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ASSURANCE OF LEARNING EXERCISES
1. L’Oréal markets 32 brands of cosmetics, fragrances, and hair care products in 130 countries. The company’s
international strategy involves manufacturing these products in 40 plants located around the world. L’Oréal’s
international strategy is discussed in its operations section of the company’s website (careers.loreal.com/en/
operations) and in its press releases, annual reports, and presentations.
Why has the company chosen to pursue a foreign subsidiary strategy?
Are there strategic advantages to global sourcing and production in the cosmetics, fragrances, and hair care
products industry relative to an export strategy?
Response:
In reviewing the 2015 annual report, the student should identify that L’Oreal operates in key markets
includingNorthAmerica,LatinAmerica,EasternEurope,WesternEurope,andAfrica/MiddleEast.The
company has shown growth in each of these key markets due to its ability to target brands as well as
marketing/salesstrategiestoeachuniquearea.Thiscanonlybeeectivelyaccomplishedwithanationally
responsive structure such as a foreign subsidiary structure.
Thestudentshouldalsoidentifythattherearesignicantadvantagestoglobalsourcingandproductionin
thisindustry.IntheOperationssectionofthe2015AnnualReport,thecompanydiscussestheimportance
2. Alliances, joint ventures, and mergers with foreign companies are widely used as a means of entering foreign
markets. Such arrangements have many purposes, including learning about unfamiliar environments, and
the opportunity to access the complementary resources and capabilities of a foreign partner. Illustration
Capsule 7.1 provides an example of how Walgreens used a strategy of entering foreign markets via alliance,
followed by a merger with the same entity.
What was this entry strategy designed to achieve, and why would this make sense for a company like
Walgreens?
ACTIVITY
This Assurance of Learning exercise is available as a Connect Assignment. The assignment can be
graded and posted automatically.
Response:
The student should identify that the strategy was designed to achieve global competitive advantage. The two
companies have complementary rather than competitive assets and expertise in that Walgreens is dominantly
a US retail seller while Boots Alliance is a European retail and wholesale seller. The alliance gave Walgreens
a swift entry into foreign markets by leveraging the global footprint of Boots Alliance with 3,300 stores
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reducing overall costs thereby producing sustainable global competitive advantage.
3. Assume you are in charge of developing the strategy for a multinational company selling products in
some50countriesaroundtheworld.Oneoftheissuesyoufaceiswhethertoemployamulti-domestic,a
transnational, or a global strategy.
a. If your company’s product is mobile phones, which of these strategies do you think it would make better
strategic sense to employ? Why?
b. If your company’s product is dry soup mixes and canned soups, would a multi-domestic strategy seem
to be more advisable than a transnational or global strategy? Why?
c. If your company’s product is large home appliances such as washing machines, ranges, ovens, and
refrigerators, would it seem to make more sense to pursue a multi-domestic strategy or a transnational
strategy or a global strategy? Why?
ACTIVITY
This Assurance of Learning exercise is available as a Connect Assignment. The assignment can be
graded and posted automatically.
Response:
All student responses will be contingent on their understanding of multi-domestic, global, and transnational
strategies. Students should reference information from Figure 7.1 to support and validate their chosen
viewpoints. All responses should be supported with rational information gleaned from the text material
dierentiatingthethreestrategies.
The student’s responses should be based upon the following three overviews:
Amulti-domesticstrategyisessentialwhentherearesignicantcountry-to-countrydierencesincustomer
preferencesandbuyinghabits,whentherearesignicantcross-countrydierencesindistributionchannels
and marketing methods, when host governments enact regulations requiring that products sold locally
meetstrictmanufacturingspecicationsorperformancestandards,andwhenthetraderestrictionsofhost
governments are so diverse and complicated that they preclude a uniform, coordinated worldwide market
approach.Packagedfoodandappliancesmighttwellhere.
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4. Using your university library’s subscription to LexisNexis, EBSCO, or a similar database, identify and
discuss three key strategies that Volkswagen is using to compete in China.
Response:
The student should identify several key initiatives that Volkswagen has undertaken in the Chinese market.
These could include:
TheyhaveenteredintoapartnershipwithFirstAutoWorks(FAW)toproduceaproductspecicallyaimed
at the Chinese market