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extent, afford different opportunities for business. After going through the steps of the
strategic decision- making process as outlined in this chapter, including those operational
factors in the institutional context such as infrastructure, availability of suppliers, labor
6-7. How can managers assess the potential relative competitive position of their firm to
decide on new strategic directions?
Learning Objective: 2; AACSB: Analytic skills
Corporate strengths and weaknesses are best assessed through an analysis of distinctive
competencies (unique capabilities and resources possessed by the firm) and through
6-8. Discuss the relative advantages of globalization versus regionalization/localization.
Learning Objective: 3; AACSB: Multicultural and diversity understanding
In globalization, firms are able to use standard products and systems. This affords
6-9. Compare the merits of the entry strategies discussed in this chapter. What is their role
in an integrative global strategy?
Learning Objective: 2; AACSB: Dynamics of the global economy
➢ Exporting: exporting offers the advantages of being low risk, not having any long–
term asset utilization, and being easy in terms of market entry and exit.
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6-10. Discuss the considerations in strategic choice, including the typical stages of the
company and the need for a long-term global perspective
Learning Objective: 3; AACSB: Analytic skills
There are three primary considerations in strategic choice: (1) evaluation of the advantages
and disadvantages of each entry strategy in relation to the firm’s capabilities; (2) the
critical environmental factors; (3) the contribution that each choice would make to the
Application Exercises
6-11. Choose a company in the social media industry or a chain in the fast-food industry.
In small groups, conduct a multilevel environmental analysis, describing the major
variables involved, the relative impact of specific threats and opportunities, and the
critical environmental factors to be considered. The group findings can then be
presented to the class, allowing a specific time period for each group so that
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comparison and debate of different group perspectives can follow. Be prepared to
state what regions or specific countries you are interested in and give your
rationale.
Learning Objective: 2; AACSB: Analytic skills
Students can combine skills acquired in a strategic management class to complete this
6-12. In small groups, discuss among yourselves and then debate with the other groups
the relative merits of the alternative entry strategies for the company and countries
you chose in Exercise 6-11. You should be able to make a specific choice and defend
that decision.
Learning Objective: 2; AACSB: Dynamics of the global environment
the business, sufficient flexibility in considering options is useful
6-13. For this exercise, research (individually or in small groups) a company with
international operations and find out the kinds of entry strategies the firm has used.
Present the information you find, in writing or verbally to the class, describing the
nature of the company’s international operations, its motivations, its entry
strategies, the kinds of implementation problems the firm has run into, and how
those problems have been dealt with.
Learning Objective: 1; AACSB: Analytic skills
Students can visit the corporate Websites of different companies, and use search engines
Experiential Exercise
6-14. In groups of four, develop a strategic analysis for a type of company that is
considering entry into an emerging market country. Which entry strategies
seem most appropriate? Share your results with the class.
Learning Objective: 3; AACSB: Analytic skills
. International expansion is the products of planning and responding to opportunities.The
steps in the rational planning process comprise defining the mission and objectives of
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End-of-Chapter Case: Foreign Businesses Tread Carefully as Cuba Opens Up
6-15. Research updates on the business environment. Pick a company you are familiar
with and do a SWOT analysis for considering entering the Cuban market.
Learning Objective: 3; AACSB: Dynamics of the global economy
Students can use formal planning techniques like industry structure analysis leading to a
SWOT analysis of the firm. They can carefully screen countries and opportunities to
find a match between resources and opportunities. When doing Internet research on
6-16. What entry strategy do you think would work best for this company?
Learning Objective: 3; AACSB: Dynamics of the global economy
When considering an entry strategy, students should keep in mind that there are
200 operating investment projects in Cuba, ranging from joint ventures
Additional Case
Tiger Surgical Supplies: Pouncing on Doi Moi Opportunities in the Emerging Economy of
Vietnam
Bordeaux Plastique Fabriquant, S.A., a French surgical supply company decided in 1994
to establish a production facility in Ho Chi Minh City, Vietnam. The company selected Vietnam
as the sight for increased production capacity due to very low labor costs, and the possibility of
exporting to Southeast Asian countries. Management of Bordeaux felt that Vietnamese workers
would be very motivated and that labor problems would be nonexistent. Bordeaux also
concluded that due to Vietnam’s desire to attract foreign capital, establishing a foreign
subsidiary in this newly emerging economy would be easy and government relations with the
company would be good. Unfortunately for Bordeaux, none of these assumptions would prove
to be correct.
