978-0077606121 Chapter 9 Answers to End of Chapter Questions

Type

Solution Manual

Book Title

International Business: The Challenge of Global Competition 13th Edition

ISBN 13

978-0077606121

April 7, 2019

Chapter 9 - International Competitive Strategy

Answers to End of Chapter Questions

1. What is international strategy, and why is it important?

International strategy is concerned with the way firms make fundamental choices about developing

2. What is the difference between strategic planning conducted in domestic companies and that

conducted in international companies?

3. Suppose that competitor analysis reveals that the American subsidiary of your firm’s German

competitor is about to broaden its product mix in the American market by introducing a new

line against which your company has not previously had to compete in the home market. The

environmental analysis shows that recent weakness in the dollar-euro exchange rate is expected

to continue, making American exports relatively less expensive in Germany. Do you recommend

a defensive strategy, or do you attack your competitor in its home market? How will you

implement your strategy?

Probably, your company will want to step up its activity in the home market of your German

competitor to distract its attention somewhat from the American market. You will be sending signals

4. You are the CEO of the Mesozoic Petrochemical Company and have just finished studying

next year’s plans of your foreign subsidiaries. You are pleased that the African regional unit’s

plan is so optimistic because that subsidiary contributes heavily to your company’s income. But

OPEC is meeting next month. Should you ask your planning committee, which meets tomorrow,

to construct some scenarios? If so, about what?

You had better construct a scenario about what OPEC might do with respect to supplying crude to

5. Your firm has used bottom-up planning for years, but the subsidiaries’ plans differ with

respect to approaches to goals and assumptions—even the time frames are different. How can

you, the CEO, get them to agree on these points and still get their individual input?

This is a situation for iterative planning. Give them some broad goals and time frames from

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Chapter 9 - International Competitive Strategy

6. What are the main strengths and weaknesses of each of the competitive strategies: home

replication, multidomestic, regional, global, and transnational? Under what circumstances

might each strategy be more or less appropriate?

Strengths of the home replication strategy are that it can be a good way to capture additional value

from foreign markets by moving out home –developed products. It is also relatively easy to control

since it is centralized. The weakness is that if there is strong pressure for local responsiveness,

competitors that customize will have an advantage.

The strengths of a regional strategy include the potential value to be derived from thinking of

international strategy within the context of a region-by-region perspective, rather than merely a

nation-by-nation versus a global basis. To the extent that an international company’s market position

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Chapter 9 - International Competitive Strategy

7. What strategic issues arise as a firm considers an international transfer of skills and products

resulting from its distinctive competencies in its home country?

One of the major strategic issues that arises when a firm considers the transfer of a skill or product

8. What is scenario analysis? Why would scenario analysis be of value to an international

company? What might limit the usefulness of such an approach?

Scenario analysis is a what–if planning approach that allows for strategic contingency thinking. It can

be valuable for companies that confront high level of uncertainty or the potential for discontinuous

1 GlobalEDGE Answers

Exercise One

1. You work in a multinational corporation whose vision is “to be the world’s leading company in the

electrical equipment industry.” Management wants to know how well it is doing with respect to its

vision. Use Forbes’ Global 2000 most recent ranking to compile a list of the world’s top ten biggest

public companies in the electrical equipment industry. What countries are these top companies from?

What criteria does Forbes use to rank the companies?

Answers:

http://globaledge.msu.edu

Go to Resource Desk: http://globaledge.msu.edu/ResourceDesk/

Exercise Two

2. You are working for a company that is planning to invest in a foreign country. Management has

requested a report regarding the attractiveness of alternative countries based on the potential return of

foreign direct investment (FDI). A colleague mentioned a potentially useful tool called the “FDI

Confidence Index” which is updated periodically. Find this index and provide information regarding

how the index is constructed. Which countries are ranked in the top 20 based on the FDI Confidence

Index?

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Chapter 9 - International Competitive Strategy

Answers:

http://globaledge.msu.edu

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