Strategic Management Concepts and Cases Competitiveness and Globalization 10Th Edition Hitt Solutions Manual Full Chapter PDF

Strategic Management Concepts and
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Globalization 10th Edition Hitt
Solutions Manual
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Chapter 8: International Strategy
Chapter 8
International Strategy
KNOWLEDGE OBJECTIVES
1. Explain incentives that can influence firms to use an international strategy.

2. Identify three basic benefits firms achieve by successfully implementing an
international strategy.
3. Explore the determinants of national advantage as the basis for international business-
level strategies.
4. Describe the three international corporate-level strategies.
5. Discuss environmental trends affecting the choice of international strategies,
particularly international corporate-level strategies.
6. Explain the five modes firms use to enter international markets.
7. Discuss the two major risks of using international strategies.
8. Discuss the strategic competitiveness outcomes associated with international
strategies particularly with an international diversification strategy.
9. Explain two important issues firms should have knowledge about when using
international strategies.
CHAPTER OUTLINE
Opening Case International Strategy: Critical to Starbucks’ Future Success

IDENTIFYING INTERNATIONAL OPPORTUNITIES
Incentives to Use International Strategy
Three Basic Benefits of International Strategy
INTERNATIONAL STRATEGIES
International Business-Level Strategy
International Corporate-Level Strategy
ENVIRONMENTAL TRENDS
Liability of Foreignness
Regionalization
CHOICE OF INTERNATIONAL ENTRY MODE
Exporting
Licensing
Strategic Alliances
Acquisitions
New Wholly Owned Subsidiary
Dynamics of Mode of Entry
Strategic Focus Walmart International: Using Multiple Paths to Enter International Markets
RISKS IN AN INTERNATIONAL ENVIRONMENT
Political Risks
Economic Risks
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a
publicly accessible website, in whole or in part.
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STRATEGIC COMPETITIVENESS OUTCOMES

International Diversification and Returns
Enhanced Innovation
THE CHALLENGE OF INTERNATIONAL STRATEGIES
Complexity of Managing International Strategies
Limits to International Expansion
Strategic Focus Haier Group: A Story of Product and Geographic Diversification
SUMMARY
REVIEW QUESTIONS
EXPERIENTIAL EXERCISES
VIDEO CASE
NOTES
LECTURE NOTES
Chapter Introduction: This chapter examines opportunities facing firms as

they seek to develop and exploit core competencies by diversifying into global
markets. In addition, it addresses different problems, complexities, and
threats that might accompany use of the firm’s international strategies.
Although national boundaries, cultural differences, and geographical
distances all pose barriers to entry into many markets, significant
opportunities draw businesses into the international arena. A business that
plans to operate globally must formulate a successful strategy to take
advantage of these global opportunities. Furthermore, to mold their firms into
truly global companies, managers must develop global mind-sets. Especially
in regard to managing human resources, traditional means of operating with
little cultural diversity and without global sourcing are no longer effective.
These themes are all emphasized in the chapter.
OPENING CASE
International Strategy: Critical to Starbucks’ Future Success
With over 17,000 stores in more than 50 countries, Starbucks is one of the world’s most
recognized brands. It is clear that international expansion is an important component of
its strategy—especially in the huge Chinese and Indian markets. In fact, Starbucks
believes that China has the potential to be the second highest revenue producer, trailing
only the US. Given that it commands less than one percent of the global coffee market,
Starbucks has a lot of room to grow. It plans to expand the number of stores in China
from around 400 in 2011 to 1500 in 2015.
However, in implementing its international strategy, the company understands that

strategy must address host-country conditions. Starbucks uses its capabilities in brand
strength, superior customer service, convenient locations, and product innovation. It
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delivers unique products and experiences for which customers are willing to pay a
premium. The transnational corporate strategy allows it to use its competencies to
standardize operations and gain global efficiencies while simultaneously giving
discretion to local units to offer products that accommodate local tastes.
Teaching Note: Given near saturation in its core US market, it is clear

that Starbucks’ future growth depends on international expansion. The
opening case focuses on Starbucks in China but global growth is much
broader than that. Ask students where they think Starbucks should push
growth and if they think the model described for China will work in other
countries. Ask them to comment on why Starbucks is implementing the
international corporate strategy identified as transnational and not global
or multidomestic. Though it is easy to see the benefits if things work out,
ask students to identify and discuss some of the risks inherent with this
approach.
Although national boundaries, cultural differences, and geographical distances all pose
barriers to entry into many markets, significant opportunities draw businesses into the
international arena.
• Global firms must formulate a successful strategy to take advantage of international
opportunities.
• Managers must develop global mind-sets.
• Operating with little cultural diversity and without global sourcing is no longer effective.
• Global firms must develop relationships with suppliers, customers, and partners, and then
learn from these.
Figure Note: Figure 8.1 provides an overview of the various choices and
outcomes of strategic competitiveness.
FIGURE 8.1
Opportunities and Outcomes of International Strategy
The following opportunities and outcomes of international strategy are illustrated in Figure
8.1:
• Firms should first identify international opportunities related to increasing market size,
return on investment, economies of scale and learning, and location-related advantages.
• Once international opportunities have been identified, firms must develop international
strategies based on firm resources and capabilities.
• A mode of entry should be selected to take advantage of the firm’s core competencies.
• A firm’s ability to realize strategic competitiveness is tempered by management’s ability
to manage effectively and efficiently a complex organization with locations in multiple
countries and the economic and political risks that accompany firm internationalization.
• The strategic outcomes from the process can include better performance and more
innovation.
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Explain incentives that can influence firms to use an

1
international strategy.
IDENTIFYING INTERNATIONAL OPPORTUNITIES
International strategy refers to selling products in markets outside of the firm’s domestic
market to expand the market for their products.
Incentives to Use International Strategy
This is explained by Vernon’s adaptation of the product life cycle concept formulated to
explain internationalization.
1. A firm introduces an innovation (new product) in its domestic market.
2. Product demand develops in other countries and exports are provided from domestic
operations.
3. As demand increases, foreign rivals produce the product; then firms justify investing in
production abroad.
4. As products become standardized, firms relocate production to low-cost countries.
Some firms implement an international strategy to secure critical resources, such as

petroleum reserves (for the oil industry), bauxite (for the manufacture of aluminum), or
rubber (for tire manufacturing).
Traditional motives persist, but other emerging motives also drive international expansion.
• Pressure has increased for global integration of operations, driven mostly by universal
product demand.
• In some industries, technology drives globalization because the economies of scale
necessary to reduce costs to the lowest level often require an investment greater than that
needed to meet domestic market demand.
• New large-scale, emerging markets such as China and India provide a strong
internationalization incentive because of the potential demand in them.
Companies seeking to expand operations in Europe, as elsewhere, need to understand the

pressure on them to respond to local, national, or regional customs, especially where goods
or services require customization due to cultural differences or effective marketing to entice
customers to try a different product.
• Firms adapt products to local tastes as they move into new national markets.
• Local repair/service capabilities are another factor that increases desire for local country
responsiveness.
• Transportation costs of large products and their parts may preclude a firm’s suppliers from
following the firm into an international market.
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• Employment contracts and labor forces differ. Host governments demand joint ownership
and frequently require a high percentage of local procurement, manufacturing, and R&D.
These issues increase the need for local investment.
Accompanying these traditional and emerging reasons for international expansion, other
opportunities available to firms through an international strategy include:
• Increasing the size of potential markets
• Achieving greater returns on capital and/or investment in new product/process
developments
• Gaining economies of scale, scope, or learning
• Gaining location-based competitive advantage
Teaching Note: Firms expanding into international markets must recognize

that many countries have characteristics that are unique and may differ
significantly from the traditional European markets into which US firms have
expanded. Thus, firms must recognize this and:
• Be capable of managing multiple risks—e.g., financial, economic, political
risks
• Be aware of increased pressure for local country or regional
responsiveness, especially where cultural differences require customization
of goods or services
• Weigh the potential advantages of enhancing the firm’s strategic
competitiveness relative to the costs of meeting managerial challenges and
product/geographic diversification requirements in international markets
Identify three basic benefits firms achieve by successfully

2
implementing an international strategy.
Three Basic Benefits of International Strategy
Increased Market Size
Expanding internationally enables firms to increase greatly the size of the potential market
for their products. This may be of critical importance if the domestic market is too small to
support scale-efficient manufacturing facilities (e.g., the pharmaceutical firms’ push into
China).
The size of a particular international market affects a firm’s willingness to invest in R&D to
build advantages in that market, with larger markets tending to provide higher returns and
lower risk.
The strength of the science base in a country also can affect a firm’s foreign R&D
investments, so most firms prefer to invest more heavily in those countries with the scientific
knowledge and talent that produce more effective new products and processes from their
R&D.
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Economies of Scale and Learning
By expanding the size and scope of their markets, firms may be able to achieve economies of
scale in manufacturing (and in other operations, such as marketing, research and
development, and distribution) by standardizing products across national borders and
spreading fixed costs over a larger sales base.
Teaching Note: Economies of scale are critical in the global auto industry.
Honda has been a largely successful firm with substantial competencies in
the manufacture of engines; however, it has sometimes struggled to compete
against larger and more resource-rich auto makers (e.g., Ford and GM). To
have a chance to survive, Honda achieved economies of scale in the
development and application of its engines (e.g., by providing engines for
many applications [e.g., lawnmowers, weed trimmers, snowmobiles] and
forming an alliance with GM to produce engines). Thus, Honda may excel as
an independent engine manufacturer.
Firms may also be able to exploit core competencies in international markets through
resource and knowledge sharing between units across country borders. This sharing generates
synergy, which helps the firm produce higher-quality goods or services at lower cost. In
addition, working across international markets provides the firm with new learning
opportunities.
Location Advantages
Firms also may be able to achieve a comparative advantage and lower the basic costs of their
products by locating facilities in low-cost markets for critical raw materials, cheap labor, key
suppliers, energy, customers, and/or natural resources.
Teaching Note: The large and unified market of the European Union is
attracting considerable investment from international companies, and
European markets and firms are undergoing substantial changes to take
advantage of the economies of scale, potential learning, and advantages of
location. The common currency and integration of capital markets have
reduced financial risks and made available significant amounts of capital that
were previously unavailable in the separate country markets. (This may be a
good place to discuss the euro and its impact on global business.)
Other factors that may impact location advantages are as follows:

• The needs of intended customers
• Cultural influences (if there is a strong match between the cultures involved, the liability
of foreignness is lower than if there is high cultural distance)
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• Regulation distances that influence the ownership positions of multinational firms as well
as their strategies for managing expatriate human resources
Explore the determinants of national advantage as

