BUS 531 – INTERNATIONAL BUSINESS. H&M CHOOSING BETWEEN GLOBAL AND REGIONAL FREE TRADE

Source: The following case is subtracted from Cavusgil T. S, Knight, R and Rosenberger J.R. (2014) International Business, 3^rd edition, Pearson Education Limited, Essex England.

Requirements:

1. Provide 1 page Summary of the case study- what is the main issue discussed.

2. Provide answers to the following questions:

2.1 China and Asia have the most comparative advantages in producing apparel. Free trade theory implies that retailers should import clothing from the most efficient country. Given this the potential drawbacks of regional integration, would it be better to allow free trade to take its natural course? That is, should agreements like OPT be restricted and apparel retailers be allowed to import from the most cost effective suppliers, whether they are located worldwide.

2.2. What are the advantages and disadvantages of OPT to Romanian firms? To Romania as a nation?

2.3 Romania is a poor country that faces job losses in its apparel sector from growing foreign competition. What can the Romanian government do to help keep jobs in Romania? Should the government try to attract more foreign investment into Romania? What steps could the government take to attract more FDI?

2.4 H&M is smaller than Spanish rival ZARA. What should H&M do to compete with this firm that also sources fast fashion from Europe? What should H&M do to counter the flood of low – cost apparel now entering the global market from China? What can H&M do to ensure its future survival and success?