International Business Mod09 Value Chain Activities Are Often Located Only One Few Areas Help Achieve

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International Business, 2e

Geringer, McNett, Ball

Instructor Guide to Module 9

09–17

2. What could be the implication of Google’s re-entering the Chinese search engine market?

Will it hurt or hinder the company’s ability to compete successfully in other parts of the

world?

This question raises an issue that almost always generates strong opinions and a variety of

perspectives. China has the largest number of Internet users of any nation in the world, and

3. Overall, do you think Google made a good decision to leave China in 2010? Why or why

not?

GET THAT JOB! FROM BACKPACK TO BRIEFCASE: Eduardo Rangel: Growth in International

through Experience

This box explores Eduardo Rangel’s decision to study international business and to gain

international experience through an extended internship in China, due to his recognition of the

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interested in living and working abroad, including the value of having a clear objective and plan

for what you hope to achieve from your international experience.

Online and Hybrid: Virtual teams evaluate Rangel’s advice for their own career development

and their ability to understand and adapt to life in another culture, particularly one that is quite

different from one’s home culture. Share conclusions with class, either online or in face–to-face

setting.

Face-to-Face: Students evaluate their own career strategy in light of Rangel’s advice.

1. How would you evaluate Eduardo Rangel’s efforts to understand and integrate effectively

within Chinese culture? How can such efforts help him to achieve his objective of immersing

within and understanding other cultures?

Students will have various answers to this question, depending on their experience with other

cultures as well as their own self-awareness and self-confidence. Rangel chose to study and

work in China for a 9-month internship, intrigued by the opportunity to immerse within a very

2. Rangel emphasizes the importance of relationship building and how experiential learning

in this regard can be invaluable to personal and professional success. Do you agree with this

assertion? Why or why not? What do you think of his recommendations for addressing this

challenge?

Students will have various answers to this question, depending on their experience with other

cultures as well as their own self-awareness and self-confidence. He emphasizes the value of

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might be most valuable, the experiences that can be sought out, and techniques that may

enhance the likelihood of success. In this regard, Rangel wanted to learn the language and the

culture, so he devoted time and energy toward learning the language and gaining an

appreciation for the country through personal travel; he was patient about making progress

and impacting behaviors and decisions; and he emphasized devoting time to building

relationships with his peers and bosses (a task enhanced, perhaps, by his investment in

language training). It can be useful to explore with the students what ideas they would have for

best achieving a goal of developing language skills while abroad, versus what would be different

if one’s goal was focused more on learning business-related skills and experience. Rangel’s

encouragement to be patient, interactive, and clear regarding personal objectives should

resonate with many students as being appropriate and desirable actions.

END OF MODULE EXERCISES

CRITICAL THINKING QUESTIONS

1. What is international strategy? Do you think it is useful for companies to take the time and

effort to prepare international strategies if they are in rapidly changing competitive situations

with high levels of uncertainty? Why or why not?

The answers to this question may vary. International strategy is concerned with the way firms

make fundamental choices about developing and deploying scarce resources internationally.

2. Why don’t companies use the same strategic planning processes for their international

business activities as for their domestic operations?  

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

competitor is about to broaden its product mix in the U.S. market by introducing a new line

against which your company has not previously had to compete in the home market? Your

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making U.S. 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?  

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 to discuss whether its member countries should reduce

production in order to raise the international price of petroleum. Should you ask your

planning committee, which meets tomorrow, to construct some scenarios? If so, what about?

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

replication, multidomestic, regional, global, and transnational? What challenges arise under

each approach in terms of building and leveraging knowledge that can yield competitive

advantage, and what can companies do to enhance the effectiveness of their knowledge

management efforts under each approach?

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

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products too much may also take away the distinctiveness of a company’s products. The extent

of local adaptation may change over time, making it difficult to maintain a competitive

advantage. The cost and complexity of coordinating a range of different strategies and product

offerings across national and regional markets can be substantial.

