Class Test-04

Name: Ruhul Amin Tusar

ID: 18241039
Section: A

1. Of the four imperatives discussed in this chapter economic, political, quality, and
administration which would be most important to IBM in its efforts to make inroads in
the Pacific Rim market? Would this emphasis be the same as that in the United States,
or would IBM be giving primary attention to one of the other imperatives? Explain.
In efforts to make inroads in the Pacific Rim market IBM is most likely to give main
attention to the economic imperative. In the past, computer customers made a purchasing
decision based on factors like service, support and brand names, but now, with price being
the main factor, people are coming to a conclusion that there is no need in buying a particular
brand to get good quality. In the Pacific Rim, computers are seen now as a common good.
In the United States as well as the Pacific Rim markets, IBM uses a combined approach to
strategic planning. IBM might use the economic imperative if it has a strong market in a
certain country. If the market needs a calculated response, IBM can use a political or quality
strategy. IBM can use the administrative imperative if flexible decision making is required to
make a deal. Because of the need to coordinate strategy both globally and regionally, IBM
uses most of the time the economic and political approaches.

2. Anheuser-Busch is attempting to expand in India, where beer is not widely consumed

and liquor dominates the market. What areas should be targeted for strategic goals?
What could be some marketing implications in the Indian market?
Anheuser-Busch plans a joint venture with Crown Beers India Ltd. in a move that will give
America’s largest brewer entry into the beer market in India. Financial terms were not
disclosed. The agreement calls for Anheuser-Busch to brew, market and distribute Budweiser
and other beers in India. Each company will have a 50-percent ownership in the joint
venture. Shares of Anheuser-Busch declined 28 cents to close at $50.39 on the New York
Stock Exchange. “International expansion is a key part of Anheuser-Busch’s growth strategy,
and while India is a small beer market today, it is growing rapidly and has tremendous long-
term potential,” said August Busch IV, president and chief executive officer of the St. Louis-
based company. The joint venture will operate under the name Crown Beers India Ltd., and
will include a new brewery in the southern India city Hyderabad. The brewery is expected to
be completed by March. Bottled Budweiser will be available in May. Crown Beers India Ltd.
will initially employ about 150 people. “The joint venture combines Crown’s local business
experience with Anheuser-Busch’s global marketing and brewing expertise to reach the
 consumer who appreciates premium beer,” said K.V.D. Prasad Rao, joint managing director
for Crown Beers.

3. Mercedes changed its U.S. strategy by announcing that it is developing cars for the
$30,000 to $45,000 price range (as well as its typical upper-end cars). What might have
accounted for this change in strategy? In your answer, include a discussion of the
implications from the standpoints of marketing, production, and finance.

Mercedes is clearly diversifying its product mix to reach a larger number of potential buyers.
By restricting itself to the extreme upper end of the price range, it would be very difficult for
Mercedes to sustain impressive growth rates.
However, by diversifying into the $30,000 to $45,000 price range, Mercedes can now appeal
to a large number of "new" Mercedes purchasers. From a marketing standpoint, Mercedes
can now target the vast middle-upper
income purchaser who may be able to afford a $30,000 to $40,000 car. From a production
standpoint, Mercedes can enjoy enhanced economies of scale by producing more
automobiles (some of the basic component parts for the $30,000 to $40,000 cars are
undoubtedly.

4. One of the most common entry strategies for MNCs is the joint venture. Why are so
many companies opting for this strategy? Would a fully owned subsidiary be a better
choice?

Joint venture (JV): An agreement under which two or more partners own or control a
business. An international joint venture (IJV) is a JV composed of two or more firms from
different countries. It is the most common entry strategies for MNCs is the joint venture. The
reason behind this is given below:
 The creation of an alliance or JV can help the partners achieve economies of scale
and scope that would be difficult for one firm operating alone to accomplish.
Additionally, the partners can spread the risks among themselves and profit from the
synergies that arise from the complementary resources.
 Access to knowledge: In alliances and JVs, each partner has access to the knowledge
and skills of the others. So one partner may bring financial and technological
resources to the venture while another brings knowledge of the customer and market
channels.
 Mitigating political factors: A local partner can be very helpful in dealing with
political risk factors such as a hostile government or restrictive legislation.
  Overcoming collusion or restriction in competition: Alliances and JVs can help
partners overcome the effects of local collusion or limits being put on foreign
competition by becoming part of an “insider” group.
Multinational corporations of course would prefer to have a fully owned subsidiary for many
reasons, but the main one is more profit, and the second is that they would have total control over
the operations and strategic planning without having to consult another party and take
permissions.