3
the basis for international business-level strategies.
INTERNATIONAL STRATEGIES
International strategies available to firms are business-level and corporate-level (see Chapters
4 and 6).
• Business-level strategy choices are generic, extending our earlier discussion of cost
leadership, differentiation, focus, and integrated cost leadership/differentiation strategies.
• Corporate-level strategies are dependent on the complexity and scope of product and
geographic diversification, and these include multidomestic, global, and transnational
(hybrid) strategies.
International Business-Level Strategy
Each business must develop a competitive strategy focused on its own domestic market.
Business-level generic strategies are discussed in Chapter 4, but international business-level
strategies have some unique features.
• In an international business-level strategy, the home country of operation is often the most
important source of competitive advantage.
• The resources and capabilities established in the home country frequently allow the firm to
pursue the strategy into markets located in other countries.
• As a firm continues its growth into multiple international locations, research indicates that
the country of origin diminishes in importance as the dominant factor.
Figure Note: Porter’s Diamond of Advantage model can be used to introduce

the discussion of Figure 8.3.
FIGURE 8.3
Determinants of National Advantage
As Figure 8.3 illustrates, four interrelated national or regional factors contribute to the
competitive advantage of firms competing in global industries.
• Factor conditions or the factors of production
• Demand conditions
• Related and supporting industries
• Firm strategy, structure, and rivalry
Note: Each of these factors is discussed in the following section.
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Perhaps the most basic factor in the model, factor conditions or factors of production, refers
to the inputs necessary to compete in any industry. These include labor, land, natural
resources, capital, and infrastructure (such as highway, postal, and communications systems).
These factors can be subdivided into four categories:

• Basic factors, such as labor and natural resources
• Advanced factors, including digital communications systems and highly educated work
forces
• Generalized factors (required by all industries), such as highway systems and a supply
of capital
• Specialized factors that are most valuable in specific uses (e.g., skilled personnel
employed at a port who specialize in the handling of bulk chemicals)
Nations having both advanced and specialized factors are likely to be characterized by
growth in new firms that are strong global competitors.
Ironically, countries often develop advanced and specialized factors because they lack critical
basic resources.
• Some Asian countries, such as South Korea, lack abundant natural resources but offer a
strong work ethic, a large number of engineers, and systems of large firms to create
expertise in manufacturing.
• Germany developed a strong chemical industry, partially because Hoechst and BASF
spent years creating a synthetic indigo dye to reduce their dependence on imports, unlike
Britain, whose colonies provided large supplies of natural indigo.
The second factor that determines national advantage is demand conditions, which are
characterized by the nature and size of buyers’ needs in the home market for the industry’s
products or services. The size of the segment can create demand sufficient to justify the
construction of scale-efficient facilities.
Related and supporting industries are the third factor of the national advantage model.
National firms may be able to develop competitive advantage when industries that provide
either materials or components or that support the activities of the primary industry are
present.
• Italian firms are world leaders in the shoe industry because of the related and supporting
industries present in Italy (e.g., a mature leather processing industry and design and
manufacture of leather-working machinery).
• In Japan, copiers and cameras are related, as are cartoon, consumer electronics, and video
game industries.
Growth in certain industries is fostered by the fourth factor—firm strategy, structure, and
rivalry. As expected, patterns of firm strategy, structure, and competitive rivalry among firms
in an industry vary between nations.
• In Italy, the national pride of the country’s designers has spawned strong industries in
sports cars, fashion apparel, and furniture.
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• In the United States, competition among computer manufacturers and software producers
has favored the development of these industries.
As described, the four basic factors of Porter’s Diamond of Advantage model emphasize the
impact or influence of the environmental or structural attributes of a nation’s economy that
may contribute to a national advantage for its firms in specific industries.
In spite of the presence of the four factors and government support, the factors leading to
national advantage are likely to result in a firm achieving competitive advantage only when
the firm develops and implements strategies that enable it to take advantage of country-
specific factors.
4 Describe the three international corporate-level strategies.
International Corporate-Level Strategy
The type of corporate-level strategy adopted by a firm has an impact on the selection and
implementation of its international business-level strategy.
Some corporate-level strategies provide individual country units with the flexibility to
develop country-specific strategies, whereas others dictate all country business-level
strategies from the home office and coordinate activities across units for the purposes of
resource-sharing and product standardization.
International corporate-level strategy can be distinguished from international business-level

strategy by the scope of operations, in terms of both product and geographic diversification.
Figure Note: The three types of international corporate-level strategies are

illustrated in Figure 8.4, whereas relationships between structural
arrangements and strategy type are discussed further in Chapter 11.
FIGURE 8.4
International Corporate-Level Strategies
As Figure 8.4 illustrates, a firm should choose its international corporate-level strategy based
on the need for both local responsiveness and for global integration.
• When the need for global integration is high and there is little need for local market
responsiveness, the firm should adopt a global strategy.
• When the need for global integration is low, but there is great need for local market
responsiveness, the firm should adopt a multidomestic strategy.
• When there is a great need for both global integration and local market responsiveness, the
firm should adopt a transnational strategy.
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Multidomestic Strategy
Multidomestic strategy is one where strategic and operating decisions are decentralized to
the strategic business unit in each country in order to tailor products and services to the local
market. The multidomestic strategy:
• Assumes business units in different countries are independent of one another
• Contends that markets differ and can be segmented by national borders
• Focuses on competition within each country
• Suggests products and/or services can be customized to meet individual market needs or
preferences
• Assumes economies of scale are not possible because of demand for market-specific
customization
Teaching Note: A few years back, Sony’s entertainment business changed

its strategy from global to multidomestic when it decided to produce films and
television programs for local markets around the world through production
facilities and television channels in most larger Latin American and Asian
countries. In 1999, Sony produced approximately 4,000 hours of foreign-
language programs and about 1,700 hours of English-language programs.
Sony now has more than 24 channels operating across 62 countries, and
some of these channels are highly successful.
The use of multidomestic strategies:

• Usually expands the firm’s local market share because the firm can pay attention to the
needs of local buyers
• Results in more uncertainty for the corporation as a whole, because of the differences
across markets and thus the different strategies employed by local country units
• Does not allow for the achievement of economies of scale and can be more costly
• Decentralizes a firm’s strategic and operating decisions to the business units operating in
each country
Global Strategy
A global strategy is one where standardized products are offered across country markets and
competitive strategy is dictated by the home office. The global strategy:
• Assumes strategic business units operating in each country are interdependent
• Attempts to achieve integration across business and national markets, as directed by the
home office
• Emphasizes economies of scale
• Offers greater opportunities to use innovations developed at home or in one country in
other markets
• Often lacks responsiveness to local market needs and preferences
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• Is difficult to manage because of the need to coordinate strategies and operating decisions
across borders
• Requires resource-sharing and an emphasis on coordination across national borders
Teaching Note: U.K.-based temporary energy provider, Aggreko, operates in

48 countries and employs a global strategy. The firm’s fleet of equipment is
integrated globally, which allows it to shift equipment to different regions of
the world to meet specific needs. Its global strategy also allows Aggreko to
design and assemble its equipment in-house to meet the needs of its
customers.
Cemex: A Mini-Case
Cemex is the third largest cement company in the world behind France’s Lafarge and
Switzerland’s Holcim and the largest producer of Ready-mix, a prepackaged product
that contains all the ingredients needed to make localized cement products. In 2005,
Cemex acquired RMC for $4.1 billion. RMC is a large U.K. cement producer with
two-thirds of its business in Europe. Cemex was already the number one producer in
Spain through its acquisition of a Spanish company in 1992. In 2000 Cemex acquired
Southdown, a large manufacturer in the US. Accordingly, Cemex has strong market
power in the Americas as well as in Europe. Because Cemex pursues a global strategy
effectively, its integration of its centralization process has resulted in a quick payoff for
its merger integration process. To integrate its businesses globally, Cemex uses the
Internet as one way of increasing revenue and lowering its cost structure. By using the
Internet to improve logistics and manage an extensive supply network, Cemex can
significantly reduce costs. Connectivity between the operations in different countries
and universal standards dominate its approach.
Transnational Strategy
A transnational strategy is a corporate strategy that seeks to achieve both global efficiency
and local (national market) responsiveness.
• It is difficult to achieve because of requirements for both strong central control and
coordination to achieve efficiency and local flexibility and decentralization to achieve
local responsiveness.
• A transnational strategy mandates building a shared vision and individual commitment
through an integrated network to produce a core competence that would result in strategic
competitiveness (that competitors would find difficult to imitate).
• Effective implementation of a transnational strategy often produces higher performance
than does implementation of either the multidomestic or global international corporate-
level strategies.
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Teaching Note: Students sometimes find the transnational strategy difficult to

grasp. This has prompted some to refer to this option as an “idealized form,”
suggesting that this it not possible to achieve in reality. This also suggests,
however, that this model represents a worthy goal for the international firm. It
is worth asking students if they believe it will ever be possible to be truly
transnational and ask what would be needed to make this a reality.
Teaching Note: Refer back to Figure 8.4 to summarize relationships between

the need for global integration and local responsiveness and international
corporate-level strategies.
Teaching Note: DaimlerChrysler employed a transnational strategy to design

and manufacture The Crossfire, a product that was introduced in 2003 and
features a sleek Chrysler design, but 40 percent of its components are from
Mercedes Benz. This global integration has facilitated lower costs for the
vehicle—components already engineered were adapted from elsewhere and
design enhancements produced an attractive car for the US market.
Discuss environmental trends affecting the choice of

