Introduction of Global Strategic Management

Global Strategic Management
• Globalization
• History of Globalization
• Global Strategic
Management
• Push factors of
Globalization
• Benefits of
Globalization
• The Localization Push
• Strategic Management
Prepared by
Dr. Samita Mahapatra
• Global Competitive
Advantage
• Strategic Flexibility and
Learning Organization
• Country Market and
Industry Attractiveness
• Country Risk Analysis
• Multiple Choice
Questions
CONTENT

Unit-1: Global Strategic Management
• Introduction: The phenomenon of Globalisation, Localisation
and Glocalization, Factors that push globalisation, The
benefits of globalisation, factors that work against
globalisation,
• The localisation pushes, The benefits of localisation and
Globalisation, The Global Integration/Local Responsiveness
Grid.
• Strategy making strategy implementing and strategic
managing; Globalization and strategic management;
Strategic flexibility and learning organization.
• Competitive strategy and competitive advantage in global
market.
• Assessing Countries’ Attractiveness: Country attractive
Market and industry opportunities, Assessing industry
opportunities, Country risk analysis.

Globalization
• The economy of the whole planet i.e global.
• The way the world is today intertwined and
interdependent.
• It comprises of :
– Everything we buy
– Everything we sell
– Everything we make
– Everything we own
– All goods and services
– All exports
– All imports

History of Globalization
• The Dutch and the East India Companies were perhaps
the first amongst the MNCs.
• The Treaty of Rome in 1957 had created the European
Economic Community (EEC), at that time called the
Common Market. This meant that tariff barriers across
Europe were coming down.
• During 1970s, the companies operating in various part
of the world was ‘multinational’ or ‘transnational’ –
Unilever, Nestle, Procter & Gamble.
• In mid 19th century US firms began to globalize by
setting up business plants in various parts of the world
• In late 20th century Japanese firms joined the race of
globalization after the World War II.

Global Strategic Management
• ‘GSM is the process of crafting a coherent,
coordinated, integrated and unified strategy that sets
the degree to which a firm globalizes its strategic
behaviors in different countries through
standardization of offerings, configuration and
coordination of activities in different countries and
integration of competitive.’ (Mellahi et all 2005)
• A global strategy seeks to achieve a competitive
advantage by integrating its operations across
countries.
• It might start with a standard core product and adapt
it as necessary to targeted countries on the basis of
contribution to globalized benefits.
• Examples: Automobiles, commercial aircraft,
consumer electronics, machinery, etc.

Example
• A car company might have one strategy for the USA –
specialist cars, higher prices
• Another strategy for European markets – smaller cars,
fuel efficient
• While for developing countries the strategy would be
simple, low priced cars.

Example
• The highly successful multinational company
PepsiCo dominates savory snack products around
the world. However, it still has local brands like
Walkers Crisps in the UK. It does not use its Lays
brand name in the UK, but employs Lays in much of
the rest of the world. Why? Historical reasons that
began with the PepsiCo acquisition of Walkers,
which was already UK market leader.

Some Global Definitions
• Global companies are the companies that
operate in the main markets of the world in an
integrated and coordinated way. Companies like
Coca Cola, Asea Brown Bovery (ABB), Sony and
Citibank are global companies.
• Globalization is the phenomenon of the
transition of industries whose competitive
structure changes progressively from
multinational to global. Industries such as
telecommunications, processed food, personal
care and retail are in the process of
globalization.

• Global industries are industries in which, in
order to survive, competitors need to operate in
the key world markets in an integrated and
coordinated way. Industries like aerospace,
computers, telecommunication equipment,
appliances, power generation, large industrial
projects, insurance and re-insurance and
corporate data transmission are examples of
what a global industry means. In these sectors it
is difficult to sustain competition if one does not
cover the whole world (or nearly) as a market,
and if one does not integrate operations to
make them cost and time effective.

