MUA/RASA/EXAM/QP/2020

POST GRADUATE UNIVERSITY EXAMINATIONS

SCHOOL OF MANAGEMENT AND LEADERSHIP

DEGREE OF MASTER OF BUSINESS ADMINISTRATION

SMO 501: INTERNATIONAL STRATEGIC MANAGEMENT

DATE: 30TH NOVEMBER 2020

DURATION: 3 HOURS
MAXIMUM MARKS: 60

INSTRUCTIONS:
1. Write your registration number on the answer booklet.
2. DO NOT write on this question paper.
3. This paper contains FOUR (4) questions.
4. Question ONE is compulsory.
5. Answer any other TWO questions.
6. Question ONE carries 30 MARKS and the rest carry 15 MARKS each.
7. Write all your answers in the Examination answer booklet provided
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QUESTION ONE

Read the Case Study below carefully and answer the questions that follow:

INTERNATIONALIZATION OF FIRMS

Foreign firms are entering china market as they as they internationalize while china
firms are moving out. Many foreign firms choose to operate in the Chinese market
because it is so large and important. This is certainly the case for automobile firms that
have used China as a base to both produce cars more cheaply and expand their market
by selling in China. In particular General Motors (GM), through its partnership with
Shanghai Automotive Industry Corporation (SAIC), has created successful joint
ventures. Because this venture continues to be successful, Fritz Henderson, GM’s CEO
since its bankruptcy filing, has indicated that none of GM’s operations in China are for
sale. In fact, GM is seeking to extend its operations in China, possibly with new
ventures. Volkswagen also has a joint venture with SAIC. Recently SAIC has sought to
introduce its own automobiles domestically and plans to participate in global markets
when possible. Similarly, another GM partner in China, Liuzhou Wuling Motors Co., is
planning to develop its own vehicles rather than through a GM brand such as
Chevrolet. Because the U.S. auto market and other auto markets elsewhere in the world
are experiencing substantially lower sales, the Chinese market is becoming more
important. Porsche AG now owns 50.76 percent of Volkswagen and is launching the
first exposure of its new model, the Panamera, in a Shanghai auto show in April 2009.

Although the U.S. market still counts as the most important sale zone for Porsche,
China is expected to have the largest auto market by sales volume in 2009. The Chinese
market is not only important for manufacturing such as the automobile industry, but
also for service industries. For example, Google recently launched a music service
supported by the world’s four largest music labels: Warner Music Group Corp.,
Vivendi SA’s Universal Music, EMI Group Ltd., and Sony Corp.’s Music Entertainment.
Google and its partners hope to draw users away from Google’s main Chinese
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competitors, especially Baidu Inc. Baidu is the dominant market share holder, with
approximately 62 percent of the search market for Web downloads in China. Google
increased its search engine market in China to 28 percent in 2008, up from 23 percent in
2007, but Baidu retained its dominance with a 62 percent market share, up from 59
percent in 2007. Interestingly, some Chinese firms are more successful abroad than they
are in their home market. Huawei Technologies Co. Ltd. is making inroads in the U.S.
market. Huawei, a Chinese telecom equipment supplier, recently won a contract with
Cox Communications, a U.S. TV cable provider. Huawei is also in the running for a
potentially bigger contract with Clear wire Corporation. Clearwire is in the process of
helping to build a wireless broadband network that would serve 120 million people in
the United States by 2010.

Other finalists for the contract include Motorola Inc., Samsung Electronics Co., and
Nokia Siemens Networks. More generally, other competitors include Alcatel-Lucent
and Telefon AB L.M. Ericsson. Another Chinese company, ZTE, competes with these
firms as well. Although Huwaei and ZTE have had more success in developing regions
of the world, Huawei has become a major vendor in Europe, where it has won
numerous contracts with significant telecom providers such as Vodaphone Group PLC
and France Telecom SA’s Orange. Huawei also has a foothold in Canada, where it is
building a third-generation (3G) network for BCE Inc.’s partners Bell Canada and Telus
Corp. Additionally, Huawei and ZTE were laggards in selling telephone equipment in
their home market against Telefon AB L.M. Ericsson, Alcatel-Lucent, and Nokia
Siemens entry into china by foreign firms and chinese firms reaching for global markets
Models pose next to a Porsche Panamera, a new four-door sports car making its
international debut at Auto Shanghai, China's largest auto show. Peter
Parks/AFP/Getty Images 218Part 2: Strategic Actions: Strategy Formulation: Networks
(a joint venture of Nokia Corp. and Siemens AG), mainly because they were an
unknown company when the first wireless networks were developed in China.
However, thanks to government support for new wireless technology and an aggressive

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strategy of deeply undercutting competitors’ prices, these two firms are beating out
their rivals for an estimated $59 billion of spending over the next three years for new 3G
wireless networks. China has approximately 659 million mobile subscribers, and the
rollout of 3G is making sales growth for these markets even more important. It is
expected that Huawei and ZTE will double their combined market share for 3G revenue
with current wireless network growth. Although Ericsson’s market share is remaining
stable, market shares for AlcatelLucent and Nokia Siemens are expected to decline in
China.

Historically, Ericsson won the lion’s share because Huawei and ZTE, as noted, were
small when the existing network was built in the 1990s. Both companies have access to
large credit lines from China’s state owned banks and other perks such as low cost land.
This has allowed them to have more flexibility in pricing and to operate with lower
margins without shareholder pressure. It will be interesting to see what happens when
the fourth-generation (4G) networks are rolled out in a few years

Required

a) Evaluate the reasons why many foreign firms are entering China because of its
large market. (5 marks)
b) Giving examples explain how multinational firms are entering china market and
evaluate the advantage of such strategies. (10 marks)
c) Many of Chinese firms are now entering foreign market. Giving examples
evaluate the strategies there are using. (10 marks)

d) Propose the relative comparative advantages do Chinese firms have that enable
them gain entry into international markets. (5 marks)

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QUESTION TWO

Firms populated with people having a global mind-set have a key source of long-term
competitive advantage in local and the global market place McKinsey & Co. proposes
three or four core competencies that a firm need to identify around which they can
develop their strategies. Examine this assertion. (15 marks)

QUESTION THREE

(a) Examine the differences are there between the global strategy and international
strategy? Evaluate the challenges managers encounter when developing
competitive strategies. (10 marks)
(b) Analyze why Companies go International and illustrate how they gain competitive
advantages. (5 marks)

QUESTION FOUR
Many organizations today develop a vision statement that answers the question “What
do we want to become?” Developing a vision statement is often considered the first step
in strategic planning, preceding even development of a mission statement. Assess the
importance of the vision statement to a firm. (15 marks)

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