Strengths of a global strategy are when a company faces strong pressures for reducing costs

and limited pressure to adapt products for local markets. Strategy and decision making can be

centralized, to promote consistency and to allow the company to offer efficiently produced,

standardized products and services. Value chain activities are often located in only one or a few

areas, to help achieve economies of scale and cost control. Close coordination and integration

of activities across products and markets, and development of efficient logistics and distribution

capabilities help reduce costs. Weaknesses of global strategies are that they may confront

challenges such as limited ability to adjust to changes in customer needs across national or

regional markets, increased transportation and tariff costs from exporting products from

centralized production sites, and the risks of locating activities in a centralized location. The lack

of appeal to specific needs of people due to income difference, preferences, as well as cultural

value system, means that not all people can have the same taste or ability to afford

cost effectiveness and local adaptation, and when there is a potential for competitive

advantage from simultaneously responding to these two divergent forces. The location of a

company’s assets and capabilities will be based on where it would be most beneficial for each

specific activity, giving a basis for competitive edge. Achieving and maintaining an optimal

6. If predictions are difficult to make accurately when there are high levels of uncertainty and

change, why would scenario analysis have value? Aren’t scenarios likely to be inaccurate

under such circumstances?

The answers to this question may vary. As noted in the text, scenario analysis is a what–if

planning approach that allows for strategic contingency thinking. It can be valuable for

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companies that confront high level of uncertainty or the potential for discontinuous events in

their operating environment. By anticipating such events and their potential impacts,

companies can help to identify and incorporate external and internal factors that may normally

not be considered relevant but that have influence on the future. It is this anticipation and

advance discussion that can add value to a company in terms of being prepared for uncertain

futures, rather than an ability to predict the future. A limitation of scenario analysis is that

managers may encounter difficulty in realizing that their assumptions based on past experience

may no longer apply, and they may encounter difficulty in envisioning future, different contexts

and implications.

7. What strategic issues arise as a firm considers whether and how to transfer internationally

the unique skills, and associated products, that result from the distinctive competencies it has

developed in its home country?

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

product resulting from a distinctive competency in its home country is, how quickly can the

8. Your firm has used bottom–up planning for years, but its subsidiaries’ plans take different

approaches to goals and assumptions—even their time frames are different. How can you,

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

9. How can you apply the concepts of strategic planning to your own life, such as for getting a

job or a better job? Which, if any, of the strategic planning approaches would not be

applicable for you, and why?

The answers to this question may vary. Many students may not initially realize the personal

relevance of strategic planning tools and techniques, but through contemplation and discussion

they may realize that they are already practicing some of this, albeit not necessarily in the most

thorough and effective manner. Students have to be able to conduct external environmental

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they perceive the intent of each, students probably will see the relevance of personal mission,

vision and values statements, and the importance of setting objectives and metrics for

assessing whether and to what extent they are making appropriate progress toward achieving

these objectives. Formulation of personal strategies will be evident to most students, albeit

perhaps not within the context of the 5 types of strategy listed in this module. Students might

understand the tradeoffs associated with pressures to adapt their approaches within different

settings or contexts, as well as the potential value of scenarios and contingency plans. Tactical

plans should be evident to students, and indeed some may recognize that they have a tendency

to be more tactical than strategic in some of their personal and career choices. College students

often have personal experience with forecasting expenses and budgeting, sometimes with

painful experience curves. The concepts of policies and procedures may also be clear to some

students, such as how they allocate time to school and extracurricular activities, boundaries

they set with regard to what must be done (or not done), and how, under different contexts

(e.g., how to behave in classes or with professors, versus what might be done with close

friends; what might be done or not done on Facebook or Tinder or LinkedIn or other social

media sites). Students usually see that they utilize personal performance measures and have

plans with various time horizons as well. It can be interesting, however, to push a bit on which

of the modules strategic planning elements would be least applicable to students, and why.

This could prove to yield some interesting and potentially illuminating discussions and insights.

GLOBALEDGE RESEARCH TASK

Exercise 1

globalEDGE ‘Global Insights’ is where profiles of trade blocs, countries, U.S. states, and

industries can be found. When navigated as described in the exercise (i.e. globalEDGE > Global

Exercise 2

globalEDGE ‘Global Insights’ is where profiles of trade blocs, countries, U.S. states, and

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Resource Name: by Industry

Resource Link: https://globaledge.msu.edu/global-insights/by/industry

MINICASE: The Globalization of Walmart

This minicase provides an opportunity for students to examine the globalization efforts of the

world’s largest retailer, Walmart. The minicase examines Walmart’s internationalization

process, including some of the failures and challenges that the company experienced as it

expanded from the U.S. Because of their familiarity with the company, students typically are

interested in this minicase and are excited to discuss it in class.

1. Why has Walmart viewed international expansion as a critical part of its strategy?

2. What did Walmart do to enable the company to achieve success in Latin America and

China?

