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CHAPTER NINE
STRATEGY IMPLEMENTATION: GLOBAL STRATEGY
This chapter specifically addresses the question of how and when to expand operations beyond the borders of the
company’s home country. Some of the popular options for international entry are: exporting, licensing, franchising,
forming a joint venture, acquisitions, greenfield development, production sharing, turnkey operations, BOT concept,
and management contracts. A multinational corporation (MNC) is a highly developed international company with a
deep involvement thought the world, plus a worldwide perspective in its management and decision making. This
approach works best when the industry has moved from being multidomestic to global. Strategic alliances between
an MNC and a local partner are becoming increasingly popular as a means by which a corporation can gain entry
into other countries. Corporations operating internationally tend to evolve through five common stages. The stages
of international development are: stage 1—domestic company, stage 2—domestic company with export division,
stage 3—primarily domestic company with international division, stage 4—multinational corporation with
multidomestic emphasis, and stage 5—MNC with global emphasis. Nearly 80% of midsize and larger companies
send some of their employees abroad as expatriates. The three most widely used techniques for international
performance evaluation are ROI, budget analysis, and historical comparisons.
LEARNING OBJECTIVES
1. Describe the means of entry by which an organization can do business in another country.
2. Explain the elements of international strategic alliances that lead to success.
TOPICS OUTLINE COVERED
1. International Entry
2. International Coordination
a. International Strategic Alliances
SUGGESTED ANSWERS TO MYMANAGEMENTLAB QUESTIONS
9-1. What are the nine means by which a company can enter a new international market?
A corporation can select from several strategic options regarding the most appropriate method for entering a foreign
9-2. What are the advantages of using a strategic alliance when operating in a new country?
Strategic alliances, such as joint ventures and licensing agreements, are a popular means by which a corporation can
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SUGGESTED ANSWERS TO DISCUSSION QUESTIONS
9-3. What are the stages of international development?
Stage 1 (Domestic company)—it exports some of its products through local dealers and distributors in the foreign
countries. The impact on the organization’s structure is minimal. Stage 2 (Domestic company with export
9-4. How can an expat program be improved to the benefit of the organization?
There are several recommendations for improving the expatriation process. Have a compelling reason for sending a
9-5. Why is strategic flexibility important for strategy formulation when an organization is at the growth
stage?
A common phenomenon in growing organizations is the fast rate of change and the difficulty of predicting changes.
When an organization is at the growth stage, developing innovation is the basic source of competitive advantage. A
ADDITIONAL DISCUSSION QUESTIONS FOR INSTRUCTORS
These are not found in the text and may be used by the instructor for classroom discussion or exams.
A9-1. Japanese corporations typically involve many more organizational levels and people in the development
of implementation plans than do U.S. corporations. Is this appropriate? Why or why not?
Although the text does not discuss Japanese practices in this chapter, they have received a lot of attention from the
press in terms of quality circles, participative decision making, and the like. Bill Ouchi, in his book Theory Z, points
out that the Japanese “ringi” process involves circulating a formal proposal throughout an organization for approval
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