Chapter 8 - Strategy in International Business

Question 1

What is strategy?

Answer 1

• planned set of actions that managers take to
  make best use of the firm’s resources and core
  competencies,
• to gain a competitive advantage

Question 2

What are the 3 strategic objectives?

Answer 2

1) efficiency - lower the cost of a firm’s operations and activities on a global scale
2) flexibility - agility to manage diverse country
-specific risks and opportunities by getting
resources in individual countries and exploiting
local opportunities
3) learning - Develop the firm’s products,
technologies, capabilities, and skills by internalizing knowledge gained from international ventures

Question 3

Value

Answer 3

the measure of a firm’s capability of
selling what it makes for more than the
costs incurred to make it

Question 4

The firm as a value chain …

Answer 4

Primary activities
- product design
- operations
- outbound logistics
- marketing
- service
Support activities
- materials and equipment
- human resource management
- systems and solutions
- infrastructure

Question 5

Global Integration vs local responsiveness

Answer 5

• the process of combining differentiated
  parts into a standardized whole (maximize efficiency)
• the process of disaggregating a
  standardized whole into differentiated part (optimize effectiveness)

Question 6

Types of strategies

Answer 6

1. International strategy.
2. Multi-domestic strategy.
3. Global strategy.
4. Transnational strategy

Question 7

International strategy

Answer 7

• low global integration/low local responsiveness
• international business & domestic business = viewed separate
• goal is to extend domestic products & replicate home market success
• little knowledge for foreign operations

Question 8

Multi-domestic strategy

Answer 8

• low global integration/high local responsiveness
• subsidiaries for foreign markets, managers locally
• low political risks & advantages against local competitors
• not cost sensitive

Question 9

Global strategy

Answer 9

• high global integration/low local responsiveness
• Headquarters seeks substantial control over all
  country operations = maximum efficiency
• Management views the world as one
  large marketplace

Question 10

Transnational strategy

Answer 10

• high global integration/high local responsiveness
• “standardize where feasible; adapt where appropriate”
• expensive & a struggle to do efficiently/challenging