• Global integration and co-ordination are the
organizational structure and management
processes by which various activities scattered
across the world are made interdependent on
each other. As examples, global manufacturing
integration implies the specialization of factories
and the cross-shipment of parts between
different production sites; global product
development requires the co-ordination of
various research centres and marketing teams;
global account management demands that
different country subsidiaries provide a service
according to a plan negotiated centrally, etc

Push factors of Globalization:
Political Factors
• General Agreement on Tariffs and Trade (GATT) now WTO
• European Economic Community now EU
• United Nations Conference on Trade and Development
(UNTAD)
• FDI
Technology Factors:
• World Wide Web,
• World Data Links,
• Mobile Phones
Social Factors:
• Consumer Needs
• Brand Awareness
Competitive Factors:
• Traditional and foreign companies
• Product designs

Benefits of Globalization
1. Cost Benefits:
• Economies of scale owing to products/processes
standardization as well as increased bargaining powers over
suppliers of raw materials, components, equipment and
services and, on the other hand, from the ability to organize
a logistic and sourcing network based on location factors.
For example, Otis was able to lower the cost of elevators in
Europe by 30 per cent after introducing a pan-European
manufacturing system.
2. Timing benefits:
• In a multinational setting, each subsidiary is more or less
free to adopt products for its own market. This is sometimes
called ‘the shopping caddy’ approach to product adoption.
For example, Microsoft launched Window 2000 at the same
time everywhere in the world

3. Learning benefits:
These accrue from the
coordinated transfer of
information, best practices and
people across subsidiaries.
Such transfer eliminates the
costly ‘reinvention of the
wheel’ and facilitates the
accumulation of experiences
and knowledge. For example,
In Thailand, Unilever
formulated and implemented
an innovative strategy to
produce and market ice
creams.

4. Arbitrage benefits:
• These come from the advantages that a company managing
globally can gain in using resources in one country for the
benefit of another country subsidiary. These advantages can
be direct competitive advantages or indirect cost
advantages.
• This strategy was used by Goodyear, the US tyre giant, when
in the early 1970s, Michelin from France moved to North
America. Goodyear, who had a small market share in Europe,
engaged in a price war that Michelin was obliged to counter
by lowering its prices, and de facto reducing its financing
scope for its American expansion.

Factors that works against Globalization:
The Localization Push
Factors that defeat standardization, co-ordination and
integration are working against globalization:
1. Cultural factors -attitudes, tastes, behavior and
social codes:
• When the consumption of a product or a service is
linked to traditions and national or religious values,
global standardization is not effective.
• For instance, Kretek (tobacco and clove) cigarettes in
Indonesia.
• Valentin day was celebrated in Rome
• Halloween was US festival, now celebrated in
Europe and Japan.
• In the Asia Pacific region, for instance, personal
relationship building more than legal contracts is the
normal way to conduct business.

2. Commercial factors: distribution, customization and
responsiveness:
• Distribution networks and practices differ from country to
country.
• managing the network, motivating dealers and distributors,
pricing, and negotiation are hardly amenable to global co-
ordination.
• For instance, the marketing and distribution of
pharmaceutical products differs according to the country’s
health system. like Japan, doctors sell medicine, while in
other countries pharmacists are selling to patients who get a
refund (or not) from their insurance company,

3. Technical factors: standards, spatial presence, transportation and
languages:
• Technical standards in electrical, civil, chemical or mechanical
engineering can create a burden for global companies.
• Spatial presence is needed in those industries which need to occupy a
physical space in order to create and distribute their products and
services: Retail banking, retailing, hotels, local telephones services,
hospital, entertainment, car dealers, etc. are example of industries
where the services have to be produced locally.
• Transportation are important if the cost of transport cancels out the
benefits of concentration of production. Bulk commodities like cement
or basic chemicals are more economically produced in local plants rather
than in global centralized units.
• Languages can add additional constraints to global approaches. English
has become more and more a ‘global language’ and industries such as
graduate business training or high-level consulting can use English
without bothering with translation.

4. Legal factors: regulation and national security issues
• Governments impose regulatory constraints that often
work against globalization.
o regulation on working permits
o exchange control, tax
o custom duties, quotas
o censorship, the Internet
o local content policies, local ownership and joint
venture policies
• Telecommunications, media, banking and insurance are
still tightly controlled and some countries, (such as China
and India) or regional blocks (EU), still impose local
content requirements.

