Ch. 7 Learning Review Questions

Question 1

Explain international strategy

Answer 1

This is a strategy where a company does business in multiple countries simultaneously.

e.g. by exchanging goods and services abroad, utilizing foreign employee talent or using foreign resources and financial sources.

Question 2

Describe the possible advantages of being international.

Answer 2

• exploiting the interdependencies of countries
• learn about a new market or world region
• possible lower operational costs
• possible economies of scale benefits
• strategically locate business for tax benefits
• be a strong competitor both domestic and abroad

Question 3

Describe the potential drawbacks of being international

Answer 3

• protectionism
• disruptions in the supply chain
• economic risk
• political risk
• cultural and language differences
• added complexity to manage strategically
• natural disasters, terrorist attacks, diseases
• increased global competition for jobs
• difficulty to exploit advantages

Question 4

What aspects of the legal-political environment do strategic decision makers need to examine?

Answer 4

• political stability of the country
• strategic threats
• relevant law and regulations
• political changes

Question 5

What economic issues might affect a company’s international strategy?

Answer 5

• the type of economic system
• fx rates
• inflation
• differing tax policies

Question 6

Discuss why it’s important to understand national culture.

Answer 6

Because what people value culturally impacts their behaviour and attitudes at the workplace. Understanding this enables the strategic manager to uphold high productivity and employee satisfaction levels. But also prevent a product/service to miss the mark due to cultural reasons.

Question 7

Contrast the multi-country and the global approaches.

Answer 7

A multi-country approach is when a company varies its strategies in each country. Essentially a localization or glocal strategy.

A global approach is one of standardization where a company has one strategies for all countries. One size fits all.

Question 8

What are the five international strategy alternatives?

Answer 8

1. Exporting
2. Importing
3. Licensing
4. Franchising
5. Foreign subsidiary

Question 9

Explain how international organizations might be structured.

Answer 9

1. Multinational corporation - operates in multiple countries
2. Multidomestic corporation - decentralized management
3. Global company - centralized management to home
4. Transnational/borderless - scraps geo borders

Question 10

Describe other international strategy implementation and evaluation decisions.

Answer 10

1. Production/operations
2. marketing
3. HR
4. Information systems / financial-accounting systems