Chapter 7 Strategies for Competing in Foreign Markets

Question 1

Why do companies expand into foreign markets? (5 reasons)

Answer 1

1. Gain access to new customers
2. Obtain access to valuable natural resources
3. Capitalize on core competencies
4. Spread business risk across wider market base
5. Achieve lower costs & enhance competitiveness

Question 2

Fluctuating exchange rates affect a company’s competitiveness

Answer 2

a. Exporters always GAIN in competitiveness when the currency of the country where goods are manufactured grows weaker
b. Exporters are disadvantaged when the currency of the country where goods are manufactured grows stronger

Question 3

What are the 4 Big Strategic Issues in Competing Multi-nationally

Answer 3

1. Whether to customize a company’s offerings in each different country market to match preferences of local buyers or offer a mostly standardized product worldwide
2. Whether to employ essentially the same basic competitive strategy in all countries or modify the strategy country by country
3. Where to locate a company’s production facilities, distribution centers, and customer service operations to realize the greatest locational advantages
4. How to efficiently transfer a company’s resource strengths and capabilities from one country to another to secure competitive advantage

Question 4

What are the key characteristics of multi-country

Answer 4

a. Market contest among rivals in one country not closely connected to market contests in other countries
b. Buyers in different countries are attracted to different product attributes
c. Sellers vary from country to country
d. Industry conditions and competitive forces in each national market differ in important respects

Question 5

What are the key characteristics of global competition

Answer 5

Company markets products in 50 to 100 countries and is expanding operations into additional country markets annually

Question 6

Identify and describe 6 international strategies.

Answer 6

1. Exporting
2. Licensing
3. Franchising strategy
4. Strategic alliances or joint ventures – To blend cost down
5. Multi-country strategy - Differentiation
6. Global strategy – same strategy

Question 7

Identify three ways to gain competitive advantage.

Answer 7

1. Locating activities among nations in ways that lower costs or achieve greater product differentiation. (Get close to your raw materials)
2. Efficient/effective transfer of competitively valuable competencies and capabilities from company operations in one country to company operations in another country.
3. Coordinating dispersed activities in ways a domestic-only competitor cannot.

Question 8

Be able to calculate exchange rates

Answer 8

.

Question 9

Multi-country –

Answer 9

Company operates in a select few foreign countries, with modest ambitions to expand further