Societal Benefits of Globalization
Arguments in favor of
globalization
• Creates overall wealth for all
nations because
specialization increases
trade
• Reduces inflation because of
cost efficiencies
• Benefits customers because
of price reduction owing to
cost efficiencies
• Better allocation of natural,
financial and human
resources
• Reduces corruption because
of free market trade
Arguments against globalization
• Imposes massive strain on
labour force both in developed
countries (job destruction) and
developing countries
(sweatshops, child labour)
• Standardizes customer tastes.
Reduces diversity
• a Induces concentration of
power in a few global
corporations
• Introduces a ‘jungle’ leading to
the domination of the strongest
multinational
• Harms the environment because
of unrestrained exploitation of
natural resources such as forests
• Reduces capacity for nations to
protect their national interests,
cultures and values

Practice Multiple Choice
Questions
6/8/2021
Prepared by Dr. Samita
Mahapatra

1. Strategic management can be defined as:
A. a process of setting long-term direction for the organization.
B. a process of setting written long-term profit plans for the
organization.
C. a process of measuring performance of the organization.
D. a process of operational planning.
2. A global - as opposed to international - strategy involves:
a. a single strategy for a subsidiary of a multinational firm.
b. a wide variety of business strategies across countries.
c. a single strategy for the entire global network of
subsidiaries and partners.
d. a wide variety of subsidiary strategies within the global
network of subsidiaries.
A
C

4. Which of the following is NOT an example of a global
strategy?
A. IKEA sells standardized, Swedish designed, self-assembly
furniture products at low price.
B. LVMH sells luxury goods made in France.
C. Walmart withdraws from Germany in order to avoid
changing its global strategy of selling low-priced products.
D. The British subsidiary of global insurance group Aviva
develops a new product for the UK market.
5. Alan Rugman said that:
a. Trade between nations is conducted at global and local
levels.
b. Most multinational firms have a local strategy.
c. Most multinational firms have a global strategy.
d. Most economic activity is regional - not global.
D
D

6. Which of the following is NOT a dimension of global
strategy?
A. Localization
B. Coordination and configuration
C. Standardization
D. Integration
7. What three broad factors determine global strategy of
multinational firms?
a. Industry globalizing drivers, internal globalizing drivers, global
orientation
b. Macro globalizing drivers, industry globalizing drivers, internal
globalizing drivers
c. Cultural globalizing drivers, industry globalizing drivers, global
orientation
d. Local globalizing drivers, industry globalizing drivers, internal
globalizing drivers
A
B

8. What are the four industry globalizing drivers?
a. Market drivers, cost drivers, government drivers, and
localization drivers
b. Market drivers, cost drivers, government drivers, and
competitive drivers
c. Market drivers, cost drivers, competitive drivers,
bargaining drivers
d. Market drivers, cost drivers, competitive drivers,
regionalization drivers B
9. Global economies of scale arise when:
A. a process can be performed more cheaply thanks to globally performed
cross-business cost-saving activities.
B. a product or a process can be globally performed using cheap labor.
C. a product or a process can be performed more cheaply at greater volume
than at lesser volume.
D. a product or a process can be performed more cheaply thanks to alliances
with multinational firms in other sectors
C

10. Governments can encourage globalization of
industries by:
a. creating common international technical standards
b. increasing tariffs and regulations
c. subsidizing domestic firms that expand internationally
d. subsidizing foreign firms that invest in their country
A
11. The process of globalization is :
a. emphasis on global culture
b. emphasis on local culture
c. an amalgamation of the global and the local
d. the use of regional symbols C

12. Business entities engaged in international business activity
are commonly known as —
a. State-trading corporations
b. EOUs
c. NGOs
d. TNCs
13. Which of the following is referred to as the predecessor to
WTO?
a. GATT
b. IMF
c. WB
d. OPEC
14. Which company acquired Jaguar Land Rover in 2010?
A. Volkswagen C. Mahindra
B. Tata Motors D. Ford
D
A
B

15. Political globalization is the process of :
a. rise of the WTO
b. changes in the rules and structures of global
governance
c. change in political system
d. emergence of a political ideology
16. Pull factors refer to :
a. strategic motivation
b. offensive motives of internationalization
c. market motives of internationalization
d. resource-seeking motives
B
B

17. What is the amalgamation and rapid unification
between countries identified as?
a. Globalisation
b. Libéralisation
c. Socialisation
d. Privatisation A
18. Which of the following is the main reason behind
the investments of MNCs?
a. To benefit foreign countries
b. To provide financial support to the country’s
government
c. For the welfare of underprivileged people
d. To increase the assets and earn profits
D

19. Why is globalization often perceived as a threat in
developed countries?
a. Because countries with authoritarian governments are
becoming more powerful.
b. Because low-skilled jobs in advanced economies are at risk.
c. Because emerging markets are importing fewer goods from
the developed countries.
d. Because MNEs from developed countries are facing stiff
competition in emerging markets.
B
20. Which of the following is a push factor which would
influence a company to internationalize?
a. Difficulty in finding skilled staff in the home country
b. The need to be close to key resources
c. Low-cost labour in other countries
d. Financial incentives from governments in emerging markets
A

