International Business, 2e
Geringer, McNett, Ball
Instructor Guide to Module 9
Module 9: International Competitive Strategy
YOUR CONTENT
Summary
Learning Objectives
Key Terms and Definitions
Content Outline
ENGAGEMENT & APPLICATION
Boxed Text Discussion Questions with Suggested Answers
End of Module Exercises
Critical Thinking Questions
globalEDGE Research Task
MiniCase
Bonus Activities
CONNECT TOOLS FOR ASSESSEMENT OF LEARNING
Connect Content Matrix
Connect Activities
International Business, 2e
Geringer, McNett, Ball
Instructor Guide to Module 9
09-2
YOUR CONTENT
SUMMARY
This module provides an overview of strategic considerations that international companies
must take into account when competing within an international business environment. In the
global marketplace, a company must be able to quickly identify and exploit opportunities
single area such as marketing or production. To be effective, a company’s international strategy
needs to be consistent among the various functions, products, and regional units of the
company as well as with the demands of the international competitive environment. The goal
of international strategy is to achieve and maintain a unique and valuable competitive position,
both in a nation as well as globally, a position that has been termed “competitive advantage.”
International Business, 2e
Geringer, McNett, Ball
Instructor Guide to Module 9
09-3
LEARNING OBJECTIVES
LO 9-1 Explain international strategy, competencies, and international competitive
advantage.
LO 9-3 Describe the features of a strategic plan.
LO 9-5 Outline new directions in strategic planning.
KEY TERMS AND DEFINITIONS
bottom-up planning (p. 257)
Planning process that begins at the lowest level in the
organization and continues upward
budget (p. 255)
An itemized projection of revenues and expenses for a future
time period
competitive advantage (p. 242)
The ability of a company to achieve and maintain a unique and
valuable competitive position both within and nation and
globally, generating higher rates of profit than its competitors
competitive strategies (p. 249)
Action plans to enable organizations to reach their objectives.
contingency plans (p. 253)
Plans for the best- or worst-case scenarios or for critical events
that could have a severe impact on the firm
explicit knowledge (p. 245)
Knowledge that is easy to communicate to others via words,
pictures, formulas, or other means
international strategy (p. 242)
A plan that guides the way firms make choices about
developing and deploying scarce resources to achieve their
international objectives
iterative planning (p. 257)
Repetition of the bottom-up or top-down planning process
until all differences have been reconciled
International Business, 2e
Geringer, McNett, Ball
Instructor Guide to Module 9
09-4
knowledge management (p.
245)
The practices that organizations and their managers use for
identifying, creating, acquiring, developing, dispersing, and
exploiting competitively valuable knowledge
mission statement (p. 246)
A broad statement that defines the organization’s purpose and
scope
policies (p. 255)
Broad guidelines issued by upper management to assist lower-
level managers in handling recurring issues or problems
procedures (p. 255)
Guides that specify ways of carrying out a particular task or
activity
sales forecast (p. 255)
A prediction of future sales performance
scenarios (p. 252)
Multiple, plausible stories about the future
strategic planning (p. 242)
The process by which an organization determines where it is
going in the future, how it will get there, and how it will assess
whether and to what extent it has achieved its goals
tacit knowledge (p. 245)
Knowledge that an individual has but that is difficult to express
clearly in words, pictures, or formulas and is therefore difficult
to transmit to others
top-down planning (p. 256)
Planning process that begins at the highest level in the
organization and continues downward
value chain (p. 244)
A set of interlinked activities that add value to the final product
or service
value chain analysis (p. 244)
An assessment conducted on the chain of interlinked activities
of an organization or set of interconnected organizations,
intended to determine where and to what extent value is
added to the final product or service
values statement (p. 246)
A clear, concise description of the fundamental values, beliefs,
and priorities expected of the organization’s members,
reflecting how they are to behave with each other and with the
company’s customers, suppliers, and other members of the
global community
International Business, 2e
Geringer, McNett, Ball
Instructor Guide to Module 9
09-5
Copyright © 2020 by McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-
Hill Education.
vision statement (p. 246)
A description of the company’s desired future position if it can
acquire the necessary competencies and successfully
implement its strategy
International Business, 2e
Geringer, McNett, Ball
Instructor Guide to Module 9
CONTENT OUTLINE
The following section provides the flow of information using the LEARNING OBJECTIVES as a
guide, KEY TERMS learners will need to take away from the course, and LECTURE NOTES to
drive home teaching points.
LO 9-1
Explain international strategy, competencies, and
international competitive advantage.
