International Strategy

Question 1

What are the benefits of using an international strategy?

Answer 1

1. Increased market size
2. Economies of scale and learning
3. Low-cost location advantages (e.g., easier access to low cost labor & materials)

Question 2

What are three international corporate-level strategies?

Answer 2

1. Global strategy
2. Transnational strategy
3. Multidomestic strategy

Question 3

What are incentives of international strategy?

Answer 3

1.Extend a product’s life cycle
2. Gain easier access to raw materials
3. Opportunities to integrate operations on a global scale
4. Opportunities to better use rapidly developing technologies
5. Gain access to consumers in emerging markets

Question 4

What are modes of entry?

Answer 4

1. Exporting - High cost, low control
2. Licensing - Low cost, low risk, low returns, little control
3. Strategic alliances - Shared costs, resources, & risks. problems of integration (e.g., corporate culture)
4. Acquisitions - Quick access to new markets, high costs, complex negotiations, problems of merging with domestic operations
5. New wholly owned subsidiaries - Complex, often costly, time consuming, high risk, maximum control, potential above average returns

Question 5

What is global strategy?

Answer 5

1) Products are standardized across national markets.
2) Business-level strategic decisions are centralized in the home office.
3) Strategic business units (SBU) are assumed to be interdependent.
4) Emphasizes economies of scale.
5) Often lacks responsiveness to local markets.
6) Requires resource sharing and coordination across borders (hard to manage).

Question 6

what is multidomestic strategy?

Answer 6

1) Strategy and operating decisions are decentralized to strategic business units (SBU) in each country.
2) Products and services are tailored to local markets.
3) Business units in one country are independent of each other.
4) Assumes markets differ by country or regions.
5) Focus on competition in each market.
6) Prominent strategy among European firms due to broad variety of cultures and markets in Europe.

Question 7

what is transnational strategy?

Answer 7

1) Seeks to achieve both global efficiency and local responsiveness.
2) Difficult to achieve because of simultaneous requirements for:
a) Strong central control and coordination to achieve efficiency
b) Decentralization to achieve local market responsiveness
c)Pursuit of organizational learning to achieve competitive advantage.