21. Globalization involves:
• A stretching of social, political, and economic activities
across political frontiers.
• A growing magnitude of interconnectedness in almost
every sphere of social existence.
• An accelerating pace of global interactions and
processes associated with a deepening enmeshment of
the local and the global.
• All of the answer options given are correct
D
22. International trade forces domestic firms to become
more competitive in terms of:
a. The introduction of new products
b. Product design and quality
c. Product price
d. All of the above D

23. The __________company produces, markets,
invests and operates across the world:
a. Global
b. International
c. Transnational
d. Multinational
C
24. Which of the following is a definition of
multinational enterprises?
a. A company employing foreign nationals.
b. A company headquartered in one country but
having operations in other countries.
c. A company operating in emerging economies.
d. None of the above. B

Concept of Strategy
• The word ‘strategy’ comes from the ancient Greek
word ‘Strategos’, meaning ‘the art of the General’.
• Strategy is an action that managers take to attain
one or more of the organization's goals.
• Strategy can also be defined as “A general direction
set for the company and its various components to
achieve a desired state in the
future. Strategy results from the
detailed strategic planning process”.
• Strategy is about making choices, it is about
deliberately choosing to be different. (Michael
Porter)
Prepared by Dr. Samita Mahapatra 37

Objectives of Strategy
• Short term and long
term goals
• Deep analysis of
competitive
environment
• Effectively utilize
company resources
• Strong decision making

Levels of Strategy
“Nine out of ten organizations fail to execute strategy”

Hierarchy of Strategy

Strategic Management
• Strategy: A unified, comprehensive and integrated
plan that relates the strategic advantage of the firm
to the challenges of the environment.
• Igor Ansoff (Father of Strategic Management)
viewed that in developing strategy, it was essential
to systematically anticipate future environmental
challenges to an organization, and draw up
appropriate strategic plans for responding to these
challenges.
• Strategic management: It is a set of managerial
decisions and action that determine the short-term
and long-term performance of a company.

• According to Glueck, "Strategy is the unified,
comprehensive and integrated plan that relates the
strategic advantage of the firm to the challenges of the
environment and is designed to ensure that basic
objectives of the enterprise are achieved through proper
implementation process."
• The analysis of the above definition describes the
following:
• Unified comprehensive and integrated plan.
• Strategic advantage related to challenges of environment.
• Proper implementation ensuring achievement of basic
objectives.
• Michael porter defines strategy as ―creation of a unique
and valued position involving a different activity from
rivals or performs similar activities in different ways.

Characteristics of SM
Strategic Management as a distinct field of study has the following
features or characteristics:
1. Strategy is significant because it is not possible to foresee the
future without a perfect foresight; the firms must be ready to
deal with the uncertain events which constitute the business
environment. Therefore we can say that strategy is future
oriented.
2. Strategy deals with long term developments rather than routine
operations, i.e. it deals with probability of innovations or new
products, new methods of productions, or new markets to be
developed in future.
3. Strategy is created to take into account the probable behavior of
customers and competitors. Strategies dealing with employees
will predict the employee behavior.
4. Strategy is a blend of internal and external factors of the
organization i.e. (SWOT) analysis of the organization.
5. Strategy provides overall framework for guiding organizational
thinking and action.

• Example: EI Hotels Ltd, an Oberoi-group company, has a strategy
of continuous growth, for achieving this they adopted two routes:
takeover of existing hotels & construction of new hotels. Finally
they choose a strategy of taking over an existing hotel & it
adopted a policy that every hotel can spend 7-8% of sales revenue
on refurbishment & decoration along with maintenance.
Wal-Mart: The largest retailer in the world, with over 7,800 stores,
has been working steadily to improve sustainability. From installing
green roofs to rolling out a more efficient trucking fleet, the company
has moved forward internally, but now it is bringing its suppliers
along.
• Challenge: How do you green the supply chain?
• Key moves: Wal-Mart has been pushing sustainability since
adopting the strategy in 2005, establishing goals of being 100%
fueled by renewable energy, producing zero waste and selling
products that will sustain the environment.