• Introduction
• What Is International Strategy, and Why Is It
Necessary?
o Why Plan Globally?
I. What Is International Strategy, and Why Is It Necessary?
A. International strategy is concerned with the way firms make choices about developing and
deploying scarce resources internationally. Strategy must be consistent among the
company’s various functions, products, and regional units (internal consistency) and with
the demands of the international competitive environment (external consistency).
B. The goal of international strategy is to achieve competitive advantage. Competitive
advantage is the ability of a company to achieve and maintain a unique and valuable
competitive position both within a nation and globally, generating higher rates of profit
than its competitors.
4. Allow the firm to be organized to fully exploit the competitive potential of these
competencies.
D. The challenge for international companies is that resources are always scarce, there are
many alternatives for using these scarce resources (for example, which nations to enter?),
and these alternatives are not equally attractive. Managers make choices regarding what
to do, and what not to do, now and over time. Different companies make different choices
II. Why Plan Globally?
International Business, 2e
Geringer, McNett, Ball
Instructor Guide to Module 9
Strategic planning is the process by which an organization determines where it is going in
the future, how it will get there, and how it will assess whether and to what extent it has
achieved its goals.
B. Formal global strategic planning provides managers a way to identify opportunities and
threats, formulate strategies to handle them, and stipulate how to finance their
implementation. Plans provide for consistency of action among the managers.
C. Strategic plans help ensure decision makers have a common under– standing of the
business, the strategy, the assumptions behind the strategy, the external business
environment pressures, and their own direction.
D. Strategic plans promote consistency of action among the firm’s managers worldwide and
encourage them to consider the ramifications of their actions in the firm’s other
geographic and functional areas.
E. Strategic planning is also intended to increase the likelihood of strategic innovations,
promoting the development, capture, and application of the new ideas needed to succeed
in a challenging competitive environment.
F. Strategic planning continues to be among the most commonly used management tool
among global executives, and it is the tool with one of the highest reported levels of
satisfaction.
LO 9-2
Describe the global strategic planning process and its
components.
• The process of Global Strategic Planning
o Step 1: Analyze Domestic, International, and
Foreign Environments
• Knowledge as a Controllable Corporate
Resource
Key Terms:
• value chain
• value chain analysis
• knowledge
• tacit knowledge
• explicit knowledge
• mission statement
International Business, 2e
Geringer, McNett, Ball
Instructor Guide to Module 9
• Global Strategy
• Transnational Strategy
• Regional Strategies for Competing Globally
• Standardization and Planning in Strategy
Formulation
• Using Scenarios in Strategy Formulation
• Contingency Planning as Part of Strategy
Formulation
o Step 7: Prepare Tactical Plans
III. The Process of Global Strategic Planning (Figure 9.1)
a. The process provides a formal structure for (1) analyzing a firm’s external
environments, (2) analyzing a firm’s internal environments, (3) defining a
company’s business and mission (4) setting corporate objectives, (5) quantifying
goals, (6) formulating strategies and (7) making tactical plans.
Step 1: Analyze Domestic, International, and Foreign Environments
2. Environmental, social, and business trends are more critical to strategy than in the
past 5 years. However, few companies react to them.
Step 2: Analyze Corporate Controllable Variables
input to the planning staff, who will prepare a report for the strategy planning
committee. The committee wants to know where the company is heading, what
2. Management often conducts a value chain analysis, which considers three key
questions:
c. How will this customer value be created?
3. Value chain analysis focuses on the third question. The goal is to enable
International Business, 2e
Geringer, McNett, Ball
Instructor Guide to Module 9
09-9
value chain, including which activities the company will do itself and which will be
outsourced.
4. Management must consider where to locate various value chain activities and to
examine linkages among the activities in the value chain. Linkages must be
examined across activities within the company and manage relationships with
external entities (suppliers, distributors, or customers) within and across nations.
5. The desired outcome is identification and establishment of a superior set of well–
integrated value chain activities and linkages. This system will permit the company
to effectively and efficiently develop, produce, market, and sell the company’s
products and services to the target customers and create the basis for global
competitive advantage.
1. In a highly competitive, rapidly changing, knowledge-intensive economy,
companies achieve competitive advantages through leveraging organizational
knowledge across national boundaries.
knowledge throughout international operations, and for ensuring that subsidiaries
are willing and able to both share what they know and to absorb knowledge from
other units of the company. This process is referred to as knowledge
management.
to express verbally or document), systems are needed to convert tacit knowledge
into explicit, codified knowledge and then make this knowledge accessible quickly
and effectively to other employees that need it. It is often necessary to establish
company is and where it expects to go. Some firms have all three statements;
others combine two or more.
a. Mission Statement defines the firm’s purpose and scope.
