Stmg 543: Global Strategic Management Question Paper
Stmg 543: Global Strategic Management
Course:Business Administration
Institution: Kenya Methodist University question papers
Exam Year:2011
SCHOOL : SCHOOL OF BUSINESS AND ECONOMICS
DEPARTMENT : BUSINESS ADMINISTRATION
TIME : 3 HOURS
INSTRUCTIONS Answer Question ONE and any other THREE questions.
Question 1
Read the case “gilletes new International strategy”, and answer the following questions.
Gillete, the well-known razor blade maker, has been a global company from the beginning as it managers quickly saw the advantages of selling its products abroad. By 2000, 60 percent of Gillette`s revenues came from global sakes and this percentage is expected increase. Gillette`s strategy over the years has been pretty constant. Find a new foreign country with a growing market for razor blades, form a strategic alliance with a local razor blade company and take a majority stake in it; invest in a large marketing campaign and the n build a modern factory to make razor blades and other products for the local market. For example, when Gillette entered Russia after the break up of the Soviet Union it saw a huge opportunity to increase sales. It formed a joint venture with a local company called Leninets Concern which made a razor known as the Sputnik, and then with this base began to import its own brands into Russia. When sales growth rose sharply it decided to offer more products in the market and built a new plant in St. Peterburg. Today, Gillette operates 54 manufacturing facilities in more than 20 countries. It establishes its factories in countries where labor and other costs are low and then distributes and markets its products to countries in that region of the world. So, in this sense it pursues a global strategy. However all of Gillette`s research and development and design takes place in the United states. As it develops new kinds of razors it equips its foreign factories to manufacture them when it decides that local customers are ready to trade up to the new product. So for example, Gillette`s latest razor may be introduced in a foreign country years later than in the United States. Thus, Gillette is customizing its product offering to the needs of different countries and also pursues a multidomestic strategy. By pursing this international strategy Gillette achieve low costs and still differentiates and customizes its product range to suit the needs of each country or world region. This strategy has proved very effective for Gillette. In 2001 Gillette Chairman and CEO James F. Kilts reported that, There are few I believe that there are few consumer products companies with more powerful global brands than Gillette. I believe that there is a huge opportunity to maximize the potential of Gillette`s global brands by tailoring its products to the needs of different countries.
a) Explain how Gillette has been able to seek cost minimization and quality maximization benefits with their global strategy. (8marks)
b) Gillette entered Russia by forming a joint venture with a local company called leninets concern. What are the advantages and disadvantages of this strategy? (8marks)
c) “By perusing this International strategy, Gillette achieved low cost and still differentiates and customizes its product ranges to fit different regional markets.” Describe the above strategy by elaborating when its appropriate. (9marks)
Question 2
When developing strategies for firms operating in the global markets it is vital to consider a company`s ability to balance pressure for local responsiveness against the need for cost reduction.
a) With use of clear illustrations, discuss the main forces for local responsiveness and those for cost reduction. (15marks)
b) A global strategy can result from several motivations in addition to simply wanting to invest in attractive foreign markets. Using practical illustrations explain the main motivations for a global strategy. (10marks)
Question 3
a) Using the theory of International investment discuss the main motivation for firms to pursue FDI as seekers. (15marks)
b) Elaborate on the main forms of globalization and discuss the main impediments of globalization of production. (10marks)
Question 4
Expanding a firms operations in the global market can help increase the firms profitability and rate of profit growth over time.
a) Discuss the key benefits of expanding a firms into the global market. (18marks)
b) Using the concept of efficiency frontier, explain how firms add value in the global market. (7marks)
Question 5
a) Explain with use of clear illustration how firms apply the generic strategies to create competitive advantages in the international market. (10marks)
b) In an effort gain competitive access and overcome barriers in entering foreign Markets, many firms are forming international strategic alliances. Discuss the main explanations for international strategic alliances. (15marks)
Question 6
Many firms from high cost developed countries are migrating their production activities to low cost production locations as they seek to manage cost of production. Using practical illustrations, discuss exhaustively the main factors influencing the choice of production locations for global firms. (25marks)
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