5 international strategies, particularly international corporate-
level strategies.
ENVIRONMENTAL TRENDS
Implementing a transnational strategy is difficult; however, firms are challenged to do so

because of these facts:
• There is an increased emphasis on local requirements, e.g., customization to meet
government regulations within particular countries or to fit customer tastes and
preferences.
• Most multinational firms desire coordination and sharing of resources across country
markets to hold down costs.
• Some products and industries may be more suited than others for standardization across
country borders.
Liability of Foreignness
Research shows that firms may focus less on truly global strategies and more on regional
adaptation. Even Internet-based strategies now require local adaptation.
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Lands’ End Adjusts to the Liability of Foreignness: A Mini-Case
The globalization of businesses with local strategies is demonstrated by the online

operation of Lands' End, Inc. (now owned by Sears), which uses local Internet portals to
offer its products for sale. Lands’ End, formerly a direct-mail catalog business, launched
its web-based business in 1995. The firm established websites in the U.K. and Germany in
1999, and in France, Italy, and Ireland in 2000—all of this prior to initiating a catalog
business in those countries. Not only are catalogs very expensive to print and mail outside
the United States, but they also must be sent to the right people, and buying mailing lists
is expensive. With limited online advertising and word-of-mouth, a website business can
be built in a foreign country without a lot of initial marketing expenses. Once the online
business is large enough, a catalog business can be launched with mailing targeted to
customers who have used the business online.
Sam Taylor, vice president of international operations for Lands’ End, indicated that the
firm has a centralized Internet team (handling development, design, etc.) at the home
office, but a local presence is also needed. So the firm hired local Internet managers,
designers, marketing support, and so on, to gain insight into the nuances of local markets.
He also explained that each additional website was cheaper to implement. For example, to
set up the Websites for Ireland, France, and Italy, the firm cloned the U.K. site and
partnered with Berlitz for French and Italian translations. This made the process
cheaper—12 times less than the U.K. site for France and 16 times less for Italy. Lands’
End now gets 16 percent of its total revenues from Internet sales and ships to 185
countries, primarily from its Dodgeville, Wisconsin, corporate headquarters. This shows
that smaller companies can sell their goods and services globally when facilitated by
electronic infrastructure without having significant (brick-and-mortar) facilities outside of
their home location. But significant local adaptation is still needed in each country or
region.
Regionalization
A firm competing in international markets must decide whether to compete in all (or many)
world markets or to focus its efforts on a specific region or regions.
Competing in many markets may enable the firm to achieve economies of scale because of
the size of the combined markets, but only if customer preferences in multiple markets do
not differ significantly. If customer preferences vary significantly among national markets, a
firm might be better served by narrowing its focus to a specific region. A regional focus may
enable the firm to better understand cultures, legal and social norms, and other factors that
may be important to achieving strategic competitiveness.
Teaching Note: At this point, it might useful to draw a parallel between

competing in multiple national markets and owning businesses in multiple
industries. Firms may be better positioned by focusing on a specific region
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where markets are more similar, thus allowing a degree of integration and
resource sharing. In Chapter 7, a similar comment was made regarding
disadvantages that often accompany overdiversification and the prescribed
downscoping to refocus the firm more on related as opposed to unrelated
diversification.
Regional strategies also are being promoted by groups of countries that have developed trade
agreements to enhance the economic power of a region. Examples include the following:
• Membership in the European Union (EU) is limited to Western European countries, but it
is being expanded to include other Western European countries as well as countries in
Central and Eastern Europe.
• The North American Free Trade Agreement (NAFTA) is an integration designed to
facilitate trade among the US, Canada, and Mexico (and it may be expanded to include
some South American countries).
• South America’s Organization of American States (OAS) is a system of country
associations that developed trade agreements to promote the flow of trade across country
boundaries within their respective regions.
• CAFTA is a US trade agreement with Central American nations that is designed to reduce
tariffs with five countries in Central America plus the Dominican Republic in the
Caribbean.
Teaching Note: The movement of investment funds has not been only from
the US to Mexico as Mexican investors have made significant investments in
the US, and some European firms have invested in Canada to gain access to
this unified market.
Most firms enter regional markets sequentially, beginning in markets with which they are
more familiar. And they introduce their largest and strongest lines of business into these
markets first, followed by their other lines of business once the first lines are successful.
They also usually invest in the same area as their original investment location.
Explain the five modes firms use to enter international

6
markets.
CHOICE OF INTERNATIONAL ENTRY MODE
Firms have a variety of alternative means of expanding internationally as indicated in Table

8.1.
Table Note: Students can refer to Table 8.1 as you discuss each of the
modes of entry into international markets.
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TABLE 8.1
Modes of Entry and Their Characteristics
Table 8.1 presents five alternative entry modes available to firms for international expansion:
• Exporting
• Licensing
• Strategic alliances
• Acquisition
• New wholly owned subsidiary (greenfield venture)
The next section of this chapter discusses characteristics of each mode, including cost/control
trade-offs.
Exporting
A common—but not necessarily the least costly or most profitable—form of international

expansion is for firms to export products from the home country to other markets.
• Exporters have no need to establish operations in other countries.
• Exporters must establish channels of distribution and outlets for their goods, usually by
developing contractual relationships with firms in the host country to distribute and sell
products.
However, exporting also has disadvantages:

• Exporters may have to pay high transportation costs.
• Tariffs may be charged on products imported to the host country.
• Exporters have less control over the marketing and distribution of their products.
Because of the potentially significant transportation costs and the usually greater similarity of
geographic neighbors, firms often export mostly to countries that are closest to its facilities.
Small businesses are the most likely to use exporting. One of the largest problems with
which small businesses must deal is currency exchange rates, a challenge for which only
large businesses are likely to have specialists.
Licensing
Through licensing, a firm authorizes a foreign firm to manufacture and sell its products in a
foreign market.
• The licensing firm (licensor) generally is paid a royalty payment on every unit that is
produced and sold.
• The licensee takes the risks, making investments in manufacturing and paying
marketing/distribution costs.
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• Licensing is the least costly (and potentially the least risky) form of international
expansion because the licensor does not have to make capital investments in the host
countries.
• Licensing is a way to expand returns based on previous innovations, even if product life
cycles are short.
Teaching Note: Counterfeiting is one risk to licensing strategies. Sony and

Philips codesigned the audio CD. In the past, they licensed the rights to
companies to make CDs and Sony and Philips collected 5 cents for every CD
sold. However, the returns to Sony and Philips from CD sales were
threatened by cheap counterfeit disks. Sales of counterfeit disks in China
alone are estimated to exceed $1 billion annually.
The costs or potential disadvantages of licensing include the following:

• The licensing firm has little control over manufacture and distribution of its products in
foreign markets.
• Licensing offers the least revenue potential as profits must be shared between licensor and
licensee.
• The licensee can learn the firm’s technology and, upon license expiration, may create a
competing product.
Strategic Alliances
Strategic alliances enable firms to:

• Share the risks and resources required to enter international markets
• Facilitate the development of new core competencies that yield strategic competitiveness
Most strategic alliances represent ventures between a foreign partner (that provides access to
new products and new technology) and a host country partner (that has knowledge of
competitive conditions, legal and social norms, and cultural idiosyncrasies that enable the
foreign partner to successfully manufacture or develop and market a competitive product or
service in the host country market).
Strategic alliances also present potential problems and risks due to (1) selection of
incompatible partners and (2) conflict between partners.
Several factors may cause a relationship to sour. Trust between the partners is critical and is
affected by a number of fundamental issues:
• The initial condition of the relationship
• The negotiation process to arrive at an agreement
• Partner interactions
• External events
• The country cultures involved in the alliance or joint venture
Note: Strategic alliances are covered in much greater depth in Chapter 9.
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Teaching Note: British Telecommunications planned to create a virtual

shopping mall in Spain through its joint venture with Banco Popular, a retail-
focused Spanish bank. The two firms jointly developed a website for
business-to-business transactions. They were to use BT’s portal in Spain to
develop a client base of small- and medium-sized businesses. BT would
provide the common portal free of charge for the first year and Banco Popular
would charge only a nominal commission for brokering sales.
Research suggests that alliances are more favorable when uncertainty is high and where
cooperation is needed to access knowledge dispersed between partners and where strategic
flexibility is important; acquisitions work best in situations with less need for flexibility and
when the transaction supports economies of scale or scope.
Acquisitions
Cross-border acquisitions have also been increasing significantly. In recent years, cross-
border acquisitions have comprised more than 45 percent of all acquisitions completed
worldwide.
As explained in Chapter 7, acquisitions can provide quick access to a new market. In fact,
acquisitions may provide the fastest and often the largest initial international expansion of
any of the alternatives.
Beyond the disadvantages previously discussed for domestic acquisitions (Chapter 7),
international acquisitions also can be quite expensive (because of debt financing) and require
difficult and complex negotiations due to:
• The same disadvantages as domestic acquisitions
• The great expense that often requires debt financing
• The exceedingly complex international negotiations for acquisitions—only about 20
percent of the cross-border bids made lead to a completed acquisition, compared to 40
percent for domestic acquisitions
• Different corporate cultures
• The challenges of merging the new firm into the acquiring firm, which often are more
complex than with domestic acquisitions—i.e., different corporate culture, but also
different social cultures and practices
Teaching Note: Emphasize that firms often use multiple entry strategies. For
example, Walmart has used multiple entry strategies as it globalizes its
operations, ranging from joint ventures in China and Latin America to
acquisitions in Germany and the U.K.
New Wholly Owned Subsidiary
8-17
Firms that choose to establish new, wholly owned subsidiaries are said to be undertaking a
greenfield venture. This is the most costly and complex of all international market entry
alternatives.
The advantages of establishing a new wholly owned subsidiary include:

• Achieving maximum control over the venture
• Being potentially the most profitable alternative (if successful)
• Maintaining control over the technology, marketing, and distribution of its products
Though the profit potential is high, establishing a new wholly owned subsidiary is risky for
two reasons:
• This alternative carries the highest costs of all entry alternatives since a firm must build
new manufacturing facilities, establish distribution networks, and learn and implement the
appropriate marketing strategies.
• The firm also may have to acquire knowledge and expertise relevant to the new market,
often having to hire host country nationals (in many cases from competitors) and/or costly
consultants.
Dynamics of Mode of Entry
The choice of a market entry strategy is determined by a number of factors. However, initial
market development strategies generally are selected to establish a firm’s products in the new
market.
• Exporting does not require foreign manufacturing expertise; it only requires an investment
in distribution.
• Licensing also can facilitate direct market entry by enabling the firm to learn the
technologies required to improve its products in order to achieve success in international
markets or to facilitate direct entry.
• Strategic alliances are also popular because the firm forms a partnership with a firm that is
already established in the new target market and reduces risks by sharing costs with the
partner.
Firms interested in establishing a stronger presence (in most instances, in the later stages of
the firm’s international diversification strategy) and in controlling technology, marketing,
and distribution adopt riskier, more costly entry strategies, such as acquisitions or greenfield
ventures.
However, the entry strategy should be matched to the particular situation. In some cases, a
firm may pursue entry strategies in sequential order—beginning with exporting and ending
with greenfield ventures. The entry mode decision should be based on the following
conditions:
• The industry’s competitive conditions
• The target country’s situation
• Government policies
• The firm’s unique set of resources, capabilities, and core competencies
8-18
STRATEGIC FOCUS
Walmart International: Using Multiple Paths to Enter International Markets
Walmart’s growth story in the US in well known. However, its international growth is
equally impressive. Walmart currently serves over 200 million customers per week through
its 9300 stores in 15 countries (under 60 different banners). Walmart International was
created to manage international growth/development. This division generates over $115
billion in sales (2010) and accounts for more than 25 percent of total sales. Revenues are
growing at about 20 percent per year. As in its US business, international success depends on
core competencies in distribution, warehousing, logistics, and data management.
Whereas US market growth has been almost exclusively organic, international expansion has
occurred through joint ventures, acquisitions, and new wholly owned subsidiaries. The
choice of entry mode depends on conditions on the ground and Walmart has been successful
with the entry modes listed above. While future growth will depend largely on the success of
its international operations, as the company becomes more geographically dispersed and as
the product it offers continues to expand, numerous challenges will need to be addressed by
the company.
Teaching Note: As is the case with many US-based firms, when markets become
saturated, growth must come from other places. Given that increasing same store
sales is important but not sufficient to achieve growth objectives, international
expansion becomes central to continued success. Walmart has been able to use
core competencies developed in its core US operations to give it competitive
advantages when it expands. Ask students if any of them have been to Walmart
stores in foreign countries. If they have, ask how the stores were the same or
different from US stores. Students should be able to identify instances where
unique products, services, policies have been used to respond to local conditions.
7 Discuss the two major risks of using international strategies.
RISKS IN AN INTERNATIONAL ENVIRONMENT
Political and economic risks complicate the management of international diversification. One
reason is that these risks result in competitive conditions that may differ significantly from
what was expected.
Examples of political and economic risks related to international diversification are listed in
Figure 8.5.
Figure Note: Be sure to note any developments in the international risk