Strategic Management Process
• Develop Vision and
Mission
• Identify strengths and
weaknesses
• Identify opportunities
and threats
• Establish long-term
objectives
• Generate alternative
strategies
• Establish Annual
Objectives
• Create Organizational
structure
• Prepare budgets
• Motivate employees
• Develop Policies
• Use information
system
• Analyze efficiency and
performance
• Analyze changes in
internal factors
• Analyze changes in
external factors
• Take corrective
actions
Strategy Formulation Strategy Implementation Strategy Evaluation

Prepared by Dr. Samita Mahapatra
47
Strategic Management Process
Strategic
Intent
•Vision
•Mission
•Objectives
Strategy
Formulation
•SWOT Analysis
•Corporate
Strategy
•Business –
Level Strategy
and
•Strategic Plan
Strategy
Implementation
•Project
•Procedural
•Resource
Allocation
•Structural
•Behavioral
Strategy
Evaluation
•Analysis and
Assessment
Strategic Control

The Strategic Management Process
Source: BPSM by P. Subbha Rao

Strategic Formulation or Planning
Develop Vision and Mission:
Vision statement: “ What we want to do?”
It is a view of the organization's future direction and business
course, a guiding for what the organization is trying to do and
to become.
Mission Statement: “What is our Business? & What will it be?”
A mission statement broadly outlines the organization's future
direction and serves as self-concept for what the organization is
to do and to become.
Tata Tea: to be India’s foremost tea based beverage company.
Infosys: To be globally respected company that provides best of
breed software solution by best –in-class people.
Prepared by Dr. Samita Mahapatra
49

Strategic Formulation or Planning
Mission Statement: “What is our Business? & What will it be?”
A mission statement broadly outlines the organization's future
direction and serves as self-concept for what the organization is
to do and to become.
1. Ask the question ‘
What is our business?
2. Write a mission
statement draft
3. Analyze and
Validate the Draft
4. Review the
mission statement
periodically
It must contain the following components:
Customers, Products /Services, Market, Technology, Survival,
Growth, Profitability, Philosophy, Competitive Advantage,
Public Image and Employees
50

Strategic Flexibility and Learning Organization
• Strategic flexibility is the capability of an organization to respond
to major changes that take place in its external environment by
committing the resources necessary to respond to those changes.
More importantly, the organization should be able to identify
change markers so that it can go back to its previous state when
the external environmental change is reversed.
• Strategic flexibility demands that an organization must become
learning organization.
• Depending on the external change, there are four major aspects
that need to be taken into account while formulating strategic
flexibility:
a. The amount of time available to respond to a major change;
b. The range of different solutions available;
c. The perspective of the organization with respect to the change;
and
d. The focus area of the flexibility that was created.

• The Learning organization is a organization skilled at creating, acquiring,
interpreting, transferring and retaining knowledge. It is also into acting
that is modifying its own behavior to expand to the new knowledge
insights.
• Learning organization or knowledge organizations works with ideas. It
comes up with new ideas, moves the ideas through out the organization
and keeps it on hold in policies, process and reviews. It also takes the
new ideas as the bases of responding to the changing environment.
• It is also the learning environment which makes the knowledge
processes possible. As important over all these is leadership which
fosters and inspires the learning process and helps create the learning
environment.
• The rate at which organizations and individuals learn may well become
the only sustainable competitive advantage. Products, services and
processes can be copied, but if the organization is learning more rapidly
than the competition then you can get ahead and stay ahead. The world
is changing. We have more global environment, industry boundaries are
collapsing, previously regulated businesses are becoming deregulated.
There are new business models.
• If the rate of learning is less than rate of change then you are going to fall
behind.

The hurdles of learning organizations:
a. Early discussions were abstract without
concrete prescriptions for action.
b. The concept is concentrated to CEO or top
level management or executives rather
than local level those who are leading
focused
projects/departments/divisions/business
units in the organisation itself, where the
real critical work of the organisation is
done.
c. Lack of standards and tools where
managers can assess how are the
organisations was doing as a learning
organisation.
For example:
GE is the learning organization. They have
process, climate and clearly they have the
leadership behavior.

• One thing managers can do to their teams have a supportive
learning environment.
• For example, an early study of medical errors documented
significant differences in rates of reported mistakes among nursing
units at the same hospital, reflecting variations in norms and
behaviors established by unit managers. In most settings, a one-
size-fits-all strategy for building a learning organization is unlikely
to be successful.
• Managers need to be especially sensitive to local cultures of
learning, which can vary widely across units.