3. What should Walmart do—or not do—to help ensure that the company achieves success in

India?

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BONUS ACTIVITIES

This section provides you with support of your course above and beyond what is found in the

text. We have developed these resources to support your course, to support your traditional,

hybrid, online, or flipped class.

VIDEO SUGGESTIONS

McGraw Hill’s collection of international business videos is available at

TEAM EXERCISES

These may be done individually or in groups or teams, either in or out of class, for later class

presentation. Some are also appropriate for use in hybrid/flipped classroom and online courses.

1. International Strategy

We have had good response from students when we have asked them to analyze a company,

2. Corporate Objectives

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Assign students to identify corporate objectives of one or several international companies,

including ones from other nations, and then try to identify how they are quantifying these

3. Scenario Analysis

Scenario analysis is an interesting concept for students, but difficult in practice. One technique

we have used is to have the students conduct an analysis of a segment such as oil extraction or

smart phones. A discussion of the segment can be completed in class and then individual teams

4. International Problems

Many students enjoy discussion of socially responsible and values-based orientation by leaders

and companies, so we have found it interesting to have students identify one or several

instances where companies have encountered situations internationally (e.g., labor problems in

SUPPLEMENTAL ACTIVITIES

Case Studies

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Case studies that focus on intercultural issues and their effects in business environments are

available through Ivey Publishing and Harvard Business School. Ivey’s catalog is available for

browsing (www.iveycases.com); the cases are downloadable for review, and pricing is around

$3.75. Harvard Business Publishing (https://cb.hbsp.harvard.edu/cbmp/pages/home) requires

an account and offers downloadable review copies for educators. The case prices begin at

$7.50.

Harvard Cases

“Philips versus Matsushita: The competitive battle continues,” examines the evolution of

international strategies and competencies of two firms battling in the same sector, showing

CONTROVERSIAL ISSUES

1. Global Debate: Google’s Values and Strategy versus Opportunity in China

This boxed feature described earlier in this module’s Instructor Guide provides an excellent

foundation for debating some of the issues raised in the text, including issues about

2. Discussion of Scenario Planning

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Drawing from the content in the IB in Practice box, “Preparing International Strategies Requires

Thinking about the Future,” you can ask students to take opposing perspectives to argue about

the usefulness of scenario planning as an effective tool within international strategic planning,

3. Current Events

A focus on current events that are relevant to the module’s topics is a good way to bring home

the concepts, review their application, and build news-review habits. Ask everyone to come

TEACHING SUGGESTIONS

1. This chapter is a “big picture” chapter and students tend to feel comfortable with its

material. This is a good place to draw on what students may have learned in any earlier strategy

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2. Analyze the relationship between where certain types of decisions are made and the overall

4. The Critical Thinking Questions at the end of the module will help in understanding chapter

content. These topics may be assigned as an outside class assignment. One of the problems in

giving textbook questions as outside assignments is that students frequently do not do the

5. Guest Lecturer possibilities:

• Management faculty could speak on scenario analysis or various aspects of strategic

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CONNECT TOOLS FOR ASSESSEMENT OF LEARNING

CONNECT CONTENT MATRIX

For every chapter, please refer to the Connect Content Matrix to see what application exercises

are available and what Learning Objectives they help reinforce/assess.

Title

Assignment

Type

Topic(s)

Learning

Objective(s)

AACSB

Accreditation

Tagging

Bloom’s

Taxonomy

International

Strategic Planning

Methods

Case Analysis

Kinds of Strategic

Plans

09–04

Knowledge

Application/

Analytical

Thinking

Remember/

Understand

/ Apply

International

Competitive

Strategies

Click and Drag

Overview of

International

Strategy

09-01; 09-02

Analytical

Thinking

Understand

The Global

Strategic Planning

Process

Click and Drag

The Process of

Global Strategic

Planning

09–02

Analytical

Thinking

Understand

Choosing a

Strategy

Case Analysis

The Global

Strategic Planning

Process

09–02

Analytical

Thinking

Understand

CONNECT ACTIVITIES

1. International Strategic Planning Methods

Activity Summary: This case analysis presents a fictitious company called Big Mart and gives

2. International Competitive Strategies

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Activity Summary: In this click and drag assignment, students assign boxes that describe

3. The Global Strategic Planning Process

4. Choosing a Strategy

Activity Summary: This is a case analysis that discusses a fictitious company that has a