situations noted in Figure 8.5 as well as the emergence of significant new
issues.
8-19
FIGURE 8.5
Risks in the International Environment
This figure presents some specific examples of political and economic risks that
multinational firms face.
Political Risks
Political risks are those related to instability in national governments and to war, civil or
international.
Teaching Note: For a useful way of identifying the political risk associated
with different countries, see the map on page 105 of Small Business
Management: An Entrepreneurial Emphasis, by Longenecker, Moore, Petty,
and Palich (2006, SWCP).
National government instability creates multiple potential problems for internationally

diversified firms. Economic risks come up as governments react to a variety of events,
reflected in uncertainty in terms of:
• Economic risks and uncertainty created by government regulation
• Existence of many, possibly conflicting, legal authorities or corruption
• The potential nationalization of private assets
Teaching Note: A number of national governments attempt to minimize

political risk (to themselves) by requiring that a significant portion of profits
from investments be reinvested only in that country (to achieve economic
stability, which can reduce probability of political instability).
Economic Risks
Economic risks are interdependent with political risks; however, some economic risks are
specific to international diversification. For example, differences and fluctuations in the
value of the different currencies are a primary concern to internationally diversified firms.
• For US firms, the value of international assets, liabilities, and earnings are affected by the
value of the dollar relative to other currencies (e.g., as the dollar value increases, the value
of foreign assets decreases).
The value of the dollar may make US firms’ exports uncompetitive in international
markets because of price differentials (and, in turn make imports from other countries
more attractive to US customers).
Discuss the strategic competitiveness outcomes associated with

8 international strategies particularly with an international
diversification strategy.
8-20
STRATEGIC COMPETITIVE OUTCOMES
Once its international strategy and mode of entry have been selected, the firm turns its
attention to implementation issues (see Chapter 11). It is important to do this because
international expansion is risky and may not result in a competitive advantage (see Figure
8.1). The probability the firm will achieve success by using an international strategy
increases when that strategy is effectively implemented.
International Diversification and Returns
Recall that in Chapter 6, the discussion centered on product diversification where a firm
manufactures and sells a diverse variety of products.
Based on the advantages discussed earlier, international diversification should be positively

related to firm performance. Research has shown that, as international diversification
increases, firms’ returns decrease and then increase as firms learn to manage international
expansion.
There are several reasons for the positive relationship between international diversification
and performance.
• Potential advantages from economies of scale and experience
• Location advantages
• Increased market size
• The potential to stabilize returns
Enhanced Innovation
As mentioned in Chapter 1, developing new technology is critical to strategic

competitiveness. In fact, Porter indicates that a nation’s competitiveness depends on the
innovativeness of its industries and that firms achieve strategic competitiveness in
international markets through innovation (see Figure 8.2).
As stated earlier in this chapter, one of the advantages of international expansion is having
larger potential markets. Larger markets allow firms to achieve greater returns on innovation,
which yields lower R&D-related risk. Thus, international diversification provides firms with
incentives to innovate.
A complex relationship exists among international diversification, innovation, and

performance. This leads, in fact, to the following circular relationship:
• Some level of performance is necessary to provide the resources required to diversify
internationally.
• International diversification provides incentives (advantages) to firms to invest in R&D
(innovation).
• If done properly, R&D and the resulting innovations should improve firm performance.
• Improved performance provides resources for continued international diversification and
investments in R&D innovation.
8-21
It also is possible that international diversification may result in improved returns for
product-diversified firms (referred to as unrelated diversification) by increasing the size of
the potential market for each of the firm’s products. But managing a firm that is both product
and internationally diversified is very complex.
Cultural diversity may enable a firm to compete more effectively in international markets.
• Culturally diverse top management teams often have a greater knowledge of international
markets.
• An in-depth understanding of diverse markets among top-level managers facilitates inter-
firm cooperation, the use of strategically relevant, long-term criteria to evaluate
managerial and business unit performance, and improved innovation and performance.
•
Explain two important issues firms should have knowledge about

9
when using international strategies
THE CHALLENGE OF INTERNATIONAL STRATEGIES
Complexity of Managing International Strategies
Managers of internationally diversified firms face a number of complex challenges.

• Firms face multiple risks from being in several countries.
• Firms can grow only so large before they become unmanageable.
• The costs of managing large diversified firms may outweigh the benefits of
diversification.
• Global markets are highly competitive.
• Firms must understand and effectively deal with multiple cultural environments.
• Systems and processes must exist to manage shifts in the relative values of multiple
currencies.
• Firms must scan the environment to be prepared for potential government instability.
Limits to International Expansion
As mentioned before, firms generally earn positive returns by diversifying internationally.
However, there are limits to the advantages of international diversification.

• Greater geographic dispersion across country borders increases the costs of coordination
between units and the distribution of products.
• Trade barriers, logistical costs, cultural diversity, and other differences by country greatly
complicate the implementation of an international diversification strategy.
• Institutional and cultural factors can present strong barriers to the transfer of a firm’s
competitive advantages from one country to another.
• Marketing programs often have to be redesigned and new distribution networks
established when firms expand into new countries.
• Firms may encounter different labor costs and capital charges.
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• In general, it is difficult to effectively implement, manage, and control a firm’s

international operations.
Teaching Note: The complex nature of the management challenges that face
internationally diversified firms is illustrated by the following cases:
• Robert Shapiro, CEO of Monsanto, assumed that Europe was similar to the
US, but the firm’s genetically engineered seeds have been strongly
rejected in Europe.
Walmart made mistakes in some Latin American markets, for example, when it
learned that giant parking lots do not draw huge numbers of car-less customers.
And the lots were far from the bus stops used by many Mexicans, so potential
customers could not easily transport their goods home.
STRATEGIC FOCUS
Haier Group: A Story of Product and Geographic Diversification
Haier Group is a global firm with both geographic and product diversification. Haier sells its
products in Europe, South Asia, Asia-Pacific, the Middle East, and North America. It holds
the largest share of the world market for major appliances. As is the case with many
companies that operate in countries outside their home base, expansion is really the best path
for sustained growth. Core competencies it has developed include product quality, reliability,
and strong customer focus. In its global push, Haier has used a number of entry modes
including joint ventures, greenfield ventures, and wholly owned subsidiaries. Haier has made
the decision to grow with the multidomestic international corporate strategy. This strategy,
which puts high emphasis on local responsiveness, may allow it to get around a problem that
a number of Chinese companies have encountered—building a strong global brand. While
being able to respond to local conditions may be important, it can never lose sight of the fact
that product quality and reliability are characteristics of all of its products across all of its
markets.
Teaching Note: Haier is an impressive international growth story. Given that