International Business, 2e
Geringer, McNett, Ball
Instructor Guide to Module 9
09–10
Copyright © 2020 by McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-
Hill Education.
b. Vision Statement describes the desired future position, what it hopes to
accomplish if it can acquire needed competencies and successfully
implement its strategy.
c. Values Statement is clear, concise description of the fundamental
values, beliefs, and priorities of the organization’s members.
Step 4: Set Corporate Objectives
1. Objectives direct the firm’s course of action, maintain it within the boundaries of
the stated mission, and ensure its continuing existence.
Step 5: Quantify the Objectives
1. If objectives can be quantified, they should be. Firms frequently do have non–
quantifiable or directional goals.
G. Step 6: Formulate the Competitive Strategies
1. Managers will formulate alternative competitive strategies and corresponding
action plans that seem plausible, taking into consideration the directions of
external forces and the firm’s strengths, weaknesses, opportunities, and threats.
2. Companies competing internationally confront two opposing forces: (1) reduction
of costs and (2) adaptation to local markets.
a. To be competitive, firms must do what they can to lower costs per unit
so customers will not perceive their products or services as being too
expensive. This results in pressure for some of the company’s facilities
products that are highly standardized.
b. Managers must respond to local pressures to modify products to meet
local market demands where they do business. This pressures the
company to differentiate strategy and product offerings from nation to
nation, reflecting differences in distribution channels, governmental
International Business, 2e
Geringer, McNett, Ball
Instructor Guide to Module 9
a. As suggested in Figure 9.3, the strategy that would be most appropriate
for the company, overall and for various activities in the value chain,
depends on the amount of pressure the company faces to adapt to
local markets and achieve cost reductions.
b. Home Replication strategy centralizes product development strategy in
the home country, and after differentiated products are developed in
this home market, they are transferred abroad to capture additional
value.
c. This strategic choice is best if there is weak pressure for local
responsiveness and cost reductions. This can cause high operating costs
because of duplicate manufacturing facilities across markets served.
d. Multidomestic Strategy is used when there is strong pressure to adapt
products or services for local markets. Decision making is decentralized
to allow the company to modify its products and to respond to changes
in local competition and demand. By tailoring products for specific
markets, companies may charge higher prices. Local adaptation
increases cost structure. The company will have to invest in additional
local capabilities and knowledge. Adapting products too much may take
away the distinctiveness of a company’s products. Local adaptation
may change over time. The cost and complexity of coordinating a range
of different strategies and product offerings across national and
• Strategic Plan Features and Implementation Facilitators
o Sales Forecasts and Budgets
o Facilitation Tools for Implementing Strategic Plans
• Policies
• sales forecast
• budget
• policies
• procedures
International Business, 2e
Geringer, McNett, Ball
Instructor Guide to Module 9
09–12
Sales forecast—a prediction of future sales performance.
Budget—an itemized projection of revenues and expenses for a future time period.
VI. Facilitation Tools for Implementing Strategic Plans
Policies are broad guidelines issued by upper management to assist lower level managers
to handle recurring problems.
Procedures describe how certain activities will be carried out, thus ensuring uniform
action throughout the firm.
VII. Performance Measures
3 ways to measure if a strategy is proceeding successfully or needs modification:
1. Success in obtaining and applying required resources.
2. Effectiveness of company’s personnel performance.
3. Progress toward achieving mission, vision, and objectives in a manner consistent
with the company’s stated values.
LO 9-4
Discuss the time horizon, organizational level, and different
methods of strategic planning.
• Kinds of Strategic Plans
o Time Horizon
o Level in the Organization
o Methods of Planning
• Top-Down Planning
• Bottom-Up Planning
• Iterative Planning
Key Terms:
• top-down planning
• bottom-up planning
• iterative planning
VIII. Kinds of Strategic Plans
Time Horizon
1. Short, medium, and long term.
International Business, 2e
Geringer, McNett, Ball
Instructor Guide to Module 9
1. If firm has four organizational levels (Figure 9.4), there will be four levels of plans.
Each will be more specific and for a shorter time frame than it is at the level
above.
Methods of Planning
1. Top-Down Planning: corporate headquarters develops and provides guidelines.
a. Disadvantages: restricts initiative at lower levels and shows
insensitivity to local conditions.
b. Advantages: headquarters should be able to formulate plans that
ensure optimal use of firm’s resources.
