government intervention in the foreign exchange market.

Supplements the case.

Discusses exchange rate determination in world of flexible rates. The fundamentals of supply of and demand for foreign exchange are explained.

The behavior of the Federal Reserve System during the early years of the Great Depression has been a topic of considerable controversy. The Fed, it has been argued, pursued a contracting policy, thereby helping to turn what might have been only a brief recession into an economic catastrophe. This case explores the reasons behind the Fed's behavior, showing students how existing institutional values may be inappropriate to novel situations.

Provides an overview of balance of payments accounting and analytical presentation of balance of payments data. Includes sample transactions to illustrate the application of the basic accounting principles and definitions of the standard balances.

Supplements the case.

What happens to an industry with millions of employees that loses its comparative advantage? This note examines this question by looking at the global textile and apparel industry. With the Multi-Fiber Arrangement coming up for renewal in December 1981, the United States, Europe, and the developing world must decide how to divide the international textile market in the 1980s. The debate focuses on who wins and who loses from protectionism, and the advantages and disadvantages of free trade.