consumer electronics products and appliances are tough businesses with high
competitive rivalry and thin margins, its move into markets outside its homeland is
understandable. Haier has proceeded very strategically and it appears that
leaders are aware of the challenges involved in international business. At the
same time, it appears that leaders realize that its competencies will be important
is it enters new markets. Ask students to comment on Haier’s use of the
multidomestic strategy: is the best choice? or might either the global or
transnational strategy be more advantageous? Though the multidomestic strategy
is allowing a good deal of responsiveness in local markets, given the high degree
of competition in its markets, might this need to be combined with world-class
systems/processes that also allow it to reduce costs?
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— ANSWERS TO REVIEW QUESTIONS
1. What incentives influence firms to use international strategies? (pp. 227–229)
Traditional incentives that are causing firms to expand internationally are to gain access to
larger markets, to extend the product life cycle, to secure key resources, and to access low-
cost factors of production (e.g., cheap labor or raw materials).
Emerging motives include the increase in pressure for global integration (driven by global
communications, which lead to a global convergence of lifestyles and, in turn, universal
product demand), rising obligations for cost cutting (e.g., seeking the lowest cost provider of
resources or low-cost global suppliers), the realization that R&D expertise for the next new
product extension may not come from the domestic market, and the emergence of large scale
markets.
2. What are the three basic benefits firms can achieve by successfully using an
international strategy? (pp. 229–231)
Firms can derive four basic benefits from international strategies. These benefits are:
Increased market size – firms can expand the size of their market, sometimes dramatically,
by entering foreign markets.
Economies of scale and learning – through international expansion firms may be able to
realize economies of scale, especially in manufacturing operations. This is even more
important to the extent that firms can standardize their products across country borders. In
addition, operating across borders creates new opportunities for learning and this can lead to
process improvements.
Location advantages – firms can realize significant cost savings by locating operations at the
optimal place in the world. Location advantages include low labor, energy, and natural
material costs. Other advantages include access to critical suppliers and to customers.
3. What four factors are determinants of national advantage and serve as a basis for
international business-level strategies? (pp. 231–234)
According to Michael Porter, the resources and capabilities established in a firm’s home
country often enable the firm to pursue its strategy beyond the domestic market. Porter
specified a model that describes the factors contributing to the advantage of firms in a
dominant global industry and associated with a specific country or regional environment.
These four factors are as follows:
• Factors of production, or the basic inputs necessary to compete in any industry, such as
labor, land, capital, and infrastructure
• Demand conditions, or the nature and size of the buyers’ needs in the home market for the
industry’s products or services (reflected either by segment size, which enables a firm to
8-24
achieve economies of scale, or specialized demand, which enables the firm to develop a
higher level of competency in producing products/services)
• Related and supporting industries, or the presence of other industries in the home market
that either are related to or support the primary industry. For example, the shoe industry in
Italy benefits from a well-established industry in leather processing, people traveling to
Italy to purchase leather goods, and an industry presence in leather-working machinery
and design services)
• Firm strategy, structure, and rivalry are interrelated as patterns of strategy that impact
(and are impacted by) industry structure, which in turn affect and are affected by
competitive rivalry.
4. What are the three international corporate-level strategies? What are the
advantages and disadvantages associated with these individual strategies? (pp. 234–
237)
The three international corporate-level strategies are multidomestic, global, and transnational
(see Figure 8.4).
Firms following multidomestic strategies assume that markets are different and should be
segmented by national boundary. They decentralize or delegate strategic and operating
decisions to the strategic business unit in each country to enable the flexibility necessary to
tailor products and services to local market preferences. The use of multidomestic strategies
usually produces expansion of local market share because of the attention paid to local
demands; however, it also leads to greater uncertainty for the corporation as a whole (due to
market differences and the strategies designed to fit these). Multidomestic strategies do not
allow for the achievement of economies of scale and thus can be more costly, leading firms
following this strategy to decentralize strategic and operating decisions to the business units
operating in each country.
Firms that follow a global strategy assume significant standardization of products across
markets. The primary focus is on efficiency through economies of scale and the leveraging of
innovation across country markets. Business-level strategy is centralized and controlled by
the home office. It requires resource sharing and coordination and cooperation between
subsidiaries and across country boundaries. Thus, a global strategy produces lower risk but
may forgo growth opportunities in local markets because they are less likely to identify
opportunities or these require product adaptation for local market preferences. Therefore, this
strategy lacks local market responsiveness and is difficult to manage because of the need to
coordinate strategies and operating decisions across country borders.
A transnational strategy seeks to achieve both global efficiency and local responsiveness. It
is difficult to realize the diverse goals of the transnational strategy because one goal requires
close global coordination, whereas the other requires local flexibility; thus, “flexible
coordination” is required to implement the transnational strategy. Management must build a
shared vision and individual commitment through an integrated network. Effective
implementation of a transnational strategy often produces higher performance than either the
global or multidomestic strategy alone.
8-25
5. What are some global environmental trends affecting the choice of international
strategies, particularly international corporate-level strategies? (pp. 237–238)
Global strategies require integration and coordination across units (and across national
boundaries) and enable the achievement of economies of scale and efficiency. On the other
hand, multidomestic strategies emphasize responsiveness to local market needs and
preferences, providing the opportunity to more effectively meet customer needs and
preferences. Successfully balancing the need for local responsiveness and global efficiency
implies that local responsiveness should facilitate competition based on an international
differentiation strategy, whereas global efficiency should facilitate competition based on an
international cost leadership strategy.
The threat of wars and terrorist attacks increases the risks and costs of international
strategies. Furthermore, research suggests that the liability of foreignness is more difficult to
overcome than once thought.
Competing in many markets may enable the firm to achieve economies of scale because of
the size of the combined markets, but only if customer preferences in multiple markets do not
differ significantly. If customer preferences vary significantly among national markets, a firm
might be better served to narrow its focus to a specific region. A regional focus may enable
the firm to better understand cultures, legal and social norms, and other factors that may be
important to achieving strategic competitiveness.
Regionalization is another trend that has become more common in global markets.
Companies need to decide if they are going to compete in all markets or selectively choose
specific regions within which to operate. Regional strategies also are being promoted by
groups of countries that have developed trade agreements to enhance the economic power of
a region. Examples include the European Union (EU) and the Organization of American
States (OAS) in South America. Another example of a regional market is the North
American Free Trade Agreement (NAFTA), which is designed to facilitate free trade among
the US, Canada, and Mexico. NAFTA may be expanded to include some South American
countries and the movement of investment funds has not been only from the US to Mexico as
Mexican investors have made significant investments in the US and some European firms
have invested in Canada to gain access to this unified market.
6. What five entry modes do firms consider as paths to use to enter international
markets? What is the typical sequence in which firms use these entry modes? (pp.
239–244)
Choice of mode of entry is determined by a number of factors, and the following modes are
listed in a sequence that is typical in practice. Initial market entry will often be through
export because this requires no foreign manufacturing expertise and demands investment
only in distribution. Licensing can also facilitate the product improvement necessary to enter
foreign markets. Strategic alliances have been popular because they allow partnering with an
experienced player already in the targeted market. Strategic alliances also reduce risk through
the sharing of costs. These modes therefore are best for early market development.
8-26
To secure a stronger presence, acquisitions or new wholly owned subsidiaries (greenfield

venture) may be required. Both acquisitions and greenfield ventures are likely to come at
later stages in the development of an international diversification strategy. Additionally,
these strategies tend to be more successful when the firm making the investment has
considerable resources, particularly in the form of valuable core competencies.
Thus, there are multiple means of entering new global markets. Firms select the entry mode
that is best suited to the situation at hand. In some instances, these options will be followed
sequentially, beginning with exporting and ending with greenfield ventures. In other cases,
the firm may use several (but perhaps not all) of the different entry modes. The decision
regarding the entry mode to use is primarily a result of the industry’s competitive conditions,
the country’s situation and government policies, and the firm’s unique set of resources,
capabilities, and core competencies.
7. What are political risks and what are economic risks? How should firms
approach dealing with these risks? (pp. 246–247)
Political risks are related to instability in national governments and to war, civil or
international. Instability in a national government creates multiple problems. Among these
are economic risks and the uncertainty created in terms of government regulation, the
presence of many (possibly conflicting) legal authorities, and potential nationalization of
private assets. For example, foreign firms that are investing in Russia may have concerns
about the stability of the national government and what might happen to their investments/
assets in Russia should there be a major change in government. Different concerns exist for
foreign firms investing in China where foreign investors are less worried about the potential
for major changes in China’s national government than about the uncertainty of China’s
regulation of foreign business investments.
Economic risks are highly interdependent with political risks. The primary economic risk is
differences and fluctuations in the value of different currencies that can affect the value of a
firm’s assets, liabilities, and earnings, as well as its price competitiveness in international
markets.
Although firms can realize many benefits by implementing an international strategy, doing so
is complex and can produce greater uncertainty. For example, multiple risks are involved
when a firm operates in several different countries. Firms can grow only so large and diverse
before becoming unmanageable, or before the costs of managing them exceed their benefits.
Other complexities include the highly competitive nature of global markets, multiple cultural
environments, the security risks posed by terrorists, potentially rapid shifts in the value of
different currencies, and the possible instability of some national governments.
8-27
8. What are the strategic competitiveness outcomes firms can reach through
international strategies, and particularly through an international diversification
strategy? (pp. 248–249)
International diversification provides the potential for firms to achieve greater returns on
their innovations (through larger and/or more numerous markets) and thus lowers the often
substantial risks of R&D investments. Therefore, international diversification provides
incentives for firms to innovate. In addition, international diversification may be necessary to
generate the resources required to sustain a large-scale R&D operation. The accelerating
trend toward rapid technological obsolescence makes it difficult to invest in new technology
and the capital-intensive operations required to take advantage of it; therefore, firms
operating solely in domestic markets may find it difficult to justify such investments due to
the length of time required to recoup the original investment. Even if the time frame is
extended, it may not be possible to recover the investment before the technology becomes
obsolete. Thus international diversification improves the firm’s ability to appropriate
additional and necessary returns from innovation before competitors can overcome the initial
competitive advantage created by the innovation. Additionally, firms moving into
international markets are exposed to new products and processes, so they can learn and
integrate this knowledge in an effort enhance their innovation efforts.
The relationship among international diversification, innovation, and returns is complex.

Some level of performance is necessary to provide the resources to generate international
diversification. International diversification provides incentives and resources to invest in
research and development. Research and development, if done appropriately, should enhance
the returns of the firm, thereby providing more resources for continued international
diversification and investment in R&D.
9. What are two important issues that can potentially affect a firm’s ability to
successfully use international strategies? (pp. 249–252)
Firms pursuing international strategies often find that success leads to growth in both
firm size and complexity. These conditions make it more difficult to manage. At some
point the degree of geographic and product diversification may cause returns to become
flat or even negative. This occurs because geographic dispersion increases the costs of
operational coordination and product distribution. In addition, trade barriers, logistical
costs, cultural diversity, and other differences by country all serve to complicate the
implementation of international strategy.
Evidence suggests that international expansion is managed differently by different

companies—some do it better than others. Managers’ abilities to deal with complexity
and ambiguity are key determinants to the success of international strategies.
INSTRUCTOR'S NOTES FOR EXPERIENTIAL

—
EXERCISES
8-28
EXERCISE 1: McDonald’s – Global, Multicountry, or Transnational Strategy?
The purpose of this exercise is to help students understand the differences between a
global, multicountry, and transnational strategy. Key advantages of the exercise are that
McDonald’s is a familiar brand name, and that some students in a typical class may have
visited a McDonald’s franchise in another country. Additionally, the unique menu items
in different locales often tempt students to mistakenly conclude that the company is
pursuing a multicountry or transnational strategy.
The first part of the assignment is to have students individually search for different menu
items at McDonald’s stores outside the US. Some sample offerings include:
• Australia – beet root garnish

• Brazil – grilled cheese
• British Columbia – cappuccino
• China – green tea ice cream and Pork Burger
• France – Croque McDo ham & cheese
• Germany – frankfurters and beer
• Hong Kong: Fish McDippers with Thai sweet chili sauce
• India – McVeggie and Maharaja Mac – two all lamb patties, special sauce,
lettuce, cheese, pickles, onions on a sesame seed bun
• Mexico – eggs with jalapeno peppers and refried beans
• New Zealand – panini sandwich and latte
• South Africa – marshmallow shake
• Netherlands – mayonnaise topping with French fries
• Thailand – Samurai Pork burger, teriyaki style
• Uruguay – McHuevo burger with poached egg topping
• Philippines – McSpaghetti pasta with hot dog chunks
• Japan – Chicken Tatsuta spicy fried chicken sandwich
Student teams then review the characteristics of the three types of strategies, and decide
which category best describes McDonalds’s. Teams then prepare a single page flip chart
with a set of bullet points, and make a short presentation to the class. At the end of
presentations, ask for a show of hands for each of the three strategy types.
Students typically advocate multicountry and transnational options, using the different
menu choices as supporting evidence. However, the business description from a recent
company 10-K filing paints a different picture:
• McDonalds restaurants serve a varied, yet-limited, value-priced menu

• Highly rationalized processes and specs to ensure product consistency across
locations
8-29
It is also important to emphasize that the tailored menu items represent only a small
portion of the company’s food offerings. Additionally, store layout, processes, marketing
and advertising, are all similar across regions. In the discussion, you can emphasize how
a few prominent modifications to the menu can create the appearance of greater tailoring
than actually exists.
A transnational strategy would have elements of both global coordination and local
responsiveness. For students who advocate this strategy, ask the following questions:
Q: What are the coordination and control mechanisms like?

