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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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