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University University of Auckland (UOA)
Subject INTBUS 305 : Governing International Business

Instructions

Read the following paragraph before attempting the questions below. You have 60 minutes to complete the test. Type your answers below the questions in the text box – you can drag to enlarge the box if required.

Case – Southatania and Butterup

After the Covid Wars, the South Island of New Zealand broke away from its northern neighbor and declared independence. Now renamed Southitania, it is engaged in the complicated process of setting itself up as a sovereign state, with its new capital in Dunedin. The new country is democratic, and, for now, retains the laws that applied before independence. As it is no longer part of New Zealand, Southitaniais busy trying to negotiate new free trade agreements with its major export markets. The US, Canada, UK, and EU have acknowledgedSouthitania as independent states, but China, Russia, and Turkey are reluctant to do so.

At its HQ in Auckland, Buttercup Dairy Ltd is in a bit of a panic. Buttercup is one of New Zealand’s and Southitania’s, major exporters. It finds itself the largest dairy producer in Southitania, where it has hundreds of millions of dollars worth of assets in the form of farms, dairy processing factories, and milk transportation assets. However, Butterup’s CEO has no idea what sort of conditions it will face in the new nation-state. Early indications are not good, as Southitania regards New Zealand with considerable hostility. Trade between the two countries is currently impossible, and relations between them may take years to normalize.

Questions on the following pages.

Question 1

Southitania’s new Minister of Business with Foreigners has asked Angus, the CEO of Buttercup,to fly down to Dunedin from the company’s HQ in Auckland. She wants a meeting to discuss Butterup’stenure in Southitania. Angus needs advice: what might the new government demand, and is Buttercup in a strong position to resist renegotiation efforts by Southitania?

Question 2

Annabelle, Butterup’s PR manager, has an interesting idea. Maybe the NZ company should be being proactive in the development of stringent new laws regarding animal safety and environmental protection in Southitania, including the world’s harshest fines for regulatory breaches. Angus can’t believe what he’s hearing – how could this be to the company’s advantage? Can you explain Annabelle’s logic?

Question 3

Southitania’s navy continues to harass New Zealand’s fishing boats in the Southern Ocean and has placed restrictions on the movement of people between the countries. Last week, the Prime Minister of New Zealand announced her intention to ‘increase pressure’ onSouthitaniato end these antagonisms. Yesterday, she sent officials from the Ministry of Foreign Affairs to study Butterup’s internal records to “understand its operations” in Southitania. Daisy, Butterup’s international affairs analyst, is nervous. “Don’t be a daft pudding,” says Angus, “this is none of our business”. What might Daisy fear?

Question 4

Before the wars, Butterup’s research center in Canterbury bred genetically modified cows to produce low-lactose milk for Asian markets. Buttercup can’t move these cows to New Zealand, so must farm them inSouthitania. It needs approval from the Ministry of Cows and Milk, but the Minister is a dairy farmer and a major shareholder in a specialty cheese company. Buttercup’s CEOworries the Minister will refuse. Florence, Butterup’s Head of International Operations, consults her INT BUS 305 readings on political strategy.“Actually, this could work very nicely for us,” she claims. The CEO is puzzled. Can you elaborate on Florence’s thinking?

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