2. Bottom-Up Planning: lowest levels inform top management of what they expect
to do.
a. Advantage: those responsible for attaining the goals are
formulating them.
b. Disadvantage: no guarantee that the sum total of the goals will
coincide with those of headquarters.
3. Iterative Planning: (Figure 9.4) combines aspects of bottom-up and top-down
planning.
LO 9-5
Outline new directions in strategic planning.
• New Directions in Planning
o Who Does Strategic Planning?
o How Strategic Planning Is Done
Key Terms:
I. New Directions in Planning
Strategic planning, particularly in the more traditional bureaucratic form still practiced in
some corporations, has been described as a calendar-driven ritual, not an exploration of
the company’s potential.
the operating people for execution.
1. This approach assumes the future will be similar to the present, even if there is
evidence to the contrary.
International Business, 2e
Geringer, McNett, Ball
Instructor Guide to Module 9
09–14
2. Not surprisingly, the resulting strategic planning documents often fail to be
implemented successfully.
3. Increasingly, the old process is being replaced by a strategic management
approach, which combines strategic thinking, strategic planning, and strategic
implementation and which is increasingly recognized as a fundamental task of line
management, rather than the job of specialized planners in staff positions.
Who Does Strategic Planning?
1. Senior operating managers, not CEO and planning staffs.
2. Frequently these teams include members ranging from junior staff members who
have shown the ability to think creatively to experienced veterans who will “tell it
like it is.”
3. New approach often includes interaction with such parties as important
customers, distributors, suppliers, and alliance partners, in order to gain firsthand
experience with the firm’s markets. Other important stakeholders such as
governments and activists (social, environmental, and political) are also relevant
influences, if not necessarily direct participants.
How Strategic Planning Is Done
1. Less structured format and a shorter document.
must allow ideas to surface from anywhere and at any time.
3. Objectives and strategies are intertwined, as are tactics and strategy. If the
Contents of the Plan
1. Concerned with issues, strategies, and implementation and with incorporating
creative, forward-looking ideas essential to competitive success within changing
2. Staying competitive demands long-term perspective to strategic decision-making
and resource allocation decisions.
International Business, 2e
Geringer, McNett, Ball
Instructor Guide to Module 9
09–15
ENGAGEMENT & APPLICATION
BOXED TEXT DISCUSSION QUESTIONS WITH SUGGESTED ANSWERS
IB IN PRACTICE: Preparing International Strategies Requires Thinking about the Future
The focus of this feature is to explain the importance of scenarios, how they are used, and how
they are developed. Many students gloss over the concept of scenarios without appreciating
their value for international firms. Spending time with a class discussion or project on scenarios
will help students to remember the concept and implement it in firms where they may work.
Online and Hybrid: Have students pick a large international firm and write a scenario for a major
external event. For example: What would Apple do if a trade war with between the U.S. and
China doubled the cost of importing their products made in China? Or what would Dole do if a
drought wiped out 90 percent of their banana supply from Central America?
1. How might the development of scenarios enhance an international company’s
performance?
Answers will vary. Some students may comment on how firms that use scenarios will know
2. What drawbacks could result if an international company decided to use scenarios as part
of its international strategic planning?
Student answers will vary. Some things to consider are the resources needed to engage
scenario planning. A small international firm may not have the resources to, for example, find a
GLOBAL DEBATE: Google’s Values and Strategy versus Opportunity in China
This is an excellent feature because students know Google and should be aware that it as an
MNC of the highest order. This also gives excellent examples of the impact of international
International Business, 2e
Geringer, McNett, Ball
Instructor Guide to Module 9
situations and dynamically changing environmental factors on implementation of strategic
plans and how firms must rapidly change their plans in response to local market conditions. It
also brings in the related issues of corporate mission and values as drivers of strategic plans.
This situation is continuing to unfold as this book goes to press, developing as the external and
competitive forces change. Discussion can be initiated through questions such as, “Did Google
make a good decision to leave China? What do you think?” or “Did Google make the right
decision to return to China? Why or why not?” An update on developments related to the
position of Google and other companies in China can lead to a discussion of how rapidly the
changing global market environment has impacted an organization your students know. This
discussion could serve as an introduction to international competitive strategies.
1. What might have been the implications if Google stayed in China’s Internet search engine
market in 2010? Would that have harmed Google’s reputation and performance elsewhere in
the world?
The answer to this question will vary, and it is intended to help people think through the issue
of how corporate values and strategy are intertwined with political, economic, and competitive