A: Many standardized rules and processes, and very little lateral communication among
units in different regions.
Q: How does decision-making work?

A: Largely top-down.
Q: Are there extensive resource flows across regions?

A: Minimal.
Overall, there is little evidence to support the argument for a transnational strategy.
EXERCISE 2: Where Next?
In this exercise teams are asked to assume the role of consultant to a fast-food restaurant
seeking to expand its footprint internationally. You can find a listing of full service
restaurants using the Datamonitor research database under the NAICS 722211. A fuller
exercise might be gained by having students pick firms that have little to no international
strategy in place like Jack in the Box or CKE Restaurants. This would provide a wider
palate to develop strategy rather than following a tried and true strategy already in place
like McDonald’s.
The teams have lots of options to choose but one important ingredient of this exercise is
for each team to research their industry and their target location(s). There should be an
alignment of entry mode. For example if choosing China there needs to be a review of
political risks that match up with entry mode and so on for many developing and
developed countries.
Next there needs to be an alignment between the industry trends and the country trends. If
a leading indicator for fast-food restaurants is the prevalence of out of home eating then
this trend needs to be assessed in the target country.
You may want to utilize poster sessions or power point presentations for this exercise to
get a broader ability to have the class participate in the discussion.
— INSTRUCTOR'S NOTES FOR VIDEO

8-30
EXERCISES
Title: THE LURE OF AN INTERNATIONAL STRATEGY: INDIA/MOHANDAS

PAI/CEO/INFOSYS
RT: 3:19
Topic Key: International strategy, Business-level strategy, Corporate-level strategy,
National advantage
The country of India doesn’t look like the new frontier in the high tech revolution but in
the ancient rural villages of southern India, amidst the chaos of crowded streets, is a bold
new world. India has turned into a technology mecca by being able to draw big name
international companies and by creating a few of their own. Mohandas Pai, CEO of
InfoSys, provides a tour of its facilities and explains the company’s extraordinary growth
by growing from 500 to 50,000 employees in 12 years. He says it’s time to go East young
man. InfoSys believes the key to luring foreign investors and workers is to create
companies on par with any in the West. Pai showcases the InfoSys conference room,
which is noted as similar to the United Nations. With over 40 office buildings, 2 gyms,
basketball courts, a supermarket, a golf course, and its own bank, InfoSys looks more like
a resort spa than a company headquarters.
Along with Indians who have traded jobs overseas to come home, increasing numbers of
young Americans from elite US colleges are coming to work for companies like InfoSys
in India, which has the second largest software industry. Many feel they can get more
experience and opportunities they could not get in the US. Graduates of US colleges are
interviewed for their perspectives on the opportunities to contribute to organizations and
the lures that are available in India. Americans are working hard and living well with
lower salaries and lower cost of living with minimum standards of three meals a day for a
$1. Mohandas Pai says that young Americans should come to India for the future is here.
Also check out http://www.indianeconomics.org/
Suggested Discussion Questions and Answers
• What international strategy incentives does India offer to a foreign investor? What
limitations exist in India for companies desiring international expansion?
o Incentives: (1) opportunities to integrate operations on a global scale
particularly with on par business facilities, Americans coming to India to
work and the technology foundation already existing in India, (2)
opportunities to better use rapidly developing technologies with existing
companies such as Infosys, (3) gain access to consumers in emerging
markets with low-cost standard of living and good jobs available in India
o Limitations: crowded streets and rural villages that paint a less than
positive picture of India’s infrastructure
• What benefits does InfoSys receive from its international strategy?
o Increased market size and economies of scale and learning
8-31
• How does India’s national advantage(s) influence its business-level strategy?

o India’s specialized and advances national advantage factors allow it to
develop a business-level strategy that can build strong home competitors
that can make strong and successful global competitors.
• What corporate-level strategy is used by InfoSys and why?
o Transnational Strategy: InfoSys is looking for global efficiency and local
responsiveness. They attempt to maintain control in India but do so with
local and international employees, which provide “flexible coordination.”
— ADDITIONAL QUESTIONS AND EXERCISES
The following questions and exercises can be presented for in-class discussion or assigned as
homework.
Application Discussion Questions
1. Given the advantages of international diversification, why do some firms choose not to
expand internationally?
2. How can a small firm diversify globally using the Internet?
3. How do firms choose among the alternative modes for expanding internationally and
moving into new markets (e.g., forming a strategic alliance versus establishing a wholly
owned subsidiary)?
4. Does international diversification affect innovation similarly in all industries? Why or why
not?
5. What is an example of political risk in expanding operations into Latin America or China?
6. Why do some firms gain competitive advantages in international markets? Have students
explain their answers.
7. Why is it important to understand the strategic intent of strategic alliance partners and
competitors in international markets?
8. What are the challenges associated with pursuing the transnational strategy? Have students
explain their answers.
Ethics Questions
1. As firms attempt to internationalize, they may be tempted to locate their facilities where
product liability laws are lax in testing new products. What are some examples in which
this motivation is the driving force behind international expansion?
2. Regulation and laws regarding the sale and distribution of tobacco products are stringent
in the US market. Use the Internet to investigate selected US tobacco firms to identify if
sales are increasing in foreign markets compared to domestic markets. In what countries
are sales increasing and why? What is your assessment of this practice?
3. Some firms outsource production to foreign countries. Although the presumed rationale
for such outsourcing is to reduce labor costs, examine the labor laws (for instance, the
8-32
strictness of child labor laws) and laws on environmental protection in another country.
What does your examination suggest from an ethical perspective?
4. Are there markets that the US government protects through subsidies and tariffs? If so,
which ones and why? How will the continuing development of e-commerce potentially
affect these efforts?
5. Should the United States seek to impose trade sanctions on other countries, such as China,
because of human rights violations?
6. Latin America has been experiencing significant changes in both political orientation and
economic development. Describe these changes. What strategies should foreign
international businesses implement, if any, to influence government policy in these
countries? Is there a chance that the political changes will reverse?
Internet Exercise
Convenience stores in Japan, such as the corner Seven-Eleven, and supermarkets in Britain
are capitalizing on Internet commerce by offering their customers easy access, e-service, and
attractive prices and selections. Located at http://www.7dream.com, Seven-Eleven allows
shoppers to surf, order, and pay for merchandise with cash, the most trusted method of
payment in Japan, a country with a comparatively low crime rate. Locate the website of
Britain’s large supermarket chain, Tesco, at http://www.tesco.com. What types of services
offered would appeal to you? What do you see as a deterrent to introducing these and other e-
commerce services into supermarkets, hypermarkets, and convenience stores in the United
States?
*e-project: This chapter explains the different methods of entering foreign markets. Using
sources on the Internet provided by your government’s trade division, the US State
Department (http://www.state.gov), the US Dept. of Commerce
(http://www.commerce.gov), and private resources such as http://www.china-venture.com,
plan the export of a new line of USA-brand baseball hats to Shanghai and Beijing, China.
Assume that you plan to manufacture the hats inside China and distribute them through
local stores within those two cities.
8-33
Another random document with
no related content on Scribd:
The Project Gutenberg eBook of The Cambridge natural
history, Vol. 02 (of 10)
This ebook is for the use of anyone anywhere in the United States and most
other parts of the world at no cost and with almost no restrictions whatsoever.
You may copy it, give it away or re-use it under the terms of the Project
Gutenberg License included with this ebook or online at www.gutenberg.org. If
you are not located in the United States, you will have to check the laws of the
country where you are located before using this eBook.
Title: The Cambridge natural history, Vol. 02 (of 10)
Author: Frank E. Beddard

W. B. Benham
F. W. Gamble
Marcus Hartog
Lilian Sheldon
Editor: S. F. Harmer
Sir A. E. Shipley
Release date: October 16, 2023 [eBook #71891]
Language: English
Original publication: New York: MacMillan and Co, 1901
Credits: Keith Edkins, Peter Becker and the Online Distributed Proofreading
Team at https://www.pgdp.net (This file was produced from images
generously made available by The Internet Archive)
*** START OF THE PROJECT GUTENBERG EBOOK THE CAMBRIDGE

NATURAL HISTORY, VOL. 02 (OF 10) ***
THE
CAMBRIDGE NATURAL HISTORY
EDITED BY
S. F. HARMER, M.A., Fellow of King's College, Cambridge; Superintendent of the

University Museum of Zoology
AND
A. E. SHIPLEY, M.A., Fellow of Christ's College, Cambridge; University Lecturer on

the Morphology of Invertebrates
VOLUME II
FLATWORMS AND MESOZOA

By F. W. Gamble, M.Sc. (Vict.), Owens College
NEMERTINES
By Miss L. Sheldon, Newnham College, Cambridge
THREAD-WORMS AND SAGITTA

By A. E. Shipley, M.A., Fellow of Christ's College, Cambridge
ROTIFERS
By Marcus Hartog, M.A., Trinity College, Cambridge (D.Sc. Lond.), Professor of Natural
History in the Queen's College, Cork
POLYCHAET WORMS
By W. Blaxland Benham, D.Sc. (Lond.), Hon. M.A. (Oxon.), Aldrichian Demonstrator of
Comparative Anatomy in the University of Oxford
EARTHWORMS AND LEECHES

By F. E. Beddard, M.A. (Oxon.), F.R.S., Prosector to the Zoological Society, London
GEPHYREA AND PHORONIS

By A. E. Shipley, M.A., Fellow of Christ's College, Cambridge
POLYZOA
By S. F. Harmer, M.A., Fellow of King's College, Cambridge
London
MACMILLAN AND CO., Limited
NEW YORK: THE MACMILLAN COMPANY
1901
All rights reserved
'Nous allons faire des vers ensemble'

André de Chénier
First Edition 1896. Reprinted 1901

CONTENTS
PAGE
Scheme of the Classification adopted in this Book ix
PLATYHELMINTHES AND MESOZOA