Psychological safety:
• To learn, employees cannot fear being belittled or marginalized when they disagree
with peers or authority figures, ask naive questions, own up to mistakes, or present
a minority viewpoint. Instead, they must be comfortable expressing their thoughts
about the work at hand.
Appreciation of differences:
• Learning occurs when people become aware of opposing ideas. Recognizing the
value of competing functional outlooks and alternative worldviews increases energy
and motivation, sparks fresh thinking, and prevents lethargy and drift.
Openness to new ideas:
• Learning is not simply about correcting mistakes and solving problems. It is also
about crafting novel approaches. Employees should be encouraged to take risks and
explore the untested and unknown.
Time for reflection:
• All too many managers are judged by the sheer number of hours they work and the
tasks they accomplish. When people are too busy or overstressed by deadlines and
scheduling pressures, however, their ability to think analytically and creatively is
compromised. They become less able to diagnose problems and learn from their
experiences. Supportive learning environments allow time for a pause in the action
and encourage thoughtful review of the organization’s processes.

Competitive Strategy and Competitive Advantage in
global Market.
• Competitive strategy is about being different. It
means deliberately choosing to perform activities
differently or to perform different activities than
rivals to deliver a unique mix of value. – Michael
Porter
• Competitive advantage is something that places
the company or organization above the
competition.

Step:4
Encroachment
Step: 3 Value
Proposal
Step: 2 Barrier to
Imitation
Step: 1 Sources of
Competitive
Advantage
global Market.
1. Sources of Competitive
Advantage
• Superior Assets
• Super Capabilities
• Key Success Factors
2. Barriers to Imitation
• Higher barriers to entry in
the industry for the new
firms
• First move advantage
• Barriers to imitation

global Market.
Competitive
Strategy

3. Value proposal form of competitive advantage:
• Operational Excellence
• Product leadership
• Customer intimacy
4. Encroachment prevents competitive advantage:
• New competitive advantage position
• Reinvestment of profit, asset and capacity accumulation,
resource strength
global Market.

global Market.

Sources of Global Competitive Advantage
Global Competitive Advantage
Adapting
to local
market
differences
Exploiting
economies
of global
scale
Exploiting
economies
of global
scope
Tapping
the
optimal
locations
for
activities
and
resources
Maximizing
knowledge
transfer
across
location

1. Adapting to local market differences:
Companies must respond to the inevitable heterogeneity they will
encounter in these market. Differences in language, culture,
income levels, customer preferences and distribution system.
a. Increased market share- offering standard products and services across countries.
Reduces the boundaries of the served market to only those customers whose
needs are uniform across countries.
b. Improved price realization –tailoring products and services to the preferences of
local customers enhances the value delivered to them.
c. Neutralizing local competitors- the natural advantage enjoyed the most by the
local competitors are the deep understanding of the single-minded
responsiveness.

2. Exploiting economies of global scale:
• Building a global presence automatically expands a company’s
scale of operations, giving it larger revenue and large asset base.
• Potential benefits of economies of scale in various ways:
spreading the fixed costs, reducing capital and operating cost,
pooling purchasing power and creating critical mass. The global
players gets the opportunity to build centers of excellence for the
development of specific technology or/and products.
3. Exploiting economics of global scope:
• Global scope refers to multiplicity of regions and countries in
which a company markets its product and services.
• Providing coordinated service to global customers
• Market power compared with competitors – a global suppliers has
the opportunity to understand the unique strategic requirements
and culture of its global customer.

4. Tapping the optimal locations for activities and resources:
• A firm that can exploit these intercountry differences betters
than its competitors has the potential to create significant
proprietary advantages
• Performance enhancement
• Cost reduction- location decisions can affect the cost
structure in terms of the cost of local manpower and other
resources, the cost of transportation and logistics as well as
government incentives.
• Risk reduction.
5. Maximizing knowledge transfer across location
• Faster product and process innovation
• Lower cost innovation
• Reduced risk of competitive preemption.

