Chapter 8: International Strategy
7. What are political risks and what are economic risks? How should firms deal with
these risks?
Political risks are related to instability in national governments and to civil or
international war. Instability in a national government creates multiple problems. Among
these are economic risks and uncertainty in government regulation, the presence of many
8. What are the strategic competitiveness outcomes firms can achieve through
international strategies, and particularly through an international diversification
strategy?
International diversification provides the potential for firms to achieve greater returns on
their innovations (through larger and/or more numerous markets) and thus lowers the
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9. What are two important issues that can potentially affect a firm’s ability to
successfully use international strategies?
Firms pursuing international strategies often find that success leads to growth in both
firm size and complexity. These conditions make it more difficult to manage. At some
MINI CASE
The Global Soccer Industry and the Effect of the FIFA Scandal
Note: To prepare students for class discussion and to introduce them to the
fundamentals of the Strategic Management process, each chapter Mini-Case is
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Cup competition, has grown into an international force, especially in the last several
decades. However, because of the weak institutional infrastructure in many countries
where the game of soccer is played around the world, there is ripe opportunity for
Teaching Note
Begin by asking students why large firms like Coca-Cola, Nike, Adidas, McDonald’s,
and Hyundai would want to become corporate sponsors for international sporting
events like FIFA’s World Cup. Help students understand that this annual event is
Answers to Case Discussion Questions
1. How does the FIFA scandal represent a form of political risk for companies operating in
foreign countries?
Although FIFA is a not-for-profit organization dedicated to promoting the growth of the
sport of football around the globe, it is still subject to both political and economic risk,
Chapter 8: International Strategy
2. What are the benefits to companies such as Nike and Coca-Cola acting as sponsors of
soccer organizations in foreign countries?
Soccer is perhaps the most popular sport worldwide. Consider that the 2010 World Cup
3. What international strategy is being used by the major companies holding these
sponsorships? Please explain.
At the corporate level, major companies that sponsor sports organizations and sporting
4. Given the process described for gaining sponsorships (e.g., through sports marketing
agencies), should Nike and other major companies realize that bribes and other corrupt
practices were taking place?
Students’ answers may vary on this opinion-based question. Some will argue that the
5. How can companies handle corrupt practices in foreign countries? Can they find ways to
compete there without engaging in these practices? Please explain.
In truth, while a firm may not want to, it may be forced to participate in at least a minimal
Chapter 8: International Strategy
ADDITIONAL QUESTIONS AND EXERCISES
The following questions and exercises can be presented for in-class discussion or assigned as
homework.
Application Discussion Questions
1. Given the advantages of international diversification, why do some firms choose not to
expand internationally?
2. How can a small firm diversify globally using the Internet?
Ethics Questions
1. As firms attempt to internationalize, they may be tempted to locate their facilities where
product liability laws are lax in testing new products. What are some examples in which
this motivation is the driving force behind international expansion?
2. Regulation and laws regarding the sale and distribution of tobacco products are stringent in
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38
6. Latin America has been experiencing significant changes in both political orientation and
economic development. Describe these changes. What strategies should foreign
international businesses implement, if any, to influence government policy in these
countries? Is there a chance that the political changes will reverse?
INSTRUCTOR’S NOTES FOR MINDTAP
Cengage offers additional online activities, assessments and resources inside MindTap,
our online learning platform. Here is a comprehensive listing of the activities available
within each chapter of MindTap for Hitt, Ireland Hoskisson’s Strategic Management:
Competitiveness and Globalization, 13th edition:
Course Level Resource: Cornerstone to Capstone Diagnostic- features short quizzes in
Chapter Level Resources:
• What Would You Do Video
• MindTap Reader (eBook)
• Assignments:
o Multiple Choice Quiz
Course Level Case Resources:
• Text Cases (Readings)
Chapter 8: International Strategy
ADDITIONAL INFORMATION FOR SELECT MINDTAP RESOURCES:
WHAT WOULD YOU DO? TOMBERLIN
This exercise introduces students to strategic decisions as they are made in the real world.
Students should come to class prepared to discuss this exercise, and why they chose the
answer they did. All answers are graded as correct – the point of the exercise is to engage
your student’s interest.
VIDEO QUIZ: TOMBERLIN
Title: Tomberlin
RT: 2:23
Topic Key: International strategy, Business-level strategy, Corporate-level strategy,
National advantage
American small businesses often find it hard to operate in the US, given the high costs of
developing the infrastructure to produce goods. One option overseas offers some
Suggested Discussion Questions and Answers
• What are some of the benefits of the strategic alliance between Tomberlin Automotive
and the Chinese manufacturing plant?
In the strategic alliance between Tomberlin Automotive and the Chinese
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• What benefits does Tomberlin Automotive receive from its international strategy by
manufacturing in China?
• What risks are associated with Tomberlin Automotive moving its manufacturing
operations to China?
If the country doesn’t maintain proper infrastructure for shipping the product
GUIDED CASE: THE GLOBAL SOCCER INDUSTRY
This auto-graded activity asks students to read the short end-of-chapter case on The
Global Soccer Industry, and answer questions in the areas of Analysis, Strategy, and
Implementation & Performance.
Once exclusive to European countries, FIFA, the international soccer federation, has
grown over the last century to include nations from South America, the Caribbean, and
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In answering the Guided Case Questions, students will review these concepts:
• International diversification strategy
YOU MAKE THE DECISION: LULULEMON
You Make the Decision branching exercises are real-world activities that allow each
student to work through challenges by choosing from different decision-making options.
These exercises provide students with the opportunity to practice strategic management in
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sure that the class is addressing issues such as increased coordination and distribution
costs, management problems that arise as a result of factors like trade barriers, licensing,
logistical costs, and cultural diversity.
Students will review these concepts:
• Different strategies that companies use to compete in the global marketplace
The ideal path that earns a perfect score is the following:
• Select a transnational strategy
GROUP PROJECT: INTERNATIONAL EXPANSION: IS IT
FOR EVERYONE?
The purpose of this exercise is to investigate the feasibility of a company expanding
internationally. Students will learn if international expansion makes sense for all industries