Vietnam
Located in South East Asia, Vietnam has attracted the attention of Western governments
since at least the 19th century. In 1858 the French colonized Vietnam. After internal fighting in
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an eight-year war, the French signed the Geneva Agreement in 1954 that lead to their
withdrawal from the country and the division of Vietnam into the communist north and
noncommunist south. The Geneva Agreement required elections to be held for unification;
however, the government in the south refused the elections and proclaimed itself the Republic
of Vietnam. During the late 1950’s conflict escalated between the north and south that led
Early Difficulties with the Government
Philippe Desmarest, a ten-year veteran of Bordeaux was placed in charge of all
governmental relations for the proposed joint venture. If successful, Philippe would become the
chief operating officer of the new facility. Because he had successfully negotiated an
international joint venture agreement with Mexican authorities a few years prior to this
assignment, Philippe was considered by management to be the best candidate to negotiate with
the Vietnamese. Philippe made several trips to Hanoi to meet with governmental officials,
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A Slow Start
Tiger Surgical Supply had purchased a building that was previously a state-owned
enterprise. The facilities were in need of much repair, but Philippe felt that with the abundance
of extremely low labor costs in Vietnam the building could be brought up to the necessary
standards in a short time, and with little expense. After much more time than expected, and at a
much greater expense than anticipated, Tiger Surgical Supply was ready for production in the
spring of 1997. Although the Vietnamese partner had helped with some governmental and
construction contacts, the partner’s role in the venture was practically nonexistent. Philippe
Both Philippe and Chien were surprised by the number of applications that were
submitted in response to the advertisement for production positions. Many of the applicants
were well educated, and it became difficult to select the few needed from the large mass of
applications. Philippe delegated responsibility for employee selection to Chien, and with the
help of his assistant, Pham Hi Thi, the two selected what they considered to be the best
candidates. One of the criteria for selection was the lack of production experience. Chien felt
that if he selected employees with previous experience in production that they would bring the
bad habits that they learned under state-controlled operations to TSS. He wanted to be able to
train the new employees in Western work methods.
Relations between Chien and many of the workers did not appear to be good. It was
obvious to all that Chien often became frustrated with the workers and would openly express his
disapproval. It appeared to Philippe that many of the workers did not appear to like Chien, and
he wasn’t sure why. Chien was a very dedicated, conscientious, and serious manager, and he
had made a personal sacrifice to return to Vietnam to help his former country. He expected
much from his employees; however, he had a soft side as well and a true desire to make
Vietnam a more prosperous country. Philippe thought that some of the ill will between Chien
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Although it was intended that TSS would be staffed by as many locals as possible,
Philippe felt that there might be a need for additional expatriates to manage the operation. He
considered recruiting managers from Thailand who could help bring a more “business”
perspective to the supervision of TSS employees. Chien and Thi disagreed and convinced
Philippe that it was important that the management of TSS be “homegrown” in order to gain
favor with the Vietnamese government and to help develop a managerial class in Vietnam.
Furthermore, they argued, having Vietnamese supervisors would provide incentive for
Tigers, Horses, Monkeys
With an urgent need for organizational efficiency, Philippe decided that TSS needed an
incentive plan to increase worker motivation. He instructed Chien to develop a plan that he
thought would work. Chien consulted Thi, who recommended against radical change, and
recommended instead that wages be based on a piece-rate system. Chien thought that a more
systematic approach was needed, and developed a program to revamp the organizational
structure. Feeling that it was not practical to attempt to fire more workers, Chien created three
different classes of employees. The highest class, the Tiger class would be paid the highest
salary and be the only employees eligible for promotion. Tigers would wear red clothing and be
given more privileges than the other classes of workers. The second-class employees, the
strong desire to save face would be a strong motivator, or so thought Chien.
The employees, many of whom refused to wear the appropriate uniforms, immediately
challenged the class system of employment. A particularly unpleasant event occurred shortly
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after the plan was announced. The body of a dead monkey was placed over the opening of the
plant gate, wearing a brown shirt, and its face covered with an image resembling that of Chien.
Continued tensions existed with the class system, and eventually it deteriorated to the point that
the only differences among group members were pay and benefits. The system, with all its
problems did, however, appear to raise overall efficiency of the operation. The Tigers who
operated in teams were very productive, and many of the Horses were showing signs of
improvement. The employees classified as Monkeys continued to perform poorly.
Expansion Plans
With some of the initial problems resolved, Philippe was eager to expand production
into other areas. The current facility could be expanded and additional workers hired to
capitalize on the increased concern over the spreading of the AIDS virus in Asia and the
Following the same course that he had followed in the initial approach to establishing
the joint venture, Philippe contacted the Vietnamese government officials in Hanoi and
informed them of the expansion plans. He felt that the officials would be delighted that TSS was
increasing its investment in Vietnam and that the company would be increasing its employment.
