Name: Score:______________

Course/Year: Date:

Strategic Management
Performance Task (Week 11)
Chapter 8 – International Strategy

I. Read and Study “Chapter 8 – International Strategy” in our textbook.

II. Key Terms: Define the following terms according to our textbook.

1. Global strategy – is an international strategy in which a firm's home office determines the strategies that business
units are to use in each country or region.

2. Greenfield venture – is an entry mode through which a firm invests directly in another country or market by
establishing a new wholly owned subsidiary.

3. International diversification strategy – is a strategy through which a firm expands the sales of its goods or
services across the borders of global regions and countries into a potentially large number of geographic locations
or markets.

4. International strategy – is a strategy through which the firms sells its goods or services outside its domestic
market.

5. Multidomestic strategy – is an international strategy in which strategic and operating decisions are decentralized
to the strategic business units in individual countries or regions for allowing each unit the opportunity to tailor
products to the local market.

6. Transnational strategy – is an international strategy through which the firm seeks to achieve both global
efficiency and local responsiveness.

III. Review Questions:

1. What incentives influence firms to use international strategy?
The incentives are Market Expansion reaching new customers and growing their market share beyond the
limitations of their domestic market. Cost Advantages lowering production or operational costs by taking
advantage of cheaper labor, raw materials, or favorable tax structures in other countries .Resource
Acquisition securing access to critical resources like raw materials, skilled labor, or technological
advancements that might be unavailable domestically. Risk Diversification spreading their business across
multiple markets to lessen dependence on a single economy and mitigate economic downturns at home.

2. What are the three basic benefits firms can gain by successfully implementing an international
strategy?
The three basic benefits are Increased Profitability by accessing new markets and potentially lower costs,
firms can generate higher profits. Second is Enhanced Brand Recognition expanding globally increases brand
awareness and can give a company a competitive edge. Lastly is Improved Innovation exposure to diverse
markets and customer needs can fuel innovation and lead to the development of new products or services.

3. What four factors are determinants of national advantage and serve as a basis for international
business-level strategies?
Michael Porter's theory of national competitive advantage outlines four key factors that influence a country's
success in specific industries: Factor Conditions: The presence of skilled labor, infrastructure, natural resources,
and other factors needed to compete effectively. Demand Conditions: The nature and sophistication of domestic
customer demand, which can push companies to innovate and improve. Related and Supporting Industries: The
availability of strong supporting industries like suppliers or specialized services. Firm Strategy, Structure, and
Rivalry: The management style, organizational structure, and level of competition within a country's industries.

4. What are the three international corporate level strategies? What are the advantages and
disadvantages associated with these strategies?
There are three main international corporate level strategies, each with its own advantages and disadvantages:
Multidomestic Strategy: Advantages: Highly responsive to local market needs and preferences (customization).
Disadvantages: Lower economies of scale due to product and marketing variations. Global Strategy: Advantages:
Achieves economies of scale through standardization of products, marketing, and operations.
Disadvantages: May be less responsive to local market needs and preferences.
Transnational Strategy: Advantages: Balances efficiency with local responsiveness. Disadvantages: Requires a
complex organizational structure and skilled managers.
5. What are some global environmental trends affecting the choice of international strategies, particularly
international corporate level strategies?
Global environmental trends, such as climate change and resource scarcity, influence international
strategies. Corporations adapt by considering sustainability, regulations, market shifts, and geopolitical
dynamics in their decision-making processes.

6. What five entry modes do firms use to enter international markets? What is the typical sequence in
which firms use these entry modes?
Firms employ modes like exporting, licensing, joint ventures, wholly owned subsidiaries, or franchising to
enter global markets. The typical sequence often starts with exporting, progressing to higher commitment
modes.

7. What are political risks and what are economic risk? How should firms deal with these risks?
Political risks involve instability, policy changes, and government intervention. Economic risks pertain to
currency fluctuations, inflation, and economic downturns. Firms mitigate these risks through diversification,
insurance, hedging, and strategic partnerships.

8. What are the strategic competitiveness outcomes firms can achieve through international strategies,
and particularly through an international diversification strategy?
International strategies can lead to increased market share, revenue growth, access to new resources, and
enhanced competitive advantage. International diversification can mitigate risks, improve resilience, and
provide opportunities for economies of scale and scope.

9. What are two important issues that can potentially affect a firm’s ability to successfully use
international strategies?
Currency exchange rates and cultural differences significantly impact international strategies. Regulatory
compliance and legal frameworks in foreign markets pose challenges. Firms must navigate these complexities
to achieve success in global operations.
IV. The Global Soccer Industry Mini-Case (pp. 268-269):

1. How does the FIFA scandal represent a form of political risk for companies operating in foreign
countries?
The FIFA scandal exposes risks of bribery, corruption, and political instability in foreign countries,
impacting companies' reputation, operations, and investments.

2. What are the benefits to companies such as Nike and Coca-cola acting as sponsors of soccer
organizations in foreign countries?
Sponsoring soccer organizations in foreign countries offers companies like Nike and Coca-Cola brand
exposure, market penetration, and positive brand association, enhancing their global presence and consumer
engagement.

3. What international strategy is being used by the major companies holding these sponsorships? Please
explain.
Major companies holding sponsorships employ a global strategy, leveraging sports sponsorships to
strengthen brand awareness, reach diverse markets, and align with local cultures, enhancing their
international competitiveness and market share.

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?
Nike and other major companies should recognize the possibility of bribes and corrupt practices in gaining
sponsorships, necessitating thorough due diligence and ethical standards in their partnerships and
procurement processes.

5. How can companies handle corrupt practices in foreign practices? Can they find ways to compete there
without engaging in these practices? Please explain.
Companies can combat corrupt practices in foreign markets by implementing robust compliance measures,
conducting thorough due diligence, fostering transparency, and promoting ethical business practices. They
can compete effectively by focusing on product quality, innovation, and customer experience, without
resorting to corrupt activities.