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HodgettsLuthansDoh: III. International Strategic 8.

Strategy Formulation and The McGrawHill

International Management, Management Implementation Companies, 2005
Sixth Edition

Go East, Young People, You Be the


Go East Management

Amanda Brendhart, Jose Gutierrez, and Rhoda Schreiber if the components can be produced more cheaply with lo-
founded and are partners in a small electronics firm, Elec- cal labor, the partnership is willing to forgo exporting and
tronic Visions, that has developed and patented some state- have everything produced locally.
of-the-art computer components. Visions has had moderate At present, the group is trying to answer three questions.
success selling these components to large U.S.-based com- First, what is the best entry strategy to use in reaching the
puter manufacturers. The biggest problem is that in recent Asian markets? Second, what type of marketing strategy
months, the computer market has begun to turn soft, and will be most effective? Third, if production must be coor-
many of the manufacturers are offering substantial dis- dinated between the United States and an overseas country,
counts to generate sales. Therefore, although Visions has what is the best way to handle this? The partners believe
found an increasing demand for its product, it now is gross- that over the next two months, they will have a very good
ing less money than it was several months ago. idea of what is going to happen regarding the opening of
To increase both sales and profit, the partners have de- Asian markets. In the interim, they intend to work up a pre-
cided to expand into Asia. Although this region is known liminary strategic plan that they can use to guide them.
for its low-cost computer production, the group believes
that countries such as China, Malaysia, and Thailand soon Questions
will become more lucrative markets, because the U.S. gov-
1. What type of entry and ownership approach would
ernment will make these countries open their doors to im-
you recommend? Defend your choice.
ports more fully. If trade barriers are removed, the partners
are convinced that they can export the goods at very com- 2. How could the partners use the four Ps of marketing
petitive prices. In addition, the partners intend to find a to help implement strategy?
partner in each market so that they have someone to help 3. If production must be globally coordinated, will
with the marketing and financing of the product. Of course, Visions have a major problem? Why or why not?