The Vietnamese officials, however, who appeared uninterested in the expansion plans, did not
match his enthusiasm. Philippe was told that he would have to contact Tran Hung, a MPI
official in Ho Chi Minh City who he was told may approve the expansion. Hung told Philippe
that he had some concerns about the expansion of TSS. Through a translator he told Philippe
that it seemed that TSS was “too French” and that the Vietnamese joint venture partner was
exercising not enough influence. He recommended that Philippe consider an additional
Vietnamese partner, maybe someone in government who could help him with the necessary
connections that he would need to expand his facility. It was obvious to Philippe that Hung was
suggesting that he be included in the investment. This was completely unacceptable to Philippe,
and so he decided to consult Chien and Thi concerning his options.
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Cutting the Tall Poppy
The following day began with some troubling news from the port from which TSS
shipped its products for export. A delivery driver for TSS was phoning to tell Chien that the
customs inspectors were not allowing any TSS product to be loaded for shipment. The driver
refused to give a reason, and seemed to be confused as to why the action was being taken.
Philippe immediately thought of Hung and proceeded to go to his office and confront him about
the actions of the customs inspectors. Upon arriving at Hung’s office Philippe was informed
were piling up on the loading docks. He told Hung that the inspection fee would be paid, and
that he needed Hung to instruct the customs agents to immediately clear the goods for shipment.
Philippe returned to his office feeling exploited by the whole experience. His feelings of
exploitation were increased when word came from the docks that the goods were still not being
loaded. Philippe immediately called Hung who informed him that now the loaders were
demanding a loading fee of one dollar a container. Philippe remain silent for a moment and then
asked Hung why TSS was being singled out for these additional fees. Hung paused for a
moment and then replied in English that “the tall poppies get cut first.” Not sure what he was
implying, Philippe told Hung that TSS would pay the additional dollar fee to the loaders. It was
at this point that Philippe was questioning his decision to promote Vietnam as a desirable
location for a production facility. Although the additional fees were small, Philippe didn’t like
Instructors Note: This case can be useful in exploring the difficulties of international expansion
into recently industrialized economies. Although the prospects may appear to be great,
frequently difficulties arise that were not planned. This case attempts to combine cultural
dimensions into a look at a strategic choice that went badly. The case can be used equally well
in the next chapter as well.
Student Stimulation
Group or Class Learning Activities
1. Visit LandsEnd.com, LandsEnd.de, and LandsEnd.co.jp. Based on an analysis of the three
Websites, assess the type of strategy used by Lands End. Is it a regionalization strategy or a
globalization strategy? Why or Why not? Has Lands End successfully globalized itself?
2. SWOT Yourself: You have been interviewing for a position with a Fortune 100 company
for a position in its international division. If you are successful in attaining the position, you
will be given a career opportunity in the country of your choice. Prior to attending your final
A. What do you see as the principal opportunities in a career in international business?
B. What do you see as your principal strengths that will allow you to take advantage of
these opportunities?
C. Identify one or two skills that you feel you will need that you don’t already possess?
What could you do over the next one or two years to develop those skills.
Additional Stimulation Discussion Questions
1. The text clearly states that opportunities will pass companies by unless they are willing to
consider the international marketplace. Do you feel this may also be true for business people
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2. Because strategic planning is no guarantee of corporate success, do you feel companies that
strategically plan really have much of a competitive advantage over those that do not?
6. Describe the primary indicators that a firm’s strategy is working.
7. The Swedish market already has two successful local car companies—Saab and Volvo.
Volvo is now partially owned by Ford. What opportunities and threats might Ford have been
responding to in making the decision to acquire Volvo?
Experiential Exercise
COMPARATIVE STRATEGY
Purpose: The purpose of this exercise is to develop a better understanding of how
organizational strategies differ in Asia, Europe, and the United States.
Procedure: Select one Annual Report from a company headquartered in Asia,
Europe, and the United States. In other words, select one Asian, one
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well as the importance placed on immediate results. Differences in
organizational mission and corporate values may also be found.
After doing the analysis, develop a report that highlights your observations.
Web Exercise
Let’s look at the missions and objectives of various companies in various fields and compare
and contrast. How do these m/o statements look at the firm’s role vis-à-vis the environment?
How would the m/o statement of a pharmaceutical company differ from a consumer company?
Judging from the following Websites and the text, how would you imagine a pharmaceutical
company would need to consider environmental issues?