Textbook Problem

DFI Strategy Friendly Stores, a U.S. retailer, has recognized numerous opportunities to expand in foreign countries and has assessed many foreign markets, including Brazil, Greece, Mexico, Portugal, singapore, and Thailand. It has opened new stores in Europe, Asia, and Latin America. In each case, the firm was aware that it did not have sufficient understanding of the culture of each country that it had targeted. Consequently, it engaged in joint ventures with local partners who knew the preferences of the local customers.

1. What comparative advantage does Friendly Stores have when establishing a store in a foreign country, relative to an independent retailer?
2. Why might the overall risk of Friendly Stores decrease or increase as a result of its recent global expansion?
3. Friendly Stores has been more cautious about entering China. Explain the potential obstacles associated with entering China.