Chapter 3 - International strategies

Question 1

definition of strategy

Answer 1

planned set of actions that managers employ to make the best use of the firm’s resources and core competences to gain competitive advantage

Question 2

definition of international strategy

Answer 2

• strategy carried out in 2 or more countries

- international strategy is used for allocation of scarce resources

Question 3

firms aspiring to become globally competitive must seek simultaneously three strategic objectives:

Answer 3

1) efficiency
2) flexibility
3) learning

Question 4

global integration definition

Answer 4

it is the coordination of the firm’s value-chain activities across multiple countries to achieve worldwide efficiency, synergy

Question 5

local responsiveness definition

Answer 5

the response to specific conditions in individual countries

Question 6

on transnational strategy

Answer 6

• increasing sophistication of products for which consumers demand new features that require variety to choose from & customization options
• think globally, act locally

Question 7

pressures for global integration include

Answer 7

• seek cost reducing by scale economies
• capitalize on consumer trends & universal needs
• provide uniform service to global customers
• global sourcing of raw materials, components, energy and labour
• monitor and respond to global customer
• take advantage of media that reaches buyers in multiple markets

Question 8

pressures for local responsiveness

Answer 8

• leverage natural endowments available to the firm
• cater to local customer needs
• accommodate differences in distribution channels
• respond to local competition
• adjust to cultural differences
• meet host government requirements and regulations

Question 9

types of international strategies

Answer 9

• home replication strategy (international strategy)
• multi-domestic strategy
• global strategy
• transnational strategy

Question 10

on international strategy

Answer 10

• used when pressures for global integration and local responsiveness are low
• companies focus on replicating their basic competencies country-to-country in areas as diverse as production, design, brand image, distribution model
• abroad subsidiaries are focused on operating activities coordinated from headquarters
• distribution is adapted to host country
• successful when the target markets are similar to the home market
• employed by SMEs that hire intermediaries in country of destination
• usually a temporary approach

Question 11

on multidomestic strategy

Answer 11

• multilocal or multidomestic strategy
• multi-country or multi-home
• used when companies have a strategic priority to respond to fragmentary pressures through local responsiveness
• allows companies to be extremely sensitive to local market differences and national political demands
• “competition is given country to country”: results depend on the condition of each country
• management mentality identifies the strategic task of the company of obtaining positions in key global markets
• interaction between different units is usually limited to the relationship between each subsidiary and the head office
• subsidiaries usually have high autonomy to decide which is the best way to adapt to local market

Question 12

on global strategy

Answer 12

• sacrifice local responsiveness to avoid duplication of costs & benefit from scale economies
• defines the design of product, location, scale & production facilities, technology
• the tastes & needs of consumers are considered homogenous
• company gives priority to standardisation & concentration
• it is common for product range & company policy to be designed at headquarters and be homogenous throughout the world
• think globally, act locally