Conference 7.286::digital

2922.0. "International Management" by ELMAGO::BOLSON () Mon Feb 28 1994 22:50

     I was wondering if I could get some input from my fellow Digital 
  employees on a case I'm working on for my International Management course.  
  I'll have to dig for the economic justifications in my paper, but I'm 
  allowed to talk to others on the subject matter.  What I'm looking for are 
  possible parallels to Digital's international experiences.  Thanks in 
  advance.
                         **************************

     Your company is a rapidly growing U.S. manufacturer of personal 
  computers and a variety of peripheral products.  Some of its success is 
  based on proprietary chip designs, but most of its products use components 
  available on the world market.  About 50 percent of sales are in non-U.S. 
  markets and this market is growing more rapidly than is the U.S. market.

     For a number of years the company was barred from sales in Brazil, due 
  to the "Informatics Law", which reserved the Brazilian personal computer 
  hardware market to locally owned producers.  Due both to internal political 
  changes and to external pressures, the government recently enacted 
  significant changes in the law.  Under the new law, the "market 
  reserve" policy is sharply curtailed, and imports of hardware are subject 
  to a moderate tariff.  There continues to be some opposition to the 
  changes, both from local producers and from economic nationalists.  It is 
  possible that our firm, which already markets two software products in 
  Brazil, will be significantly affected by the new system.  Since it is one 
  of the world's ten largest economies, we would like to maintain a presence 
  in the Brazilian market.

     Management has asked you for an analysis of several issues arising from 
  Brazilian trade policies in the informatics area.  Among them are:

     1>	Are there identifiable "winners" and "losers" from the liberalization 
        of the law?  Who are they, and might any of them be potential allies?

     2>	The new law allows imports of some components at lower tariff rates 
        than apply to finished, ready-to-use products.  What opportunities 
        would this present?  In such a case, how might the "effective 
        tariff" rates on finished computer products differ from the posted or 
        nominal rates?

     3>	What might be the effects of liberalization of trade in computer 
        hardware and software on different sectors of the economy?  Are there 
        any sectors or industries which we should be targeting, and if so, 
        how do we reach them?

     4>	How might the Brazilian government develop a domestic computer 
        manufacturing capacity at the least cost to society as a whole, and 
        where might our firm fit in?