CHAPTER I
TURBELLARIA
Introduction—description of the Polyclad Leptoplana
tremellaris—Appearance—Habits—Structure: Polycladida—
Classification—Habits—Anatomy—Development: Tricladida—
Occurrence—Structure—Classification: Rhabdocoelida—
Occurrence—Habits—Reproduction—Classification 3
CHAPTER II
TREMATODA
Characters of Trematodes—Habits and Structure of Trematoda
Ectoparasitica (Monogenea)—Life-Histories of Polystomum
integerrimum, Diplozoon paradoxum, and Gyrodactylus
elegans—Trematoda Endoparasitica (Digenea)—Occurrence
and Habits of Digenea—Life-History of Distomum
macrostomum—Distomum hepaticum and its Effects—Bilharzia
haematobia—Bisexual Trematodes—Table of Hosts—
Classification 51
CHAPTER III
CESTODA
Introduction—Nature of Cestodes—Occurrence of Cestodes—
The Tape-Worms of Man and Domestic Animals—Table of Life-
Histories of Principal Cestodes of Man and Domestic Animals
—Structure and Development of Cestodes—Table for the
Discrimination of the More Usual Cestodes of Man and
Domestic Animals—Classification 74
CHAPTER IV
MESOZOA
Dicyemidae—Structure—Reproduction—Occurrence:
Orthonectidae—Occurrence—Structure: Trichoplax:
Salinella 92
NEMERTINEA
CHAPTER V
NEMERTINEA
Introductory—External Characters—Anatomy—Classification—
Development—Habits—Regeneration—Breeding—
Geographical Distribution—Land, Fresh-Water, and Parasitic
Forms—Affinities 99
NEMATHELMINTHES AND CHAETOGNATHA

CHAPTER VI
NEMATHELMINTHES
Introduction—Nematoda—Anatomy—Embryology—Classification
—Ascaridae—Strongylidae—Trichotrachelidae—Filariidae—
Mermithidae—Anguillulidae—Enoplidae—Parasitism:
Nematomorpha—Anatomy—Classification—Life-History:
Acanthocephala—Anatomy—Embryology—Classification 123
CHAPTER VII
CHAETOGNATHA
Structure—Reproduction—Habits—Food—Classification—Table
of Identification [see also p. 534] 186
ROTIFERA, GASTROTRICHA, AND KINORHYNCHA

CHAPTER VIII
ROTIFERA, GASTROTRICHA, AND KINORHYNCHA
Rotifera—History—External Features—Movements—Anatomy—
Reproduction—Embryology—Classification—Distribution—
Affinities: Gastrotricha: Kinorhyncha 197
ARCHIANNELIDA, POLYCHAETA, AND MYZOSTOMARIA

CHAPTER IX
The Chaetopodous Worms—The Archiannelida—Anatomy of
Nereis, as Typical of the Polychaeta 241
CHAPTER X
Classification of the Polychaeta—Shape—Head—Parapodia—
Chaetae—Gills—Internal Organs—Jaws—Sense Organs—
Reproduction—Larval Forms—Budding—Fission—Branching—
Regeneration 257
CHAPTER XI
Natural History of Polychaetes—General Habits—Character of 284
Tube and its Formation—Colouring—Protective and Mimetic
Devices—Phosphorescence—Food—Uses—Associated Worms
—Worms as Hosts—Distribution—Fossil Remains
CHAPTER XII
Characters of the Sub-Orders of Polychaetes—Characters of
the Families—Description of British Genera and Species: the
Myzostomaria 303
OLIGOCHAETA (EARTHWORMS, ETC.), AND HIRUDINEA

(LEECHES)
CHAPTER XIII
OLIGOCHAETA (EARTHWORMS AND THEIR ALLIES)
Introduction—Anatomy—Reproduction—Bionomics—Distribution
—Classification—Microdrili and Megadrili 347
CHAPTER XIV
HIRUDINEA (LEECHES)
Introduction—Anatomy—Reproduction—Classification—
Rhynchobdellae and Gnathobdellae 392
GEPHYREA AND PHORONIS

CHAPTER XV
GEPHYREA
Introduction—Anatomy—Development—Sipunculoidea—
Priapuloidea—Echiuroidea—Epithetosomatoidea—Affinities of
the Group 411
CHAPTER XVI
PHORONIS
History—Habits—Structure—Reproduction—Larva—
Metamorphosis—List of Species and Localities—Systematic
Position 450
POLYZOA
CHAPTER XVII
POLYZOA
Introduction—General Characters and Terminology—Brown
Bodies—History—Outlines of Classification—Marine Polyzoa
—Occurrence—Forms of Colony and of Zooecia—Ovicells—
Avicularia—Vibracula—Entoprocta 465
CHAPTER XVIII
POLYZOA—continued
Fresh-water Polyzoa—Phylactolaemata—Occurrence—Structure
of Cristatella—Division of Colony—Movements of Colony—
Retraction And Protrusion of Polypides in Polyzoa—
Statoblasts—Table for Determination of Genera of Fresh-
water Polyzoa—Reproductive Processes of Polyzoa—
Development—Affinities—Metamorphosis—Budding 492
CHAPTER XIX
POLYZOA—continued
Classification—Geographical Distribution—Palaeontology—
Methods for the Examination of Specific Characters—
Terminology—Key for the Determination of the Genera of
British Marine Polyzoa 515
Addendum to Chaetognatha 534
Index 535
SCHEME OF THE CLASSIFICATION ADOPTED IN THIS BOOK
PLATYHELMINTHES (p. 3)
Family.
TURBELLARIA Planoceridae
(p. 3) (p. 19).
Leptoplanidae
Acotylea (p. 16) (p. 19).
Cestoplanidae
(p. 19).
Polycladida
Enantiidae (p. 19).
(p. 7)
Anonymidae (p. 19)
Pseudoceridae
(p. 19).
Cotylea
Euryleptidae (p. 19).
Prosthiostomatidae
(p. 19).
Paludicola
Planariidae (p. 42).
(p. 30)
Procerodidae
Maricola (p. 42).
Tricladida (pp. 30, 32) = Gundidae.
(p. 30) Bdellouridae (p. 42).
Bipaliidae (p. 42).
Terricola Geoplanidae (p. 42).
(pp. 30, 33) Rhynchodemidae
(p. 42).
Rhabdocoelida Proporidae (p. 49).
(p. 42) Acoela (p. 42) Aphanostomatidae
(p. 49).
Macrostomatidae
(p. 49).
Microstomatidae
(p. 49).
Prorhynchidae
Rhabdocoela (p. 49).
(p. 43) Mesostomatidae
(p. 49).
Proboscidae (p. 49).
Vorticidae (p. 50).
Solenopharyngidae
(p. 50).
Alloeocoela Plagiostomatidae
(p. 43) (p. 50).
Bothrioplanidae
(p. 50).
Monotidae (p. 50).
Temnocephalidae
(pp. 53, 73).
Tristomatidae
(pp. 53, 73).
Monogenea (pp. 5, 52)
Polystomatidae
= Heterocotylea + Aspidocotylea
(pp. 53, 73).
(p. 73)
Gyrodactylidae
(pp. 53, 61).
Aspidobothridae
(p. 73).
TREMATODA Holostomatidae
(pp. 3, 51) (p. 73).
Amphistomatidae
(p. 73).
Distomatidae
Digenea (pp. 5, 52) = Malacocotylea (p. 73).
(p. 73) Gasterostomatidae
(p. 73).
Didymozoontidae
(p. 73).
Monostomatidae
(p. 73).
Cestodariidae
= Monozoa (p. 91).
Bothriocephalidae
(p. 91).
CESTODA (pp. 3, 74) Tetrarhynchidae
(p. 91).
Tetraphyllidae
(p. 91).
Taeniidae (p. 91).
MESOZOA
Dicyemidae (p. 93).
MESOZOA (pp. 3, 92) Orthonectida
(p. 94).
NEMERTINEA (p. 99)
HOPLONEMERTEA (p. 110) = Metanemertini (p. 112).
SCHIZONEMERTEA (p. 111) = Heteronemertini (ex parte) (p. 113).
PALAEONEMERTEA (p. 111) = Protonemertini (p. 112). + Mesonemertini
(p. 112). + Heteronemertini (ex parte) (p. 113).
NEMATHELMINTHES (p. 123)

Ascaridae (p. 138).
Strongylidae
(p. 142).
Trichotrachelidae
(p. 144).
Filariidae (p. 147).
Mermithidae
NEMATODA (pp. 123, 124) (p. 150).
Anguillulidae
(p. 154).
Enoplidae (p. 157).
Chaetosomatidae
(p. 158).
Desmoscolecidae
(p. 159).
NEMATOMORPHA (pp. 123, 164) Gordiidae (p. 164).
Echinorhynchidae
(p. 182)
Gigantorhynchidae
(p. 183).
ACANTHOCEPHALA (pp. 123, 174)
Neorhynchidae
(p. 184).
Arhynchidae
(p. 185).
CHAETOGNATHA (p. 186)
ROTIFERA (p. 197)

FLOSCULARIACEAE (p. 220) Flosculariidae
(p. 221).
Apsilidae (p. 221).
Melicertidae
(p. 221).
MELICERTACEAE (p. 221)
Trochosphaeridae
(p. 221).
Philodinidae
BDELLOIDA (p. 222)
(p. 222).
Asplanchnidae
ASPLANCHNACEAE (p. 222)
(p. 223).
Pedalionidae
SCIRTOPODA (p. 223)
(p. 223).
Microcodonidae
(p. 224).
Rhinopidae (p. 224).
Hydatinidae
(p. 224).
Synchaetidae
Illoricata (p. 223)
(p. 224).
Notommatidae
(p. 224).
Drilophagidae
(p. 224).
Triarthridae (p. 224).
Rattulidae (p. 225).
PLOIMA (p. 223)
Dinocharididae
(p. 225).
Salpinidae (p. 225).
Euchlanididae
(p. 225).
Cathypnidae
Loricata (p. 224)
(p. 225).
Coluridae (p. 225).
Pterodinidae
(p. 225).
Brachionidae
(p. 225).
Anuraeidae (p. 225).
SEISONACEAE (p. 225) Seisonidae (p. 226).
GASTROTRICHA
GASTROTRICHA Euichthydina (p. 235)
(p. 231). Apodina (p. 235)
KINORHYNCHA (p. 236)
CHAETOPODA (p. 241)

ARCHIANNELIDA (p. 241)
POLYCHAETA Phanerocephala Syllidae (p. 306).

