International Strategy Pt 2

Question 1

Why international expansion (list)

Answer 1

Exploit growth from:

Firm-specific advantages or country-specific advantages

Question 2

Need for global integration

Answer 2

• Economies of scale
• Standardized product
• Worldwide brand
• International competitors

Question 3

Need for local responsiveness

Answer 3

• Specific customer requirements
• Locally determining costs
• Local brands
• Local competitors

Question 4

Multidomestic Strategy

Answer 4

Strategy and operating decisions are decentralized to the business units in each country

Tailor competitive strategy and products to “local/home” country

Question 5

Global Strategy

Answer 5

Products are standardized across all markets and businesses are made in centralized offices.

Utilizes economies of scale and struggles to react to local markets.

Question 6

Transnational Strategy

Answer 6

Global efficiency + local responsiveness

Requires central control and decentralization making it difficult to have

Question 7

When to export

Answer 7

The firm wants to 
manufacture in their home 
country and avoid 
operational expenses in 
foreign country.

High cost low control

Question 8

When to establish strategic alliances

Answer 8

1. The firm needs to connect 
with an experienced partner 
already in the targeted 
market and to reduce its 
risk through the sharing of 
costs.

2. The firm is facing uncertain
   situations in its target
   the market as in emerging
   economies.

Evenly distributes risk, resources, etc.

Question 9

When to enter through acquisition

Answer 9

The firm needs rapid cross-
border access to new
international markets.

High costs and runs the risk of merger issues.

Question 10

When to enter as a wholly-owned subsidiary

Answer 10

The firm’s intellectual 
property rights in an 
emerging economy are not 
well protected, and the need 
for global integration is high.

This is more complex and costly but has high-return potential.