Describe the four benefits of global expansion for firms

Part A-

Write responses which demonstrate your understanding of the key concepts of the course on the subjects indicated.

Describe the four benefits of global expansion for firms who do venture in to the global market. In your answer, explain how each of these benefits may not be available to those companies who limit their activity to the domestic market.

What are the four basic strategies that firms use to compete in international markets? Under what conditions is each strategy most appropriate? In the longer term, which strategies are the least viable? Explain why.

Explain the advantages and disadvantages of being a first mover as a decision in the timing of entry into a foreign market.

In the past twenty years, the number of Foreign Direct Investments through mergers and acquisitions has increased significantly. Describe the advantages and disadvantages associated with this type of entry strategy? How can the disadvantages or risks of FDI by merger/acquisition be reduced?

Discuss the relationship between quality and costs as a strategic objective of global production and logistics.

How does the type and characteristics of technology a firm uses affect its decision of where to locate production?

Explain how the role of foreign factories evolves over time.

How do different levels of economic development in countries influence product decisions in an international marketing strategy which targets multiple foreign markets?

What are the three factors that contribute to the trend toward greater retail concentration in developed countries? How have these factors promoted retail concentration?

What the critical variables which affect the effectiveness of a firm’s international communications? Identify why and how advertising and promotional strategies might vary among countries because of these variables.

Part B-

ESSAY QUESTIONS – Choose 2 (two) essay questions of the three scenario questions listed below, (minimum two paragraphs per scenario). Each of these questions presents real-life situations. Ask yourself how you would manage these scenarios if you were in charge and had to make the decisions. Use the material and concepts we have studied throughout the entire class to guide and support your decisions, but apply the material and concepts to the specific facts you are given.

Scenario 1 – You are an International Marketing consultant. You have been hired by a small company, Popper’s Ltd., which specializes in high quality microwave gourmet popcorn featuring different and unique seasonings, such as nacho cheese, seaweed, and cinnamon crunch. The popcorn is certified in North America as being “Organic” [no synthetic fertilizers or pesticides used during production of the popcorn]. This company has been highly successful in the North American market (Canada, U.S., Mexico) and would like to begin to export its products to other countries. The popcorn is packaged in boxes of 5 microwave packets each and promoted heavily on television and internet featuring advertisements of people watching sporting events on television eating the Popper’s popcorn.

You are asked to evaluate the marketing mix provide advice on the following:

a) What specific recommendations would you give to the company about adaptations/modifications which may have to be made to the product attributes [organic, microwave gourmet popcorn] in order to satisfy international market requirements? What other considerations regarding the “Product” element of the marketing mix should Popper’s take into account in preparing to sell their product in the international market?

b) Should Popper’s apply a global standardized Communications program, using the same advertisements as they do in the U.S.? If yes, why? If no, why not? If no, what recommendations would you make to adapt their program to the international marketplace?

c) What type of promotion program— push and/or pull– would you recommend? Why would you recommend this type of program?  Briefly describe what you would include in your promotion program.

Scenario 2 – You are the Vice-President for International Development of a small U.S. pharmaceutical company (located in Emeryville, California) which specializes in the development of new medical vaccines using unique biotechnological know-how. Until now, the company has only achieved small successes in limited international markets. Recently, however, the company developed a vaccine to protect humans against the Zika virus.  According to the World Health Organization, this virus has already been identified in Central and South America, and parts of Asia; in these areas the need for a vaccine is urgent and immediate. The virus is starting to appear in North America and Oceania/Pacific Islands where cases are being reported in people who had travelled to Zika-bearing mosquito areas. The company has limited manufacturing capability; if the Zika virus reaches epidemic proportions in Central and South America, it will not have the capability to supply large enough quantities to meet demand.  The company wants to determine the best way it should supply the markets and which entry strategy it should use in various regions. The possibilities are numerous:

  • Manufacture the product at home and export
  • License the formula out to a company or companies already established in affected regions
  • Enter into a strategic alliance with a large pharmaceutical company and establish a 50/50 joint venture company which would manufacture and market the product
  • Establish wholly owned subsidiaries in the affected areas
  • Another alternative or combination of alternatives you might identify.

As the Vice-President, you must make some strategic decisions:

a) Which entry mode or modes (entry strategy/strategies) would you use to supply Central and South America and affected areas in Asia?

b) Why would you choose this strategy or strategies instead of the other alternatives? Explain what the advantages are of the entry more or modes you are recommending and what the disadvantages of the other modes are.

c) What entry mode would you use in those regions where Zika is not yet a major threat and demand is not as urgent? Why would you recommend this entry mode or modes?

Scenario 3 – You are the CEO of a chemical company that produces sulfuric acid, an acid that is used as an input in a wide variety of industrial products. The company has a good reputation in the U.S. and has started venturing out successfully into the international market by exporting minimal quantities to Asia and South America. The product is a commodity so there is intense competition on price.  The product has a low value to weight ratio and trade barriers are moderate but there is an expectation that they will increase.  A manufacturing plant costs about $20 million to build and requires a moderately skilled workforce. Your current plant can supply the U.S. market and some volume of export business but will need to be enlarged or supplemented by additional plant capacity or new plants in order to keep up with demand. The total value of the world market is expected to reach $20-30 billion. As the CEO, you must make some decisions:

a) Based on the above, which of the four basic strategies in international business do you think your company should pursue? Why would you make this choice to organize and align your company to this particular strategy?

b) Should your company follow a plan of concentrated manufacturing or decentralized manufacturing? Explain why.

c) What types of factors would you look for when you are deciding on a location or locations for the company’s plant or plants?

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