(pp. 241, 245) (p. 303) Hesionidae (p. 308).
Aphroditidae
(p. 309).
Phyllodocidae
(p. 313).
Tomopteridae
(p. 315).
Nereidae (p. 315).
Nereidiformia Nephthydidae
(p. 303) (p. 317).
Amphinomidae
(p. 318).
Eunicidae (p. 318).
Glyceridae (p. 320).
Sphaerodoridae
(p. 320).
Ariciidae (p. 321).
Typhloscolecidae
(p. 321).
Spionidae (p. 321).
Polydoridae
(p. 323).
Spioniformia Chaetopteridae
(p. 304) (p. 323).
Magelonidae (325.
Ammocharidae
(p. 325).
Terebelliformia Cirratulidae (p. 325).
(p. 304) Terebellidae
(p. 327).
Ampharetidae
(p. 330).
Amphictenidae
(p. 330).
Capitelliformia Capitellidae
(p. 305) (p. 331).
Opheliidae (p. 331).
Maldanidae
(p. 332).
Arenicolidae
(p. 333).
Scoleciformia
Scalibregmidae
(p. 305)
(p. 334).
Chlorhaemidae
(p. 334).
Sternaspidae
(p. 335).
Sabellidae (p. 336).
Eriographidae
Sabelliformia (p. 338).
Cryptocephala (p. 305) Amphicorinidae
(p. 303) (p. 339).
Serpulidae (p. 339).
Hermelliformia Hermellidae
(p. 306) (p. 341).
MYZOSTOMARIA (pp. 241, 341)
OLIGOCHAETA Microdrili (p. 373) Aphaneura (p. 374).

(pp. 241, 347) Enchytraeidae
(p. 375).
Discodrilidae
(p. 376).
Phreoryctidae
(p. 376).
Naidomorpha
(p. 377).
Tubificidae (p. 378).
Lumbriculidae
(p. 379).
Moniligastridae
(p. 380).
Perichaetidae
(p. 380).
Cryptodrilidae
(p. 382).
Acanthodrilidae
Megadrili (pp. 373, 374). (p. 384).
Eudrilidae (p. 385).
Geoscolicidae
(p. 386).
Lumbricidae
(p. 388).
HIRUDINEA (p. 392)

Ichthyobdellidae
(p. 406).
RHYNCHOBDELLAE (p. 405)
Glossiphoniidae
(p. 406).
Gnathobdellidae
(p. 407).
GNATHOBDELLAE (p. 407)
Herpobdellidae
(p. 407).
GEPHYREA (p. 411)

SIPUNCULOIDEA (pp. 412, 420).
PRIAPULOIDEA (pp. 412, 430).
ECHIUROIDEA (pp. 412, 434).
EPITHETOSOMATOIDEA (pp. 412, 444).
PHORONIS (p. 450)
POLYZOA (p. 465)

ENTOPROCTA (pp. 475, 487)
ECTOPROCTA Gymnolaemata Cyclostomata Articulata (p. 517).

(p. 475) (p. 476) (p. 477) Inarticulata (p. 517).
Cheilostomata Cellularina (p. 518).
(p. 477) Flustrina (p. 518).
Escharina (p. 518).
Alcyonellea (p. 518).
Ctenostomata
Vesicularina
(p. 477)
(p. 518).
Phylactolaemata (pp. 476, 493)
PLATYHELMINTHES AND MESOZOA
BY
F. W. GAMBLE, M.Sc. (Vict.)

Demonstrator and Assistant-Lecturer in Zoology in the Owens College, Manchester.
CHAPTER I
TURBELLARIA
INTRODUCTION: DESCRIPTION OF THE POLYCLAD LEPTOPLANA TREMELLARIS—

APPEARANCE—HABITS—STRUCTURE: POLYCLADIDA—CLASSIFICATION—HABITS—
ANATOMY—DEVELOPMENT: TRICLADIDA—OCCURRENCE—STRUCTURE—
CLASSIFICATION: RHABDOCOELIDA—OCCURRENCE—HABITS—REPRODUCTION—
CLASSIFICATION.
The Platyhelminthes, or Flat Worms, form a natural assemblage of animals, the

members of which, however widely they may differ in appearance, habits, or life-
history, exhibit a fundamental similarity of organisation which justifies their
separation from other classes of worms, and their union into a distinct phylum.
Excluding the leeches (Hirudinea), and the long sea-worms (Nemertinea)—which,
though formerly included, are now treated independently—the Platyhelminthes
may be divided into three branches: (1) Turbellaria (including the Planarians), (2)
Trematoda (including the liver-flukes), and (3) Cestoda (tape-worms). The
Mesozoa will be treated as an appendix to the Platyhelminthes.
The Turbellaria were so called by Ehrenberg[1] (1831) on account of the cilia or

vibratile processes with which these aquatic animals are covered, causing by their
incessant action, tiny currents ("turbellae," disturbances) in the surrounding water.
The ciliary covering distinguishes this free-living group from the parasitic
Trematodes and Cestodes, some of which possess such an investment, but only
during their early free larval stage, for the short period when they have left the
parental host and are seeking another (Figs. 26, 27, 42).
Some Turbellaria (Rhabdocoelida) resemble Infusoria in their minute size, shape,

and movements. Nevertheless they possess an organisation of considerable
complexity. The fresh-water Planarians (Fig. 14), abounding in ponds and streams,
vary from a quarter to half an inch in length, and are elongated and flattened. Their
body is soft, and progresses by a characteristic, even, gliding motion like a snail.
The marine Planarians or Polyclads (Fig. 8) are usually broad and leaf-like,
sometimes attaining a length of six inches, and swim or creep in a most graceful
way. Land Planarians occur in this country (Fig. 15), but far more abundantly in
tropical and sub-tropical districts, in moist places, venturing abroad at night in
pursuit of prey. They are elongated and cylindrical, in some cases measuring,
when fully extended, a foot or more in length, and are often ornamented with
brilliantly coloured, longitudinal bands.
Turbellaria are carnivorous, overpowering their prey by peculiar cutaneous

offensive weapons, and then sucking out the contents of the victim by the
"pharynx." Land Planarians feed on earthworms, molluscs, and wood-lice; fresh-
water Planarians on Oligochaet worms, water-snails, and water-beetles; marine
forms devour Polychaet worms and molluscs. Some Turbellaria seem to prefer
freshly-killed or weakly examples of animals too large to be overpowered when
fully active. Certain Rhabdocoelida are messmates of Molluscs and Echinoderms,
and a few others are truly parasitic—a mode of life adopted by all Trematodes save
Temnocephala.
The Trematodes[2] may be divided into those living on the outer surface of various
aquatic animals, usually fish (Ectoparasites); and those which penetrate more or
less deeply into the alimentary canal or the associated organs of the host
(Endoparasites). They are oval, flattened Platyhelminthes ranging from a
microscopic size to a length of three feet (Nematobothrium, Fig. 22), and are
provided with organs of adhesion by which they cling to the outer surface, or to the
interior, of the animals they inhabit. Trematodes occur parasitically in all groups of
Vertebrates, but, with the exception of the liver-flukes of the sheep (Distomum
hepaticum and D. magnum), and of Bilharzia haematobia found in man (in the
blood-vessels of the urinary bladder) over the greater part of Africa, their attacks
are not usually of a serious nature. Ectoparasitic Trematodes are Monogenetic;
that is, their larvae grow up directly into mature forms. The Endoparasitic species,
however, are usually Digenetic. Their larvae enter an Invertebrate and produce a
new generation of different larvae, and these another. The last are immature
flukes. They enter a second host, which is swallowed by the final Vertebrate host in
which they become mature.
The Cestodes or Tape-worms have undergone more profound modifications both in

structure and in mode of development. They are all endoparasitic, and, with one
exception (Archigetes), attain maturity solely within the alimentary canal of
Vertebrates. In length they range from a few millimetres to several metres, but this
great size is attained from the need for the rapid production and accumulation of
enormous numbers of eggs. The "head" or "scolex" is attached to the mucous
membrane of the host by suckers or hooks, but there is no mouth nor any certain

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Strategic Management Concepts and

Cases Competitiveness and

1. Explain incentives that can influence firms to use an international strategy.

Opening Case International Strategy: Critical to Starbucks’ Future Success

STRATEGIC COMPETITIVENESS OUTCOMES

Chapter Introduction: This chapter examines opportunities facing firms as

However, in implementing its international strategy, the company understands that

Teaching Note: Given near saturation in its core US market, it is clear

Explain incentives that can influence firms to use an

IDENTIFYING INTERNATIONAL OPPORTUNITIES

Incentives to Use International Strategy

Some firms implement an international strategy to secure critical resources, such as

Companies seeking to expand operations in Europe, as elsewhere, need to understand the

Teaching Note: Firms expanding into international markets must recognize

Identify three basic benefits firms achieve by successfully

Three Basic Benefits of International Strategy

Increased Market Size

Economies of Scale and Learning

Other factors that may impact location advantages are as follows:

Explore the determinants of national advantage as

International Business-Level Strategy

Figure Note: Porter’s Diamond of Advantage model can be used to introduce

Note: Each of these factors is discussed in the following section.

These factors can be subdivided into four categories:

4 Describe the three international corporate-level strategies.

International Corporate-Level Strategy

International corporate-level strategy can be distinguished from international business-level

Figure Note: The three types of international corporate-level strategies are

Teaching Note: A few years back, Sony’s entertainment business changed

The use of multidomestic strategies:

Teaching Note: U.K.-based temporary energy provider, Aggreko, operates in

Teaching Note: Students sometimes find the transnational strategy difficult to

Teaching Note: Refer back to Figure 8.4 to summarize relationships between

Teaching Note: DaimlerChrysler employed a transnational strategy to design

Discuss environmental trends affecting the choice of

Implementing a transnational strategy is difficult; however, firms are challenged to do so

Lands’ End Adjusts to the Liability of Foreignness: A Mini-Case

The globalization of businesses with local strategies is demonstrated by the online

Teaching Note: At this point, it might useful to draw a parallel between

Explain the five modes firms use to enter international

CHOICE OF INTERNATIONAL ENTRY MODE

Firms have a variety of alternative means of expanding internationally as indicated in Table

A common—but not necessarily the least costly or most profitable—form of international

However, exporting also has disadvantages:

Teaching Note: Counterfeiting is one risk to licensing strategies. Sony and

The costs or potential disadvantages of licensing include the following:

Strategic alliances enable firms to:

Note: Strategic alliances are covered in much greater depth in Chapter 9.

Teaching Note: British Telecommunications planned to create a virtual

New Wholly Owned Subsidiary

The advantages of establishing a new wholly owned subsidiary include:

Dynamics of Mode of Entry

7 Discuss the two major risks of using international strategies.

RISKS IN AN INTERNATIONAL ENVIRONMENT

Figure Note: Be sure to note any developments in the international risk

National government instability creates multiple potential problems for internationally

Teaching Note: A number of national governments attempt to minimize

Discuss the strategic competitiveness outcomes associated with

STRATEGIC COMPETITIVE OUTCOMES

International Diversification and Returns

Based on the advantages discussed earlier, international diversification should be positively

As mentioned in Chapter 1, developing new technology is critical to strategic

A complex relationship exists among international diversification, innovation, and