Wk4: Expanding abroad and Entry Mode

Question 1

Describe how an MNC implements the strategic plan, such as how it chooses a site for overseas operations

Answer 1

Focusing on the economic imperative, addressing the political imperative, emphasizing the quality imperative and implementing administrative coordination. .. Some MNE’s will implement more than one strategy and are influenced primarily by the two forces of the pressure of global integration and pressure for national responsiveness.

Question 2

What does strategic planning help with and how is it effective?

Answer 2

Strategic planning helps with political risk, competition analysis and currency instability. Its effectiveness is mixed and depends on the specifics.

Question 3

What is the economic Imperative

Answer 3

It is a strategy based upon cost leadership, differentiation and segmentation. The strategy is typically used when it is a generic good and is aided through global sourcing.

Question 4

What is the political imperative?

Answer 4

Utilizes strategies that are country responsive and designed to protect local market niches. MNE’s sell products for which a large portion of the value is added in downstream activities in the value chain (marketing, sales and services)

Question 5

Describe the Quality Imperative.

Answer 5

A strategy that utilizes total quality management to meet or exceed customer expectations to continuously improve. Quality imperative takes two separate tasks, one raises expectations and the other is implement management practices to make quality improvement an ongoing process.

A key element on Quality imperative is TQM
Process: reengineering designed to identify and eliminate redundant tasks and wasteful efforts
Rewards: designed to reinforce quality performance.

Question 6

What is administrative coordination?

Answer 6

MNE makes decisions based on the merits of the individual situation. Admin coordination is helpful when rapid and flexible decision making is needed to make a sale.

Question 7

Describe the strategy and the conditions in which each expanding abroad strategy is works

Answer 7

1. International strategy only works when national responsiveness and global integration are low. It is typically a home replication strategy used by small firms that keep their R&D innovation at home. It is aimed at transferring valuable skills abroad to a market where competitors lack those skills or products.
2. Multidomestic/regional strategy works when national responsiveness pressure is high and global integration pressures are weak. This strategy treats each market as unique with different needs
3. Global strategy only works when responsiveness pressure is weak and global integration pressure is high. It is based on price competition with a focus on product standardization to achieve economies of scale.
4. Transnational strategies exploit experience-based economies and location economies. This strategy makes sense when global integration is high and pressure for national responsiveness is high. Provides opportunities to leverage valuable skills within a multinational global network of operations.

Question 8

What are the steps in Expanding abroad?

Answer 8

1. scanning the external environment for opportunities and threats
2. Conducting an internal resource analysis of company strengths and weaknesses (understand current managerial, technical and financial capabilities, KSF)
3. Formulating goals in light of the external scanning and internal analysis

Question 9

What are the entry strategies of MNE’s (6)

Answer 9

LEARN WHY to DO EACH
Export/import operations
Licensing 
Franchising 
Wholly owned subsidiaries
Alliances and Joint Ventures
Mergers and Acquisitions