Lecture 6

Question 1

Was Air New Zealand’s purchasing of Ansett vertical or horizontal integration?

Answer 1

Horizontal

Question 2

Why is Air New Zealand’s ownership of Virgin Blue limited to 49%?

Answer 2

The Australian Government wants Australian companies to own the majority of an Australian airline

Question 3

Why did Ansett go bankrupt in 2001?

Answer 3

The Australian Government regulations stated that certain routes had to be taken, however these were not used enough to be profitable, leading to severe losses

Question 4

Why did the New Zealand Government bother to save Air New Zealand by injecting $885 million?

Answer 4

Air lines are a strategic asset, particularly as one of New Zealand’s key industries is tourism

Question 5

What are the advantages of making a product at home and exporting it, letting a foreign agent handle overseas marketing?

Answer 5

Less financial investment
The agent has knowledge of the native market
Manufacturing quality can be controlled

Question 6

What are the disadvantages of making a product at home and exporting it, letting a foreign agent handle overseas marketing?

Answer 6

Relying on someone else to market your product

Potential tariffs/ taxes

Question 7

What is the advantage of making a complete new subsidiary in a foreign country?

Answer 7

You control and own everything

Question 8

What are the disadvantages of making a complete new subsidiary in a foreign country?

Answer 8

Huge risk and very slow growth

Question 9

What are the advantages of forming an alliance with a company in the host country?

Answer 9

You can utilise an already established brand

Fast growth

Question 10

What are the disadvantages of forming an alliance with a company in the host country?

Answer 10

Shared profits

Cultural synergy or clash