Assignment No.

9
Questions to Answer:

1. What are the stages of International Development?

Answer: Stages of international development are:

Stage 1 (Domestic company): The primarily domestic company exports some of its
products through local dealers and distributors in the foreign countries. The impact on
the organization’s structure is minimal because an export department at corporate
headquarters handles everything. Eden Brewery is a UK microbrewery that joined a trade
mission organized by UK Trade and Investment, after Eden identified Japan as a potential
market for its craft beer. While there the company met with distributors and outlets
interested in importing the beer to Japan. The whole process can take some time to set
up, but is run fairly simply from an organizational perspective.

Stage 2 (Domestic company with export division): Success in Stage 1 leads the company
to establish its own sales company with offices in other countries to eliminate the
middlemen and to better control marketing. Because exports have now become more
important, the company establishes an export division to oversee foreign sales offices.

Stage 3 (Primarily domestic company with international division): Success in earlier stages
leads the company to establish manufacturing facilities in addition to sales and service
offices in key countries. The company now adds an international division with
responsibilities for most of the business functions conducted in other countries.

Stage 4 (Multinational corporation with multidomestic emphasis): Now a full – fledge

MNC, the company increases its investments in other countries. The company establishes
a local operating division or company in the host country, such as Ford of Britain, to
better serve the market. The product line is expanded, and local manufacturing capacity
is established. Managerial functions (product development finance, marketing, and so on)
are organized locally. Over time, the parent company acquires other related businesses,
broadening the base of the local operating division. As the subsidiary in the host country
successfully develops a strong regional presence, it achieves greater autonomy and self-
sufficiency. The operations in each country are, nevertheless, managed separately as if
each is a domestic company.

Stage 5 (MNC with global emphasis): The most successful MNCs move into a fifth stage in
which they have worldwide human resources, R&D, and financing strategies. Typically
operating in a global industry, the MNC denationalizes its operations and plans product
 design, manufacturing, and marketing around worldwide considerations. Global
considerations now dominate organizational design. The global MNC structures itself in a
matrix form around some combination of geographic areas, product lines, and functions.
All managers are responsible for dealing with international as well as domestic issues.

2. How can an expat program be improved to the benefit of the organization?

Answer:

 Have a compelling reason for sending a current employee to a new country.

Vague ideas about broadening a person will quickly lead to frustration and loss of
productivity. A business case should be made for every assignment.
 Choose individuals who are open to the assignment and committed to adapt to
the new environment.
 Assign sponsors/mentors in both the home country and the new country.
 Develop a means of maintaining very open, frequent communication throughout
the assignment.
 Design a plan for repatriation. Communication should begin six months before the
end of the assignment to discuss the process. The employee should outline the
top skills, qualifications, and insights achieved during the assignment and express
how he or she would like to incorporate them at the home office (or in some
cases on the next assignment).
 Craft an approach for sharing the experiences and lessons learned within the
company. One organization asks assignees to blog about their experiences — both
during and after the assignment. These posts are shared via internal social media
and commented on by others throughout the company.

3. Why is strategic flexibility important for strategy formulation when an organization is at

the growth stage?

Answer: Research provides some support for stages of international development, but it
does not necessarily support the preceding sequence of stages. For example, a company
may initiate production and sales in multiple countries without having gone through the
steps of exporting or having local sales subsidiaries. In addition, any one corporation can
be at different stages simultaneously, with different products in different markets at
different levels. Firms may also leapfrog across stages to a global emphasis.

4. What are the nine means by which a company can enter a new international market?

Answer:

 Exporting
 Licensing
  Franchising
 Joint Ventures
 Acquisitions
 Green Field Development
 Production Sharing
 Turnkey Operations
 BOT Concept
 Management Contracts

5. What are the advantages of using a Strategic alliance when operating in a new country?

Answer:

 Partners must agree on fundamental values and have a shared vision about the
potential for joint value creation.
 Alliance strategy must be derived from business, corporate, and functional
strategy.
 The alliance must be important to both partners, especially to top management.
 Partners must be mutually dependent for achieving clear and realistic objectives.
 Joint activities must have added value for customers and the partners.
 The alliance must be accepted by key stakeholders.
 Partners contribute key strengths but protect core competencies.