Country Market and Industry Attractiveness
Assessment

Models and Sources of Countries Assessment
Organization/Publications Types of Rating Methodology
IMD (International
Institute of
Management
Development)
The World Competitive
yearbook published by
https://www.imd.org/w
cc/world-
competitiveness-center/
Ranking of 47 countries on
a world competitive
scoreboard
Assessing competitiveness
and location attractiveness
Uses statistical and survey
data to score 288 criteria
grouped into eight
categories:
Domestic Economy
Internationalization
Government
Finance
Infrastructure
Management
Science and Technology
People

Models and Sources of Countries Assessment
Organization/Publications Types of Rating Methodology
European Intelligence Unit
Business Ranking in
Country Forecast
Quarterly Report
https://store.eiu.com/pro
duct/country-forecast
Ranking of 60 countries on
the quality of the
attractiveness of the
investment environment
Uses subjective and objective
indicators grouped into 10
categories of the 70 criteria:
Political Environment (11 criteria)
Macroeconomic Environment (5
criteria)
Market Opportunities (8 criteria)
Policy towards private
enterprises and competition (8
criteria)
Policy towards foreign
investments (8 criteria)
Foreign trade and Exchange
control (4 criteria)
Taxes (6 criteria)
Financing (6 criteria)
Labour Market (8 criteria)
Infrastructure (10 criteria)

1. Obstacles which potential newcomers would encounter when
entering a market are called:
a. Economies of scale
b. Mobility barriers
c. Buyer switching costs
d. Barriers to entry
2. Which of the following is NOT an example of barriers to entry?
a. Buyer switching costs
b. Economies of scale
c. Product differentiation
d. Expected retaliation
D
A

3. By having business in different countries, a firm reduces:
a. Credit Risk
b. Political Risk
c. Financial Risk
d. Business Risk B
4. Organizations that are good at developing relevant
capabilities to respond to a changing context are known as:
a. Knowing organizations
b. Stretch organizations
c. Learning organizations
d. Absorptive organizations C

5. Which of the following attributes is NOT seen as being
necessary for an organization to become a 'learning
organization'?
a. Cultural diversity
b. Top management commitment
c. Openness to new ideas
d. Willingness to experiment and risk making mistakes A
6. Which of the following statements best captures what is
meant by the term 'learning', according to the learning-based
approach to strategy?
a. Having enough knowledge to cope with a changing
environment
b. The accumulated wisdom of managers based on their
experience
c. Thoroughly memorizing all details of the strategy
d. The active-creativity to develop new strategies and
opportunities
D

7. Which of the following statements best summarizes the
implications of the learning approach for the development of
strategy?
a. Strategy is best informed by the accumulated experience of the senior
management team
b. The strategy process should involve more people at all levels in the
organization and should seek to be more flexible and not get locked into
particular ways of thinking
c. The strategy process is dependent on learning through investments in
training in new skills to facilitate implementation of the strategy
d. The strategy development process is dependent on the creativity of senior
management in coming up with new innovative strategies
B
8. One of the following writers has NOT been a major contributor
to developing the learning-based approach to strategy
development. Which one is he?
a. Peter Senge c. Igor Ansoff
b. Chris Argyris d. Henry Mintzberg A

9. Which of the following is NOT an example of a political risk?
a. Government regulations
b. Cost of production
c. War
d. Communal unrest B
A country that analyzes the probability of:
(1) an uprising,
(2) the election of a socialist nationalizing government, and
(3) the stability of per capita income, is engaging in:
a. country risk analysis.
b. political situation analysis.
c. factor risk analysis.
d. consumer purchasing power analysis. A

Reference Books:
• Lasserre, Philippe, Global Strategic Management (4th Edition),
Palgrave Macmillan, Bristol, Great Britain, 2003.
• Michael Hitt, Duane Ireland and Robert Hoskisson, Concepts
Strategic Management Competitiveness & Globalization (9th
Edition), South-Western Cengage Learning Mason, USA, 2011.
• Hans Hedin, Irmeli Hirvensalo, Markko Vaarnas, The Handbook of
Market Intelligence Understand, Compete and Grow in Global
Markets, John Wiley & Sons Ltd, West Sussex, United Kingdom,
2011.
• Lorange, P. and J. Roos, Strategic Alliances: Formulation,
Implementation, and Evolution, Blackwell, Oxford.
• Gerardo R. Ungson and Yim-Yu Wong, Global Strategic
• Management, Segment Books New Delhi, 2009.
• Global Strategic Management, Kamel Mellahi, J. George Frynas,
and Paul Finlay, Oxford University Press, New York, 2005.
• Globalization and Business, Johnd Daniels, Leeh. Radebaugh, and
Daniel P. Sullivan, Prentice Hall of India Private Limited, New
Delhi, 2002.

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