7 International Strategies - Model Of Strategic Forces

Question 1

What two strategic pressures do firms face while developing their international strategy? (The two pressures are conflicting)

Answer 1

1) Global Integration
Pressure to standardize
2) Local Responsiveness
Pressures to disperse configuration

Question 2

What drives global integration (what are the pressures)

Answer 2

1) globalization helps standardise consumer preferences
2) markets are globalizing -> generate high touch products
3) technology enables mass standardization
4) economies of scale make products cheaper

Question 3

What are the pressures for local responsiveness?

Answer 3

1) consumer divergence
2) cultural specifity & historical legacy
3) nationalism
4) host govt policies

Question 4

Examples for host govt policies that create pressure towards local responsiveness

Answer 4

• tax regimes
• business regulations
• grants/incentives offered to companies

Question 5

What does low pressure for global integration entail

Answer 5

Standardization and centralization: useful but not necessary across international operations

Question 6

What does high pressure for global integration entail?

Answer 6

Standardization and centralization: imperative (crucial) across international operations

Question 7

What does low pressure for local responsiveness entail?

Answer 7

Adaptation and decentralization: unnecessary to sell generic products to similar markets

Question 8

What does high pressure for local responsiveness entail?

Answer 8

Adaptation and decentralisation: needed to sell customised product to differing markets

Question 9

International strategy

Answer 9

• Leverages core competencies + home country innovations into foreign markets
• critical elements of value chain centralized at headquarters

Question 10

Multidomestic strategy

Answer 10

Differentiate products to respond to national differences in:
1) customer preferences
2) industry characteristics
3) govt regulation
- value added activities adapted to local markets (e.g. products feature)

Question 11

Global strategy

Answer 11

• standardized products: marketed with little adaptions to local conditions
• exploits location economies + economies of scale
• Target universal needs that support selling standardized products worldwide
• Emphasize:
  1) volume
  2) cost minimization
  3) efficiency

Question 12

When does a multidomestic strategy work well?

Answer 12

1) companies are strong at subsidiary level
2) capacity to respond locally important
3) no significant economic pressures for global integration

Question 13

When does an international strategy work well?

Answer 13

1) firm has competencies that foreign rivals lack
2) no significant economic pressures for global integration
3) local responsiveness not crucial

Question 14

International strategy: pressure for global integration/local responsiveness

Answer 14

• low pressure for global integration
• low pressure for local responsiveness

Question 15

Disadvantage international strategy

Answer 15

Missed opportunities from having too much concentration at HQ and little input from foreign subsidiaries

Question 16

Multidomestic strategy: pressures for local responsiveness/global integration

Answer 16

• high pressure local responsiveness
• low pressure global integration

Question 17

Disadvantage multidomestic strategy

Answer 17

• costly: need of adaptation to local market characteristics

Question 18

When does global strategy work well?

Answer 18

• MNEis cost leader
• worldwide standardization possible
• large economies of scale to be captured
• local responsiveness not crucial

Question 19

Global strategy: pressure for local responsiveness/global integration?

Answer 19

• low pressure local responsiveness
• high pressure global integration

Question 20

Disadvantage global strategy

Answer 20

Cost reductions and standardization do not allow for adaption to local markets

Question 21

Transnational strategy

Answer 21

• leverage core competencies worldwide
• reduce costs by exploiting local economies
• adapts to local market conditions
  => simultaneously manage global integration and local differentiation in in ways that leverage specialized knowledge and promote worldwide learning

Question 22

When does transnational strategy work well?

Answer 22

1) global learning emphasized
2) knowledge flows within comp
3) sophisticated internal mgt and control systems
4) capacity to respond locally is important
5) large economies of scale to be captured

Question 23

Transnational strategy: pressure for local responsiveness/global integration

Answer 23

• high pressure local responsiveness
• high pressure for global integration

Question 24

Disadvantage transnational strategy

Answer 24

Complicated and difficult to implement

Question 25

Gradual process becoming more international (5)

Answer 25

1. domestic 2. exporter 3. international 4. multinational 5. global

Question 26

E-P-G Model

Answer 26

1. ethnocentric: home oriented 2. polycentric: host oriented 3. geocentric: world oriented

Question 27

MNE of the future: Cybercorp

Answer 27

Operational boundaries defined by connectivity network of internet, not by national boundaries

Question 28

MNE of the future: Micro-Multinational

Answer 28

Born global firms, powerful platform but little in size

Question 29

MNE of the future Glo-Re-Calized MNE

Answer 29

- global vision and local tactics - exploit local economies within regional network

Question 30

MNE of the future: Metanational

Answer 30

- innovate ON existing multinational operation

Question 31

MNE of the future: globally integrated enterprise

Answer 31

- no centres - internet connects everything